Debt dilemma: 10 Nigerian states pile up N417.7bn debt despite revenue boom

Despite a significant influx of revenue from the Federation Account Allocation Committee (FAAC), at least ten Nigerian states have collectively increased their domestic debt by a staggering N417.7 billion year-on-year, raising serious concerns about fiscal prudence and long-term sustainability.

A detailed review of official data from the Debt Management Office (DMO) reveals that Rivers, Enugu, Niger, Taraba, Bauchi, Benue, Gombe, Edo, Kwara, and Nasarawa states collectively saw their domestic debt stock jump from N884.9 billion in Q1 2024 to N1.3 trillion in Q1 2025.

This represents a concerning 47.2 percent year-on-year increase.

The data also indicates a quarter-on-quarter rise, with the combined domestic debt of these ten states growing by N42.3 billion, or 3.4 percent, from N1.26 trillion in Q4 2024 to N1.30 trillion in Q1 2025.

This escalating indebtedness comes at a time when FAAC disbursements to states have notably improved, fueled by rising oil prices, gains from naira devaluation, and revenue freed up from petrol subsidy removal.

However, these figures suggest that rather than leveraging these increased inflows to reduce debt, some states are unfortunately engaging in further borrowing.

Rivers State currently holds the highest domestic debt among these ten states, with a stock of N364.39 billion as of Q1 2025.

While this figure remained unchanged from Q4 2024, it marks a substantial year-on-year increase of N131.82 billion (56.7 percent) compared to N232.58 billion in Q1 2024.

It should be noted that the DMO report indicated Rivers State’s Q1 2025 figure was as of December 2024, and its Q1 2024 figure was as of March 2023, suggesting a lag in current data submission.

Enugu State exhibited the most rapid debt accumulation, with its domestic debt soaring from N82.48 billion in Q1 2024 to N188.42 billion in Q1 2025 – a staggering rise of N105.95 billion, or 128.4 percent.

Enugu also recorded the most significant quarterly growth, adding N69.14 billion between December 2024 and March 2025.

The swift increase in Enugu’s debt raises questions about the specific projects being financed and demands greater transparency.

Other states with notable year-on-year increases include:

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• Niger State: Up by N57.68 billion (67 percent) to N143.75 billion
• Taraba State: More than doubled its domestic debt, rising by N50.29 billion (154.1 percent) to N82.93 billion.
• Bauchi State: Increased by N34.01 billion (31.4 percent) to N142.40 billion.
• Benue State: Rose by N13.09 billion (11.2 percent) to N129.82 billion.
• Gombe State: Added N12.85 billion (18.1 percent) to reach N83.66 billion.
• Edo State: Saw a N10.02 billion (13.8 percent) increase to N82.40 billion.
• Kwara State: Rose by N1.03 billion (1.7 percent) to N60.10 billion.
• Nasarawa State: Increased by N968 million (4.1 percent) to N24.73 billion.

Collectively, the N1.30 trillion domestic debt held by these ten states now accounts for a significant 33.67 percent of the total N3.87 trillion domestic debt for all 36 states and the Federal Capital Territory as of Q1 2025.

This marks a notable rise from their 21.8 percent share in Q1 2024, indicating a growing concentration of borrowing in a select few states.

While the total domestic debt across all states and the FCT saw a slight overall decline, the increasing share of these ten states underscores an uneven pattern of fiscal behavior that could pose risks to their long-term financial health.