States across Nigeria owe contractors and retirees a combined ₦1.06tn despite receiving record revenues in 2024, according to BudgIT’s 2025 State of States report.
The report shows that contractor arrears totalled ₦434.87bn, while unpaid pensions and gratuities amounted to ₦626.81bn. This indicates that many states are still struggling with old obligations even though federal allocations more than doubled and several states recorded higher internally generated revenue.
Thirty states reported owing either contractors or retirees in the 2024 fiscal year. Twenty-six states carried contractor debts, while 27 states reported pension and gratuity backlogs.
Only Borno, Kano and Nasarawa had no arrears in either category.
Kaduna recorded the highest debt, with a combined ₦139.36bn. The state owed ₦56.07bn to contractors and ₦83.29bn in pension and gratuity arrears, which was the largest pension backlog in the country.
Ogun followed with ₦107.18bn in total arrears, including ₦81.54bn in pensions and ₦25.64bn owed to contractors. Benue ranked third with ₦99.68bn, while Edo had ₦95.46bn and Enugu had ₦90.18bn.
Other states with high arrears included Imo with ₦57.25bn, Akwa Ibom with ₦43.71bn, Delta with ₦42.35bn, Oyo with ₦41.97bn and Plateau with ₦40.98bn. These ten states account for nearly half of the nationwide ₦1.06tn backlog.
At the lower end of the list, Kano and Nasarawa had no arrears, while Lagos owed only ₦48.74m in contractor debts and had no pension backlog. Ebonyi followed with ₦88.89m, Borno with ₦1.10bn, Jigawa with ₦1.79bn and Katsina with ₦2.22bn.
BudgIT also reported that total liabilities across 35 states amounted to ₦1.24tn. Rivers State was excluded due to the nullification of its 2024 budget by a court ruling.
Beyond contractor and pension arrears, states owed ₦33.74bn in salary claims, ₦62.33bn in judgment debts and ₦73.25bn in other obligations.
BudgIT noted that despite unprecedented inflows, including ₦11.38tn in FAAC allocations, many states still prioritised recurrent spending over settling legacy debts. This caused arrears to persist.
Budget pressures were most severe in Kaduna, Benue, Adamawa and Taraba. In these states, total liabilities exceeded internally generated revenue. Kaduna owed nearly double its IGR, while Benue’s arrears were almost five times its domestic revenue. Adamawa and Taraba also recorded pension debts larger than their 2024 IGR.
The report linked the rising burden to structural weaknesses, growing personnel costs and long-standing pension issues.
