Despite a notable increase in revenue from the Federation Account Allocation Committee (FAAC), ten Nigerian states have collectively amassed ₦417.7 billion in additional domestic borrowing over the past year, based on official data from the Debt Management Office (DMO).
Between Q1 2024 and Q1 2025, Rivers, Enugu, Niger, Taraba, Bauchi, Benue, Gombe, Edo, Kwara, and Nasarawa states saw their combined domestic debt balloon from ₦884.9 billion to ₦1.30 trillion—marking a 47.2% surge year-on-year. The data also shows a quarterly increase of ₦42.3 billion between Q4 2024 and Q1 2025.
This borrowing trend persists even amid improved federal allocations—driven by higher crude oil prices, the removal of fuel subsidies, and exchange rate gains following the naira’s depreciation.
Rivers State emerged as the highest domestic debtor among the ten, with an unchanged figure of ₦364.39 billion between Q4 2024 and Q1 2025. However, the figure represents a 56.7% year-on-year increase from ₦232.58 billion in Q1 2024.
Enugu State posted the steepest year-on-year growth, with its domestic debt rising from ₦82.48 billion to ₦188.42 billion—a 128.4% increase. The state also recorded the largest quarterly jump, adding ₦69.14 billion in just three months. Niger State’s domestic debt rose from ₦86.07 billion to ₦143.75 billion, a 67% surge year-on-year, with a marginal quarterly increase of ₦3.02 billion.
Taraba State more than doubled its debt from ₦32.64 billion to ₦82.93 billion—an increase of ₦50.29 billion or 154.1%, the highest percentage rise in the review period.
Bauchi State’s debt climbed from ₦108.39 billion to ₦142.40 billion year-on-year. However, the state posted a minor quarterly decline of ₦1.55 billion. Benue State also saw an 11.2% year-on-year increase from ₦116.73 billion to ₦129.82 billion, and a quarterly rise of ₦7.25 billion.
Gombe’s debt rose from ₦70.81 billion to ₦83.66 billion, representing an 18.1% increase. Nevertheless, its Q1 2025 debt figure was ₦5.58 billion lower than in Q4 2024. Edo State’s debt grew from ₦72.38 billion to ₦82.40 billion within the year. But notably, the state reduced its domestic obligations by ₦30.60 billion in the first quarter of 2025 alone.
Kwara State experienced a modest rise, from ₦59.07 billion to ₦60.10 billion—up 1.7% year-on-year and nearly the same quarter-on-quarter. Nasarawa State registered the smallest increase at 4.1%, with its debt moving from ₦23.76 billion to ₦24.73 billion year-on-year, though the state cut its debt by ₦1.87 billion in Q1 2025.
Altogether, these ten states now account for 33.67% of Nigeria’s total ₦3.87 trillion subnational domestic debt, up from 21.8% in Q1 2024 and 31.8% in Q4 2024. Rivers State’s unchanged figure is attributed to data being as of December 2024, while its Q1 2024 debt was from March 2023, revealing a potential lag in reporting.
Enugu’s rapid debt escalation has raised fiscal sustainability concerns, especially since public details on the usage of these funds remain scarce. Niger and Taraba face similar scrutiny, given their large borrowing increases.
In contrast, Gombe and Edo appear to have adopted some fiscal restraint, reducing their debts on a quarterly basis. Edo’s ₦30 billion reduction could indicate active repayments or more disciplined debt strategies.
Analysts are warning of future risks if states fail to capitalize on higher federal receipts to reduce borrowing. Particularly worrying is the prospect of debt service costs outpacing Internally Generated Revenue (IGR), especially in low-IGR states.
According to previous reports, seven states spent an average of 190% of their IGR on debt servicing in Q1 2025, with Bayelsa, Adamawa, Benue, Niger, Kogi, Taraba, and Bauchi among them.
Further analysis of Q1 2025 Budget Implementation Reports reveals that debt service costs soared by 51% compared to Q4 2024, emphasizing the growing fiscal strain at the subnational level.
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