A review of the Debt Management Office (DMO) data shows that at least ten states raised their domestic debt by a combined ₦417.7 billion year‑on‑year, despite a significant increase in revenue allocations from the Federation Account Allocation Committee (FAAC).
Key Debt Increases (Q1 2024 → Q1 2025)
- Combined debt rose from ₦884.9 bn to ₦1.30 tn—a 47.2% increase.
- Since Q4 2024, total rose by ₦42.3 bn (3.4%)
State-by-State Highlights
- Rivers: ₦364.4 bn (56.7% rise)
- Enugu: ₦188.4 bn (128% surge—₦105.9 bn added)
- Niger: ₦143.8 bn (+67%)
- Taraba: ₦82.9 bn (+154%)
- Bauchi, Benue, Gombe, Edo, Kwara, Nasarawa: All recorded significant upticks
Wider Context
- These ten states now account for 33.7% of the ₦3.87 tn total subnational domestic debt .
- While national public debt rose to ₦149.39 tn by March 2025, total subnational debt slightly declined—yet debt burden is increasingly concentrated in a few states
Revenue vs Borrowing
- Despite better FAAC inflows due to higher oil prices, naira devaluation, and subsidy removal, many states borrowed instead of reducing obligations.
- Q1 2025 debt servicing by seven states totaled ₦98.7 bn, about 190% of their internally generated revenue (IGR)—up from ₦65.3 bn in Q4 2024
Concerns and Outlook
- Experts warn that over-reliance on borrowing risks fiscal sustainability, especially if allocations fall or interest rates climb.
- Economists propose states focus on long-term revenue generation—such as bonds, VAT, property taxes—and prudent borrowing structures
Bottom Line: Even with rising revenues, many states are accumulating debt at an unsustainable pace—prompting calls for stronger financial discipline and alternative revenue strategies.