At least 20 Nigerian states collectively borrowed nearly N458bn in the first half of 2025, despite enjoying a surge in federal allocations within the same period.
Fresh loans were taken against the backdrop of worsening debt servicing costs.
States spent about N235.6bn on external debt repayments between January and June, a 68 per cent jump from the N139.9bn recorded a year earlier. The increase reflects the burden of dollar-denominated obligations made heavier by the naira’s decline.
Data from the National Bureau of Statistics shows that the Federal Account Allocation Committee disbursed N10.13tn across all levels of government in the first six months of 2025.
Out of this, states got N3.43tn, almost 43 per cent higher than the N2.40tn received in the same period of 2024. Monthly allocations rose sharply, hitting over N600bn in June.
Budget reports reveal that many states turned to borrowing to meet financial needs. Oyo led with N93.4bn in domestic credit, while Kaduna secured N62bn in external funding and Lagos took N50bn domestically.
Other states in this net include Gombe, Zamfara, Katsina, Kebbi, and Jigawa with loans ranging from N7.4bn to N28bn.
Bauchi drew from both domestic and foreign sources, totalling N26.3bn.
Borno, Taraba, Sokoto, Niger, Kwara, and Ekiti also tapped into external credit, alongside Ondo, Abia, Ebonyi, and Enugu.
The borrowing spree, despite improved revenues, underscores the fiscal squeeze facing states as they juggle rising obligations with expanding expenditure.
Nigeria’s debt
This paper reported that according to the NBS, Nigeria’s domestic and external debt rose to ₦149.39 trillion (about $97 billion) in Q1 2025, up from ₦121.7 trillion in 2024, an increase of 22.8% year-on-year. Reuters reports that in Q2 2025, Nigeria’s GDP stood at ₦372.82 trillion ($243.7 billion), placing the country’s debt-to-GDP ratio at 39.8%.
The debt-to-GDP ratio, the percentage of a country’s total public debt compared to its Gross Domestic Product, remains slightly below both the government’s self-imposed 40% ceiling and the 55% benchmark set by the World Bank and the International Monetary Fund (IMF).
While Nigeria’s debt-to-GDP ratio may seem modest compared to some global averages, the real concern lies in the debt-servicing burden, which accounted for 77.1% of total international payments, including overseas remittances and letters of credit.
