- Debt underscores persistent fiscal pressures facing state govts
Lagos, Rivers, and Delta States have emerged as the top three most indebted states in Nigeria as of the first quarter of 2025, according to fresh debt figures collated from official data.
The combined debt stock of the 10 most indebted states stood at N2.48trn as of March 31, 2025, despite significant monthly allocations from the Federation Account Allocation Committee.
Lagos retained its position as the state with the highest domestic debt, with obligations totalling N874.04bn. Rivers followed with N364.39bn, while Delta ranked third with N204.72bn.
Ogun State was in fourth place with N190.14bn, narrowly ahead of Enugu’s N188.42bn. Niger and Bauchi states recorded debts of N143.75bn and N142.40bn respectively.
Benue, Imo, and Akwa Ibom States rounded off the list with debts of N129.82bn, N122.09bn, and N118.21bn respectively.
The figures highlight the persistent fiscal pressures facing sub-national governments, many of which rely heavily on borrowings to finance infrastructure and meet recurrent obligations.
During the first four months of this year, the Federation Account recorded a total revenue inflow of N10.2trn despite the drop in crude oil prices.
This is based on figures obtained from the Federation Account Allocation Committee.
The remittances were made by the Federal Inland Revenue Service, the Nigerian Customs Service, and other revenue-generating agencies of government.
Out of this amount, N6.58trn was disbursed as statutory allocations to the Federal Government, 36 states, and 774 local government areas from January to March.
The FAAC committee, headed by the Minister of Finance, Wale Edun, is made up of Commissioners for Finance from the 36 states of the federation, the Accountant General of the Federation, and representatives of the Nigerian National Petroleum Company Ltd.
Others are representatives of the Federal Inland Revenue Service, the Nigeria Custom Service, Revenue Mobilisation, Allocation and Fiscal Commission and the Central Bank of Nigeria.
The federation account is currently being managed on a legal framework that allows funds to be shared under three major components – statutory allocation, Value Added Tax distribution, and allocation made under the derivation principle.
Under statutory allocation, the Federal Government gets 52.68 percent of the revenue shared; states, 26.72 percent; and local governments, 20.60 percent.
The framework also provides that VAT revenue be shared thus: the FG, 15 percent; states, 50 percent; and the LGs, 35 percent.
Similarly, extra allocation is given to the nine oil producing states based on the 13 percent derivation principle.
Monthly analysis of the allocation showed that in January, total revenue stood at N2.641trn, with N1.703trn allocated. From this amount, the Federal Government received N552.59bn, state governments got N590.61bn, and local governments received N434.56bn. Oil-producing states shared N125.28bn under the derivation fund.
In the month of February, revenue dropped slightly to N2.344trn, with N1.678trn distributed to the three tiers of government.
Out of this amount, the Federal Government received N569.65bn, states got N562.19bn, while local governments received N410.56bn. The derivation fund allocated to oil-producing states stood at N136.04bn, the highest monthly figure in the quarter.
In the month of March, total revenue rose again to N2.411trn, but only N1.578trn was disbursed.
Out of this amount, the Federal Government received N528.69bn, states got N530.45bn, and local governments received N377bn. Derivation fund payments totalled N132.61bn.
For the month of April, revenue dropped to N2.8trn was collected, while the sum of N1.68trn was shared to the three tiers of government.
From the N1.68trn allocation, the Federal Government received a total sum of N565.3bn, state governments received N556.74bn while the local government council received N406.627bn.
In addition, the sum of N152.55bn being 13 percent of mineral revenue was shared to the benefiting state as derivation revenue.
FAAC attributed the increased revenue performance to improved oil receipts, enhanced tax collection efforts, and gains from the foreign exchange market.
SOURCE: thepointng.com