Nigeria’s sub national debt burden climbed to N4.36 trillion in 2025, underscoring growing fiscal pressure on state governments, with Lagos State retaining its position as the most indebted at N1.04 trillion.
Latest data released by the Debt Management Office showed that the combined debt stock of the 36 states and the Federal Capital Territory rose from N3.97 trillion in 2024, representing a 9.89 per cent year-on-year increase.
In absolute terms, subnational borrowing expanded by N392.41 billion, reflecting increased reliance on debt by state governments to finance infrastructure projects, plug revenue shortfalls and navigate a challenging macroeconomic environment.
The data revealed a significant concentration of debt among Nigeria’s largest states, with the top 10 accounting for N2.96 trillion, or 67.98 per cent of the total debt stock. This highlights a widening fiscal imbalance at the subnational level, where a handful of economically dominant states continue to drive borrowing.
Further breakdown shows that Rivers State, Delta State, Ogun State and the Federal Capital Territory, alongside Lagos, account for nearly N2.26 trillion, more than half of the total debt stock.
Lagos alone represents about 27.97 per cent of total subnational debt, reinforcing its outsized fiscal position relative to other states.
Among the top 10 indebted states, Benue State stood out as the only state to record a decline in its debt profile. The state’s debt fell by 12.52 per cent to N107.23 billion in 2025 from N122.58 billion in the previous year, suggesting a combination of debt repayment, reduced borrowing or restructuring of existing obligations.
While the decline signals improving fiscal discipline, analysts note it may also reflect constrained capital spending, raising concerns about the potential trade-off between debt reduction and infrastructure development.
Overall, the rising debt profile underscores the increasing dependence of state governments on borrowing, with implications for fiscal sustainability, debt servicing capacity and long-term economic growth.
SOURCE: dailytimesng.com