States reduce debt exposure amid rising FG’s allocation

Data by Debt Management Office (DMO) has showed that majority of states in Nigeria have drastically reduced their debt exposure in the last two years.

The data by  DMO revealed that  more than three-quarters of the states reduced their loans over the past 15 months and it is on the backdrop of President Bola Tinubu  increasing allocation to state amid  petrol subsidy removal.

The data by DMO revealed that in the first quarter (Q1) of 2025, total debts of the states and the FCT stood at about N3.869 trillion.

This represented a decrease of N199.02 billion compared to N4.068 trillion recorded in the first quarter of last year.

It also indicated a drop of N98.92 billion from N3.968 trillion recorded in the fourth quarter of 2024.

A breakdown showed that Delta is atop the chart of 28 states that reduced their debts.

It brought down its debt of N334.77billion in 2024 to N204.60 billion in the first quarter of this year.

The reduction represented 38.87 per cent.  Abia cut its debt by N65.04 billion to N48.67 billion in the first quarter of 2025. Adamawa reduced its debt by N24.90 billion to N78.65 billion, while Akwa Ibom brought down its debt by N24.72 billion to N118.21 billion.

Anambra also reduced its domestic debt by N6.23 billion to N28.20 billion. Bayelsa’s debt decreased by N2.05 billion to N129.56 billion. Borno lowered its debt by N9.37 billion to N107.03 billion, and Cross River cut its debt by N2.52 billion to stand at N174.60 billion in the first quarter of 2025.

Ebonyi achieved a reduction of N1.34 billion to N80.60 billion; Ekiti decreased its debt by N2.05 billion to N117.81 billion; Imo cut N11.08 billion to bring its debt down to N210.87 billion.

Jigawa, which maintained the lowest debt profile, reduced its liabilities by N25.68 billion to just N1.06 billion.

Kaduna brought its debt down by N23.95 billion to N88.75 billion, while Kano lowered its debt by N3.66 billion to N109.43 billion. Katsina reduced by N10.32 billion to N63.66 billion. Kebbi’s debt decreased by N13.43 billion to N44.59 billion. Kogi recorded a reduction of N26.33 billion to N93.30 billion.

Lagos, still Nigeria’s most indebted state domestically, cut its debt by N35.03 billion to N874.04 billion in the first quarter of 2025.

Ogun’s debt dropped by N6.94 billion to N258.94 billion.

Ondo also reduced its debt by N25.12 billion to N61.64 billion. Osun lowered its debt by N15.84 billion to N134.13 billion, while Oyo cut N24.58 billion to end the quarter at N106.63 billion.

Plateau’s debt fell by N16.03 billion to N145.45 billion while Sokoto reduced its own by N17.47 billion to N47.25 billion. Yobe decreased its debt by N12.87 billion to N52.92 billion; Zamfara by N24.47 billion to reach N67.57 billion, and the FCT, by N1.46 billion to N9.41 billion.

On a quarter-on-quarter basis, Edo achieved one of the largest reductions, lowering its debt by N30.60 billion to N82.49 billion in the first quarter of this year—a 27.08 per cent decline from the fourth quarter of last year.

Rivers posted the highest increase by adding N131.82 billion to bring its debt portfolio to N364.55 billion in the first quarter of this year.

Bauchi raised its debt by N34.01 billion to N142.40 billion, while Benue also raised its debt by N2.24 billion, thereby taking its profile to N66.72 billion. Edo recorded an increase of N10.36 billion to reach N82.49 billion. Enugu’s domestic debt climbed by N22.25 billion to N188.75 billion; Gombe by N15.22 billion to N107.13 billion, and  Kwara by N14.86 billion to N127.35 billion. Nasarawa’s domestic debt increased by N15.63 billion to N84.58 billion, Niger’s rose by N11.00 billion to reach N96.65 billion, while Taraba’s also rose by N10.60 billion to N63.92 billion.

On a quarter-on-quarter basis, Enugu recorded the most significant increase, rising by N69.14 billion from the previous quarter to reach N188.75 billion in the first quarter of this year. Niger’s debt rose by N5.35 billion to N96.65 billion. Delta also saw a slight increase of N3.43 billion to N204.60 billion.

Taraba added N3.66 billion to reach N63.92 billion. Kwara recorded an increase of N2.44 billion to N127.35 billion, and Benue by N2.36 billion to N66.72 billion.

Analysts said the varying debt figures reflected the distinct approaches of Nigeria’s states to managing debt and financing development.

While some appear to have used increased federal allocations to reduce outstanding liabilities, others opted to borrow more, possibly to fund new projects or address urgent fiscal pressures.

Federal, states, and local governments, which hitherto shared less than N1 trillion monthly, have been sharing an average of N1.6 trillion, according to FAAC data. 

In June, the highest distributable amount of N1.8 trillion was shared: Federal Government got N645.383 billion; states (N607.417 billion), and local governments (N444.853 billion).

Additionally, N120.759 billion was distributed to oil-producing states as 13 per cent derivation revenue from mineral sources.

A review of sub-nationals’ domestic debts showed that while some appeared to be avoiding fresh loans, others were reducing debts. A few accumulated more.