States’ Debt Hits N4.002trn As Lagos Accounts For 26%

The Debt Management Office (DMO) has revealed that Nigeria’s 36 states and the Federal Capital Territory (FCT) incurred a combined debt of N4.002 trillion as of 30 September 2025.

The latest figures, released by the DMO, show that the subnational debt represents 2.61 per cent of Nigeria’s total public debt, which stood at N153.29 trillion within the same period.

According to the data, debt obligations are heavily concentrated among a handful of states, with 10 states accounting for 67 per cent of the total subnational debt, amounting to N2.68 trillion.

Lagos State emerged as the most indebted state with N1.045 trillion, representing about 26 per cent of the total debt owed by all states and the Federal Capital Territory.

A distant second is Rivers State, with a debt stock of N381.205 billion, followed by Delta State at N247.171 billion.

Enugu State came fourth with a debt profile of N194.715 billion, while Ogun and Bauchi states are indebted to the tune of N168.093 billion and N158.197 billion respectively.

Niger State followed with a debt profile of N143.469 billion, while Cross River State and Benue State are indebted to the tune of N141.941 billion and N107.254 billion respectively. Akwa Ibom was at the bottom of the top 10 most indebted states, owing N95.506 billion as of September 2025.

The figures underscore the growing fiscal pressures at the subnational level.

Meanwhile, the Federal Government continues to shoulder the bulk of Nigeria’s overall public debt burden.

This debt equals 2.61 per cent of Nigeria’s N153.29 trillion total public debt, with states financing deficits arising from infrastructure gaps and declining oil revenues.

Studies link subnational borrowing to budget shortfalls, where loans fund expenditure but risk constraining growth if mismanaged, as seen in negative impacts on GDP in some analyses.

Concentration in oil-rich or urban states like Lagos underscores fiscal federalism issues, with calls for greater revenue autonomy and stricter debt limits.

Growing debt raises servicing costs, crowding out spending on health and education amid naira depreciation and high interest rates.

The DMO emphasised prudent management, as analysts say unchecked subnational borrowing could amplify national debt risks under President Trump’s administration and global economic influences.

Reforms such as improved internally generated revenue (IGR) and federal transfers aim to ease pressures, but the profiles of the top states highlight the need for targeted fiscal discipline.