Findings by The People’s Insight reveal that about 20 Nigerian states borrowed N457.66bn in the first half of 2025 despite recording higher revenue inflows. Data shows that states collectively spent N235.58bn servicing external debt within the period, a 68.4% increase compared to the same time in 2024.
While states received N3.425tn from federal allocations between January and June 2025, a 42.96% rise from the N2.396tn disbursed in the first half of 2024, many still turned to borrowing. Oyo led with a N93.4bn domestic loan, followed by Kaduna (N62bn foreign) and Lagos (N50bn domestic). Several others, including Zamfara, Katsina, Kebbi, Jigawa, Bauchi, Borno, and Enugu, also secured significant foreign loans.
Experts warn that overreliance on dollar-denominated loans poses serious fiscal risks. With the naira’s depreciation, repayment costs have surged, forcing states to divert revenues away from critical development projects into debt servicing. Analysts caution that this trend may weaken financial autonomy, mortgage future federal allocations, and undermine investments in key sectors such as health, education, and infrastructure.
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