Despite a marginal 4.89% year-on-year (YoY) decline in total subnational debt, Nigeria’s 10 most indebted states saw their combined debt rise by 2.49% YoY in Q1 2025, reaching N2.48 trillion, up from N2.42 trillion in Q1 2024.
The debts of these states combined now account for 64.05% of the country’s total subnational debt.
The debt profile of Nigerian states has seen significant shifts in Q1 2025, with Lagos maintaining its position as the most indebted state despite a year-on-year (YoY) decline.
Meanwhile, states like Rivers, Enugu, and Niger recorded staggering increases in their debt burdens.
The latest data released by Debt Management Office (DMO) shows a reshuffling in Nigeria’s subnational debt landscape, driven by a blend of fiscal constraints, infrastructure ambitions, oil revenue shifts, and tighter federal allocations.
This analysis explores the debt trends of the top 10 states and the key factors driving their year-on-year changes.
The 10 most indebted Nigerian states in Q1 2025
Akwa Ibom recorded a year-on-year decline of 17.3% from N142.93 billion in Q1 2024 to N118.21 billion in the review period, despite its status as an oil-rich state and beneficiary of the 13% derivation fund. This state debt profile contributed 4.77% to the total debt of the top 10 states and 3.06% to the total subnational debt in Q1 2025.
The lower debt profile is attributed to high oil derivation revenues and conservative borrowing policies. The state also continues to attract direct investments into its industrial and tourism sectors, potentially offsetting the need for debt-heavy budgets.
According to the Akwa Ibom State Q1 2025 Budget Implementation Report, the state recorded a significant revenue inflow of N77.9 billion from both FAAC and internally generated sources, representing 33.5% of its annual revenue target. This strong revenue performance reduced the need for new borrowing and enabled the state to service existing debts more aggressively.
Additionally, the state’s capital expenditure in Q1 2025 was N133.9 billion, which is only 20.4% of the approved N655 billion capital budget. This indicates a cautious approach to project execution, likely aimed at controlling debt accumulation.
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