The total domestic debt of all 36 states of the federation and the Federal Capital Territory (FCT) rose from ₦3.87 trillion in the first quarter of 2025 to ₦3.96 trillion in the second quarter.
According to data from the Debt Management Office (DMO), this shows a difference of ₦94.79 billion, or 2.45%. However, in comparison with the corresponding quarter in 2024, the states’ total domestic debt dropped by 7.1% from ₦4.27 trillion.
Analysis of sub-national domestic debt profiles since the inception of this administration in 2023 shows more of a declining trend, attributed to the significant increase in revenue accruing to the states from the federation account, largely as a result of the removal of the fuel subsidy.
The debt dropped from ₦5.82 trillion as at 30 June 2023 to ₦5.74 trillion in the third quarter of 2023; it, however, rose slightly to ₦5.86 trillion in the fourth quarter of 2023 before dropping to N4.07 trillion in the first quarter of 2024.
In the second quarter of 2024, it rose to ₦4.27 trillion, dropped to ₦4.21 trillion in the third quarter, and further declined to ₦3.97 trillion in the fourth quarter of 2024.
In the first quarter of 2025, it continued the downward trend, dropping to ₦3.87 trillion. The rise of the debt profile in the second quarter of 2025 was driven by the significant rise in the debts of Lagos, Cross River, and Taraba states. Each of the states’ debt profiles rose by ₦167.31 billion, ₦32.16 billion, and ₦11 billion, respectively, over the figures in the first quarter.
On the other hand, during the same period, Imo, Akwa-Ibom, and Bayelsa states reduced their debts by ₦24.11 billion, ₦9.39 billion, and ₦7.54 billion, respectively.
Data from the Office of the Accountant General of the Federation on FAAC allocations to states shows that within the second quarter of 2025, all the states and the FCT collectively received ₦1.89 trillion from the Federation Accounts Allocation Committee. A breakdown of the figures shows that in April, the states received a net total allocation of ₦624.72 billion; in May, the figure was ₦617.53 billion, while in June, it increased to ₦648.78 billion.
However, it has also been observed that despite the increase in allocations to states, many of the states, because of low internally generated revenue (IGR) and lack of fiscal discipline, are grappling with financial crises, leading to borrowing to finance their budgets.
The debt situation in the states mirrors what is happening at the national level, where the total public debt stock as at 30 June 2025 (second quarter) stood at ₦152.40 trillion ($99.66 billion). This indicates an increase of ₦3.01 trillion (2.01%) when compared to the ₦149.39 trillion ($97.24 billion) recorded at the end of March 2025.
The country also spent ₦4.44 trillion in the second quarter of 2025 to service debt, indicating an increase of ₦862.57 billion (24.10%) from the ₦3.58 trillion projected for the quarter.
