Nigeria’s 36 states and the Federal Capital Territory have recorded a sharp rise in external debt, reaching about $5.7 billion in 2025, despite increased allocations from the Federation Account Allocation Committee (FAAC).
Data from the Debt Management Office shows that subnational external debt rose from $4.80 billion in 2024 to $5.68 billion in 2025 — an increase of $884.66 million, representing an 18.43% growth year-on-year.
Analysis indicates that 33 states recorded increases in their debt profiles, while only four — Edo, Rivers, Anambra, and Bayelsa — posted marginal reductions.
The rise in borrowing comes even as FAAC allocations improved significantly, driven by higher oil prices, gains from naira devaluation, and subsidy removal. In 2025, states received over ₦7.3 trillion from FAAC, up from ₦5.18 trillion in 2024.
Despite this revenue boost, many states continued to rely heavily on external loans to fund infrastructure and meet fiscal demands. Analysts warn that this trend could pose long-term risks, especially as most of the debts are dollar-denominated.
Experts note that continued borrowing may increase repayment burdens, reduce funds available for development projects, and weaken states’ financial stability if not properly managed.
