Major Concern: 20 Governors Borrow Billion Amid Soaring Debt Servicing Costs
Nigeria’s debt crisis at the sub-national level is deepening as state governors collectively incurred fresh loans amounting to approximately billion in the first half of , according to an analysis of states’ Q2 budget implementation reports.
The alarming rate of borrowing is highlighted by the fact that it occurred despite a significant boost in revenue allocation to the states from the Federal Account Allocation Committee (). disbursements to the states totalled trillion in , representing a increase compared to the same period in .
The new loans which include both foreign and domestic debt have exacerbated the fiscal strain on the states. Findings also reveal that state governments collectively spent billion on servicing their external debt during the period. This marks a sharp rise from the previous year, a surge analysts attribute to the local currency’s depreciation, which inflates the Naira value of dollar-denominated repayments.
Leading the charge in new indebtedness was Oyo State, which secured a substantial billion domestic loan. Other major borrowers include Kaduna ( billion foreign) and Lagos ( billion domestic). A number of states, including Gombe, Zamfara, Katsina, and Kebbi, also resorted to significant foreign borrowing to fund their operations.
Experts are warning that the continued dependence on external debt exposes states to immense fiscal risks. A Professor of Economics at Ekiti State University noted that every depreciation of the Naira forces states to channel a larger share of their revenues into debt servicing, ultimately undermining their capacity to fund critical social sectors and infrastructure development. The trend raises serious concerns about the long-term fiscal sustainability and financial autonomy of state governments across the federation.
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