Despite a marginal 4.89% year-on-year (YoY) decline in total subnational domestic 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 domestic debts of these states combined now account for 64.05% of the country’s total subnational domestic debt.
The domestic 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 domestic debt burdens.
The latest data released by the Debt Management Office (DMO) shows a reshuffling in Nigeria’s subnational domestic debt landscape, driven by a blend of fiscal constraints, infrastructure ambitions, oil revenue shifts, and tighter federal allocations.
This analysis explores the domestic 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
Rivers State saw a massive 56.68% surge in its debt profile, rising from N232.58 billion to N364.39 billion—one of the steepest among the top 10 states.
According to data compiled by the Debt Management Office (DMO), Rivers State undertook a series of large-scale capital projects following the 2023 elections, which significantly expanded its borrowing needs. These projects included investments in roads, schools, hospitals, and urban renewal schemes aimed at boosting long-term economic growth and improving public service delivery.
Despite the increase in debt, Rivers maintained a strong Internally Generated Revenue (IGR) to operating expense ratio of 121.26%, which provided some fiscal buffer for its aggressive borrowing strategy. This suggests that the state’s revenue base was relatively strong, allowing it to absorb higher debt levels without immediate liquidity risks.
The state’s fiscal strategy also reflects a shift toward front-loaded borrowing, where funds are raised early to accelerate project execution. This approach, while effective for rapid development, raises concerns about long-term debt sustainability, especially if revenue projections fall short or project returns are delayed.
