Nigeria’s subnational debt profile deteriorated further in 2025, with the combined debt stock of the 36 states and the Federal Capital Territory (FCT) rising to N4.36 trillion.
Even as Lagos maintained its position at the top with a debt profile of N1.04 trillion.
The figures are culled from the latest released data on states’ debt profile by the Debt Management Office (DMO), reflecting increased borrowing by state governments to fund infrastructure, manage fiscal gaps, and navigate a challenging macroeconomic environment.
Total debt stock of the 36 states and the FCT increased from N3.97 trillion in 2024 to N4.36 trillion in 2025, representing a 9.89% year-on-year increase.
In absolute terms, this translates to an increase of N392.41 billion, with borrowing concentrated among a few large states.
What the data is saying
The data shows a significant concentration of debt among Nigeria’s largest states, with the top 10 accounting for the bulk of total obligations, further highlighting Nigeria’s widening fiscal imbalance at the state level.
- Total subnational debt rose to N4.36 trillion in 2025 from N3.97 trillion in 2024, a 9.89% increase year-on-year.
- The top 10 most indebted states accounted for N2.96 trillion, contributing a significant 67.98% of the total debt stock, highlighting the concentration of debt among a few large states.
- The report also revealed that a large share of subnational debt is concentrated in just a handful of states — Lagos, Rivers, Delta, Ogun, and Federal Capital Territory— which together owe nearly N2.26 trillion, roughly more than half of the entire N4.36 trillion debt stock.
- Lagos stands far ahead of every other state, making up 27.97% of the total debt, more than a quarter of the total debt.
Top 10 most indebted states in Nigeria – 2025
Lagos State retained its position as Nigeria’s most indebted subnational entity by a wide margin, with a debt stock of N1.22 trillion, thereby reflecting a share of 27.97% of total debt.
The state’s debt profile increased year-on-year by 35.78% from N900.19 billion recorded in 2024, translating to a N319.27 billion jump — the largest increase among all states.
Lagos alone accounted for nearly one‑third of the entire subnational debt stock, contributing more debt than the combined total of several mid‑tier states.
The sharp rise in Lagos’ debt reflects the state’s aggressive capital spending strategy, particularly in transport infrastructure, urban renewal projects, power initiatives, and counterpart funding for large‑scale public‑private partnerships.
Despite the increase, Lagos’ strong internally generated revenue (IGR) continues to support its borrowing capacity.
What this means
The rise in subnational debt in 2025 reflects a balancing act between financing development and maintaining fiscal sustainability. While borrowing supports infrastructure and economic growth, it also raises concerns about repayment capacity.
- Infrastructure financing, inflationary pressures, and revenue gaps remain the dominant driver of increased debt across most states
- Debt concentration among the top states highlights uneven economic development and spending patterns, with Lagos alone accounting for 27.97%.
- While states like Lagos, Delta, and Enugu expanded borrowing, Benue, among the most indebted states, reduced its debt stock, highlighting limited fiscal space nationwide.
The sustainability of Nigeria’s subnational debt will depend on how effectively states can grow revenue, manage debt servicing costs, and ensure that borrowed funds translate into measurable economic outcomes.
