As of June 30, 2024, the total debt of Nigeria’s 36 states climbed to ₦11.47 trillion, despite funding from the Federal Accounts Allocation Committee (FAAC) and their internally generated revenues (IGR).
This reflects a 14.57% increase from ₦10.01 trillion at the end of December 2023, according to data from the Debt Management Office (DMO).
In terms of external debt, the combined obligations of the states and the Federal Capital Territory (FCT) rose from $4.61 billion to $4.89 billion within the review period.
Due to the naira’s devaluation—from ₦899.39/$1 in December 2023 to ₦1,470.19/$1 by June 2024—these external debts increased by 73.46% in naira value, growing from ₦4.15 trillion to ₦7.2 trillion.
However, domestic debt for the states and the FCT saw a reduction, dropping from ₦5.86 trillion to ₦4.27 trillion.
Overall, by June 2024, the total debt of states and the FCT represented a portion of Nigeria’s total public debt, which stood at ₦134.3 trillion. This marked a decrease in their share compared to December 2023, though nominal debt figures continued to rise.
A report from Channels Television noted that state governments’ debt reliance intensified throughout 2023, with the collective debt across all 36 states soaring by 38.1%, from ₦7.25 trillion in 2022 to ₦10.01 trillion.
According to BudgIT’s 2024 State of States report, domestic debt grew by ₦606.12 billion, pushing the year-on-year growth rate to an average of 11.4%. By December 31, 2023, total domestic debt for states was recorded at ₦5.86 trillion.
Rising foreign debt levels also contributed to the fiscal pressures, increasing by 4.1% from $4.43 billion in 2022 to $4.61 billion in 2023. The liberalization of the exchange rate further strained state finances by increasing the naira cost of foreign loan repayments.
Lagos State remained the largest holder of foreign debt, accounting for 26.9% of total external liabilities, which amounted to $1.24 billion.
