Lagos, Rivers dominate Nigeria’s subnational debt

Lagos, Rivers, and eight other states now control the lion’s share of both domestic and external debt, highlighting a growing divide between fiscally strong states and their marginal peers.

Amid mounting public debt pressures across Nigeria, the fiscal squeeze is no longer confined to the federal government. It has extended to the states, where a handful of subnational governments account for a dominant share of total liabilities.

Latest data from the Debt Management Office (DMO) show that as of September 30, 2025, the combined domestic and external debt of the 36 states and the Federal Capital Territory (FCT) stood at N4.002 trillion, representing 2.61 percent of Nigeria’s total public debt stock of N153.29 trillion.

While the share remains relatively small at the aggregate level, the composition of subnational debt reveals a strong concentration among a limited number of states.

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A breakdown of the figures shows that 10 states account for N2.68 trillion, about 67 percent of total subnational debt, pointing to a highly uneven fiscal landscape.

Lagos State leads by a wide margin with a debt stock of N1.045 trillion, equivalent to roughly 26 percent of the total debt held by states and the FCT. The state’s borrowing reflects sustained investment in infrastructure, including transportation, housing, and urban development.

Rivers State follows with N381.205 billion, while Delta State records N247.171 billion.

Enugu State ranks fourth with N194.715 billion, while Ogun State and Bauchi State post N168.093 billion and N158.197 billion, respectively.

Also among the top borrowers are Niger State (N143.469 billion), Cross River State (N141.941 billion), Benue State (N107.254 billion), and Akwa Ibom State (N95.506 billion).

The distribution of debt highlights a significant gap in access to borrowing across states.

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Lagos accounts for 26.1 percent of domestic subnational debt, more than double the 9.5 percent recorded by Rivers. Delta, Enugu, and Ogun follow with smaller shares.

Outside the top tier, over 25 states collectively account for about one-third of domestic debt, indicating more limited participation in credit markets.

External borrowing follows a similar pattern. Lagos leads with 21.8 percent of total foreign debt exposure, followed by Kaduna (13.7 percent) and Edo (7 percent). Ogun and Cross River account for 4.5 percent and 4.2 percent, respectively, while Rivers holds 3.8 percent.

Together, Lagos, Rivers, and a small group of states account for over half of domestic debt and about 40 percent of external debt, underscoring the concentration of borrowing capacity within a narrow segment of the federation.