Lagos, FCT, Rivers drive 43% of states’ N4.52trn debt

Lagos State, the Federal Capital Territory (FCT) and Rivers State accounted for N1.96 trillion, or 43.27 per cent, of the N4.52 trillion domestic debt owed by Nigeria’s 36 states and the FCT as of March 31, 2026, highlighting the growing concentration of sub-national borrowing among a handful of major economies.

The latest domestic debt data released by the Debt Management Office (DMO) showed that the combined debt stock of the states and FCT increased by N163.25 billion, or 3.7 per cent, from N4.36 trillion at the end of December 2025.

The increase means states added an average of more than N54 billion to their domestic obligations during the first quarter, although the movement was uneven, with some of the largest debtors reducing their outstanding liabilities while the FCT and several other states recorded sharp increases.

Lagos remained Nigeria’s largest sub-national domestic debtor, with N1.21 trillion, representing about 26.6 per cent of the total debt stock.

The FCT followed with N389.88 billion, while Rivers State had N362.43 billion.

Together, the three accounted for nearly half of the domestic obligations owed by the 36 states and the FCT, underscoring the extent to which the country’s sub-national debt burden is concentrated in states with large economies, extensive infrastructure requirements and significant public spending responsibilities.

The concentration becomes more pronounced when Delta and Ogun states are included. Delta had N213.85 billion in domestic debt, while Ogun owed N200.75 billion.

The five largest debtors therefore accounted for approximately N2.40 trillion, or more than half of the combined state and FCT domestic debt stock.

The DMO figures also reveal a wide gap between Nigeria’s most indebted and least indebted states. Jigawa had the lowest domestic debt at just N1.60 billion, followed by Ondo with N7.31 billion and Anambra with N9.62 billion.

Other states with debt stocks below N20 billion included Ebonyi at N12.30 billion, Katsina at N12.69 billion and Kebbi at N14.58 billion.

The first-quarter movement was driven largely by sharp increases in the debt obligations of several states.

The FCT recorded the biggest increase, with its domestic debt more than doubling from N188.86 billion in December 2025 to N389.88 billion in March 2026, an increase of N201.02 billion in three months.

Edo State also recorded a significant increase, with its debt stock rising from N91.18 billion to N172.37 billion, while Borno’s increased from N42.64 billion to N88.44 billion.

Yobe’s domestic debt also rose from N81 billion to N98.59 billion during the period.

The increases, however, were partly offset by reductions among some of the largest debtors.

Lagos reduced its domestic debt marginally from N1.22 trillion to N1.21 trillion, while Rivers cut its obligations from N378.81 billion to N362.43 billion.

Delta reduced its debt stock from N248.83 billion to N213.85 billion, while Ogun’s obligations fell from N227.47 billion to N200.75 billion.

The contrasting movements point to differing fiscal strategies among state governments, with some relying more heavily on domestic borrowing to finance infrastructure and other expenditure while others reduced outstanding obligations during the quarter.

The figures also underline the importance of the revenue capacity of the major debtor states in determining the sustainability of their borrowing.

Lagos, for instance, reported N1.67 trillion in recurrent revenue in the first half of 2026, representing 90 per cent of its half-year target, while operating a 2026 budget of N4.44 trillion.

The approved Lagos budget comprises N2.052 trillion in recurrent expenditure and N2.185 trillion in capital expenditure, reflecting the scale of spending required to finance infrastructure and public services in the country’s largest commercial centre.

The concentration of debt in Lagos also means that developments in the state’s revenue performance and fiscal management could have a significant bearing on the overall sustainability of Nigeria’s sub-national debt profile.

At the national level, the DMO data come amid continuing concerns over the cost of public borrowing and the ability of governments at all levels to generate sufficient internally generated revenue to finance expenditure without excessive reliance on debt.

For the states and FCT, the rise from N4.36 trillion to N4.52 trillion in just three months suggests that domestic borrowing remains an important source of financing despite efforts to strengthen internally generated revenue.

The widening gap between the highest and lowest indebted states also shows that the sub-national debt challenge is not uniform across the federation.

While Lagos, the FCT and Rivers carry a disproportionate share of the total debt stock, several states maintain relatively low domestic debt obligations. The key issue for policymakers is therefore increasingly not just the size of state debt, but whether borrowing is being matched by sufficient revenue and productive investment capable of supporting future debt repayment.