10 states eye N4.3tn borrowing to finance 2026 projects

Ten Nigerian states plan to raise about N4.287tn through borrowing, bonds, grants, capital receipts and public-private partnerships to finance parts of their 2026 capital projects.

The states — Lagos, Abia, Ogun, Enugu, Osun, Delta, Sokoto, Edo, Bayelsa and Gombe — have together presented budgets totalling N14.174tn to their respective assemblies.

A review of the proposals shows that many states are increasingly depending on non-recurring funding sources beyond FAAC allocations, VAT and internally generated revenue, as they push to deliver infrastructure and development across sectors.

However, economists warn that while borrowing can support growth when carefully managed, constant reliance on debt reflects weak financial discipline and could create heavier burdens for future generations.

Lagos, which presented the largest subnational budget at N4.237tn, expects N3.12tn from IGR and federal transfers, leaving N1.117tn — about 26.4 per cent — to be sourced through loans and bonds. Abia, with a N1.016tn plan, anticipates N607.2bn from federal inflows and grants, while the remaining N409bn, or 40.3 per cent, will come from borrowing and other capital receipts, despite its recent progress in reducing domestic debt.

Ogun State’s N1.669tn “Budget of Sustainable Legacy” also relies on borrowing, with N518.9bn — roughly 31.1 per cent — expected from loans and grants to fund capital projects.

Former Vice-Chancellor of Crescent University, Prof. Sheriffdeen Tella, argued that Nigeria’s fiscal problems stem more from mismanagement and leakages than from a lack of revenue.

He said governments should live within their means and strengthen IGR rather than repeatedly turning to debt.

Enugu’s proposed N1.62tn budget represents a sharp increase from the previous year, with N329bn to be sourced from loans and capital receipts. The state already carries the highest domestic debt in the South-East.

Labour leader Chris Onyeka criticised Nigeria’s budgeting culture, saying frequent violations, low implementation levels and extra-budgetary spending have weakened the relevance of approved budgets as binding financial plans.

Other states also plan to lean on borrowing.

Osun will fund part of its N723.45bn budget through capital receipts while continuing efforts to reduce its debt stock.

Delta’s N1.664tn plan still depends heavily on loans and grants despite stronger revenue projections.

Sokoto, Edo and Bayelsa also expect significant external funding, while Gombe appears the most dependent, with more than half of its budget tied to loans and capital receipts.

Analysts caution that relying heavily on non-recurring funds exposes states to delays, higher debt servicing costs and future fiscal pressure.

They advise state governments to prioritise transparency, plug leakages and build sustainable local revenue systems rather than depending excessively on borrowing to fund development.