26 states increased external borrowing by $239m in first half of 2025

Twenty-six Nigerian states expanded their external debt portfolios by a combined $239 million in the first half of 2025, according to new figures released by the Debt Management Office (DMO).

The development reflects rising fiscal pressures across states as well as varied approaches to debt management.

The DMO reported that Nigeria’s total external debt stood at $46.98 billion as of June 2025.

Subnational external debt inched up marginally from $4.80 billion to $4.812 billion, but the slight overall increase masks wide disparities among individual states.

While several states made significant repayments, others borrowed heavily during the period.

Imo State led the pack in new borrowings, adding $36.2 million to its external debt. It was followed by Oyo ($35.7 million), Kaduna ($33.6 million), Enugu ($27.3 million), and Ogun ($21.8 million).

Other states that recorded notable increases include Katsina ($14.2 million), Borno ($8.7 million), Kwara ($6.7 million), Gombe ($5.8 million), Nasarawa ($5.7 million), Osun ($5.1 million), and Plateau ($5.1 million).

Moderate increases were seen in Akwa Ibom ($4.8 million), Ebonyi ($4.5 million), Abia ($3.8 million), Yobe ($3.4 million), Taraba ($3.1 million), and Kogi ($2.9 million). States with the smallest additions included Adamawa ($2.1 million), Ondo ($2.0 million), Niger ($1.9 million), Sokoto ($1.2 million), Jigawa ($1.2 million), Kebbi ($1.1 million), Zamfara ($554,100), and Bayelsa ($438,000).

Despite the fresh borrowings, 11 states—including Lagos, Edo, Rivers, Bauchi, and the Federal Capital Territory (FCT)—made substantial repayments that offset much of the increase.

According to the DMO, these states collectively reduced their external debt by $227 million during the same period, resulting in only a marginal net rise in nationwide subnational debt.

Nigeria’s total public debt climbed to ₦152.39 trillion in the second quarter of 2025, up from ₦149.38 trillion in the first quarter.

The five most indebted states accounted for ₦4.66 trillion of this figure.

Lagos State remains the most heavily indebted, with ₦2.496 trillion in total liabilities, comprising ₦1.04 trillion in domestic debt and ₦1.456 trillion in external obligations, calculated at an exchange rate of ₦1,400 to the dollar.

Kaduna follows with a total debt stock of ₦1.507 trillion (₦585.72 billion domestic; ₦922.18 billion external). Rivers State ranks third with ₦327.55 billion (₦74.05 billion domestic; ₦253.5 billion external), while Delta State has ₦232.16 billion (₦102.49 billion domestic; ₦129.67 billion external).

The FCT, which made significant repayments, remains the least indebted among the top five with ₦101.4 billion.

A senior government official who spoke on condition of anonymity said the varying borrowing patterns underscore the fiscal tightrope states must walk—balancing development needs with debt sustainability.

He added that the aggressive repayments recorded in some states point to an increasing commitment to responsible fiscal management.

Analysts warn, however, that rising external borrowing exposes states to currency and interest rate risks, particularly in an unstable economic climate.

While debt can be a tool for development, experts stress that prudent management at both federal and state levels is essential to safeguard financial stability, attract investment, and support long-term economic growth.