Despite ongoing fiscal tightening, Nigeria’s states are piling up more debt on their citizens. Fresh data from BudgIT’s latest State of States report shows that average debt per capita rose slightly from ₦40,469 in 2023 to ₦41,766 in 2024, underscoring the growing strain on state finances and public resources.
The report titled “A Decade of Subnational Fiscal Analysis: Growth, Decline and Middling Perfomance” was launched on Tuesday in Abuja.
According to the report, 12 states—including Lagos, Edo, Kaduna, and Cross River – exceeded the national average. Lagos and Edo stood out with the highest debt per capita, each surpassing ₦100,000.
The other states above the N41,766 average include Ogun, Ekiti, Bayelsa, Bauchi, Abia, Enugu, Ebonyi, and Adamawa states.
The debt-per-capita is a metric that calculates the average debt per individual by dividing the total debt by the state’s population. The increase in the metric implies that debt burdens are mounting despite the efforts of the subnational governments to repay their loan obligations.
BudgIT’s press statement, as seen by BusinessDay, attributes this increase to additional liabilities amid current economic challenges. It stated;
“Additional subnational liabilities continued to present challenges, totalling ₦1.24 trillion in 2024, up from ₦1.19 trillion in 2023. These included contractor arrears (₦434.87 billion), pension and gratuity obligations (₦626.81 billion), salary and staff claims (₦33.74 billion), judgement debts and litigation (₦62.33 billion), and other miscellaneous liabilities (₦73.25 billion).”
Read also: States’ foreign debt declines by over $200m, Lagos accounts for over 25% of remaining debt
The report also revealed that the state governments are putting efforts to reduce exposure to naira volatility. In the 2024 fiscal year, the 35 reporting states (minus Rivers state) repaid over $200 million in foreign debts.
Lagos, Enugu, and Gombe states recorded the largest reductions in foreign debt, cutting $74.56 million, $33.39 million, and $21.88 million, respectively.
On the domestic front, over N2 trillion was repaid by the subnational governments. In the period under review. 31 states reduced their domestic debt by at least ₦10 billion, with Lagos, Cross River, and Delta each cutting over ₦100 billion.
Throwing more light on the source data, BudgIT stated in the report.
“For some states, there was a disparity between total debt figures quoted in the state’s audit report and values reported by Nigeria’s Debt Management Office (DMO). In this light, we used debt data as of 31st December 2024 published by the DMO for each of the 35 states for consistency. A uniform exchange rate of N1,535.3176/$1 (as of 31st December 2024) was adopted for converting external debt components of each state’s debt.”
While giving the keynote address at the launch on Tuesday, the chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, urged citizens to ensure that their state government use the borrowed monies right.
He said: “Borrowing is not the problem. Unproductive accumulation of debt is the problem. If you pay taxes and you do not follow the money, you are at best making a donation. Beyond dividends of democracy, you must demand value for the taxes paid”