Amid ongoing fiscal tightening, Nigerian states are accruing more debt to their citizens. The latest data from Budgit's latest 'State of the States' report shows that average debt per capita increased slightly from N40,469 in 2023 to N41,766 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 Performance’ 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 came out with the highest debt per capita, each surpassing N100,000.
Also read: States' external debt falls by over $200 million, Lagos accounts for over 25% of remaining debt
Other states above the N41,766 average include: Ogun, Ekiti, Bayelsa, Bauchi, Abia, Enugu, Ebonyi and Adamawa states.
Debt per capita is a metric that calculates the average debt per capita by dividing the total debt by the state's population. The increase in the metric implies that the debt burden is increasing despite efforts by subnational governments to repay their debt obligations.
As seen by BusinessDay, Budgit's press statement attributes this growth to additional liabilities amid the current economic challenges.
It said, “Excess subnational liabilities continued to pose challenges, totaling N1.24 trillion in 2024, up from N1.19 trillion in 2023. These included contractor dues (₦434.87 billion), pension and gratuity obligations (N626.81 billion), salaries and employee claims (N33.74 billion), judgment debts and litigation (N62.33 billion), and other miscellaneous liabilities (N73.25 billion).”
States trying to reduce debt burden
The report also revealed that state governments are making efforts to reduce the risk of naira volatility. In the 2024 fiscal year, 35 reporting states (except Rivers State) incurred external debt repayments of more than $200 million.
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 paid by subnational governments. In the period under review. Thirty-one states reduced their domestic debt by at least N10 billion, with Lagos, Cross River and Delta each reducing by more than N100 billion.
Shedding more light on the source data, Budgit said, “For some states, there was a disparity between the total debt figures quoted in the state audit reports and the values reported by Nigeria's Debt Management Office (DMO).
Also read: Tinubu sets up committee to repay Gencos debt
Budgit further said, “In this light, we used debt data up to December 31, 2024, published by the DMO for each of the 35 states for consistency. A uniform exchange rate of N1,535.3176/$1 (as of December 31, 2024) was adopted to convert the external debt components of each state’s debt.”
Delivering the keynote address at the launch on Tuesday, Chairman of the Presidential Fiscal Policy and Tax Reform Committee, Taiwo Oyedele, urged citizens to ensure that their state governments use the borrowed funds properly.
He said: “Borrowing is not the problem. Unproductive accumulation of debt is the problem. If you pay taxes and you don't follow the money, you are doing charity at best. Beyond the dividends of democracy, you should demand value for the taxes paid.”
