Nigeria’s States Deepen External Borrowing as Debt Hits $5.68bn

Chineye Egesi May 04, 2026 3 min read

Nigeria’s States Deepen External Borrowing as Debt Hits $5.68bn

Nigeria’s subnational external debt profile expanded significantly in 2025, with 32 states and the Federal Capital Territory (FCT) collectively increasing their foreign obligations by $944.12 million, according to newly analysed data from the Debt Management Office (DMO).

A closer examination of the figures shows that the total external debt stock for states and the FCT climbed from $4.80 billion as of December 31, 2024, to $5.68 billion by December 31, 2025. This represents a year-on-year increase of $884.66 million, translating to a growth rate of 18.43 percent.

However, the overall increase would have been even more pronounced if not for debt reductions recorded by a small number of states.

According to analysis by Nairametrics, four states, Edo, Rivers, Anambra, and Bayelsa, collectively reduced their external debt by $59.46 million during the same period. This partial offset explains the difference between the gross increase of $944.12 million and the net increase of $884.66 million.

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The data highlights a widening reliance on external borrowing by most subnational governments, likely driven by fiscal pressures, infrastructure financing needs, and constrained internally generated revenue.

Without the modest debt repayments by the four states, the total external debt burden of states and the FCT would have approached a $1 billion increase within a single year.

This trend raises important considerations about debt sustainability at the subnational level, especially in the context of exchange rate volatility and rising global interest rates, both of which can significantly increase the cost of servicing external obligations.

Nigeria FCT DMO

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Nigeria’s States Deepen External Borrowing as Debt Hits $5.68bn

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