TWELVE states, including Lagos, Kaduna, and Benue, spent over N117 billion servicing debts in the first quarter of 2025 despite falling far short of their revenue projections, according to official Budget Implementation Reports (BIRs) analysed by News Point Nigeria.
The reports, published on the states’ official websites and the Open Nigerian States portal, a public data transparency platform supported by BudgIT reveal a widening gap between debt obligations and actual revenue generation at the subnational level.
The affected states are; Abia, Adamawa, Bayelsa, Benue, Kaduna, Lagos, Taraba, Borno, Ekiti, Katsina, Ondo, and Kebbi.
Together, these 12 states collectively spent N117 billion on public debt servicing in just the first three months of the year. The irony? All 12 states also failed to meet their revenue targets, further deepening concerns about their fiscal sustainability and debt dependence.
At the forefront of this fiscal squeeze is Lagos State, Nigeria’s commercial nerve centre. The state reported N26.8 billion in debt servicing payments in Q1 alone, a significant chunk of the N95 billion it budgeted for debt repayments in the 2025 fiscal year.
Lagos also fell short of its revenue projections, raking in N583 billion, well below its Q1 target of N728.9 billion. That figure represents just 20 per cent of its ambitious N2.9 trillion annual revenue target.
Lagos attributed the underperformance to delays in international aid and grant disbursements, which were expected to support large intervention projects.
These delays, officials said, were due to “complex donor procurement processes and slow programme implementation.”
Yet critics say that the growing reliance on external interventions, while accumulating debt exposes deeper problems in domestic revenue capacity.
Benue State followed closely, spending N21 billion on debt repayments, despite recording just N67.05 billion in total revenue for the quarter. This means almost one-third of its revenue went to debt service, raising alarms about fiscal space for development.
Even worse, Benue met only 14.6 per cent of its Q1 Internally Generated Revenue (IGR) target, realising N5.18 billion. The state blamed its low IGR performance on technical glitches in a newly deployed revenue collection software.
Meanwhile, its allocation from the Federation Account Allocation Committee (FAAC) stood at N58.71 billion, far below the expected target.
Kaduna State, another northern heavyweight, spent N18 billion on debt service in Q1 2025, a jump from the N16 billion spent in the same period in 2024.
While the state reported N206.94 billion in total receipts, further analysis shows that N137.28 billion of that was an opening balance from the previous year. Subtracting that leaves Kaduna with just N69.66 billion in actual new revenue, indicating a significant shortfall against its projected earnings.
This growing fiscal imbalance, where debt repayments outpace income growth, has become a worrying trend across several Nigerian states.
Despite the increase in FAAC allocations following the removal of fuel subsidies and exchange rate unification, many states remain over-leveraged and underperforming.
Budget experts warn that such trends threaten long-term development, especially as funds that could be used for healthcare, education, and infrastructure are diverted toward debt obligations.
A policy analyst with BudgIT, speaking anonymously to News Point Nigeria, said:
“Debt itself isn’t bad what matters is how it’s used. But when a state is borrowing just to meet recurrent expenditure or to pay back old debts, that’s a red flag. And when you couple that with missed revenue targets, it’s a crisis in slow motion.”
The situation may be even worse than reported. As of the time of writing, 23 other states and the Federal Capital Territory (FCT) have not published their Q1 2025 budget implementation reports, violating transparency standards and making it difficult to assess the full national picture.
As Nigeria’s economic challenges persist with inflation, unemployment, and foreign exchange instability mounting states are under renewed pressure to boost IGR, cut waste, and adopt sustainable debt practices.
For now, however, the evidence shows that many states are sliding deeper into debt without the revenue performance to match, a trend that could soon become a national emergency if left unchecked.