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20 governors borrowed N458bn despite higher allocations in 2025.
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States spent N235bn servicing external debts, up 68.4 per cent.
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Experts warn rising loans will stifle development and fiscal stability.
At least 20 state governments borrowed a combined N458bn in the first half of 2025, despite receiving increased federal allocations within the same period.
Budget implementation reports reviewed show that the loans, taken both domestically and externally, come as debt servicing obligations surge nationwide.
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EKO HOT BLOG reports that between January and June, states spent N235.58bn on external debt servicing, a 68.4 per cent rise from N139.92bn recorded in the same period of 2024. Analysts link the increase to the cost of dollar-denominated loans worsened by the naira’s depreciation.
Data from the National Bureau of Statistics indicate that the Federation Account Allocation Committee shared N10.13tn among the three tiers of government in the first half of 2025. Of this, states received N3.425tn, a 42.9 per cent jump from N2.396tn in the same period of 2024.
Despite this, fresh borrowings continued. Oyo led with N93.4bn in domestic loans, followed by Kaduna with N62bn in foreign loans and Lagos with N50bn domestically.
Other borrowers include Gombe (N20.3bn), Zamfara (N28bn), Katsina (N20.7bn), Kebbi (N7.4bn), Jigawa (N10.98bn), Bauchi (N26.3bn), Borno (N18.2bn), Taraba (N18.7bn), Sokoto (N15bn), Niger (N25.8bn), Kwara (N2.18bn), and Ekiti (N19.8bn). Ondo (N5.6bn), Abia (N7bn), Ebonyi (N10.9bn), and Enugu (N10.7bn) also borrowed externally.
Experts warn that mounting loans leave states increasingly vulnerable. Professor Taiwo Owoeye of Ekiti State University said, “Every depreciation of the naira inflates repayment obligations, forcing states to divert funds from critical projects to debt servicing.”
