Kaduna, Edo, Katsina, Sokoto and Lagos emerged as the five Nigerian states with the sharpest rise in public debt over the past decade, according to a review of BudgIT’s latest ‘State of States’ report.
An analysis by Pinnacle Daily shows that the debt profiles of these states expanded rapidly between 2015 and 2024, reflecting widening fiscal pressures and a growing dependence on borrowing to fund government activities.
Kaduna State’s total debt stock surged by 954.57 per cent, rising sharply from ₦93.45 billion in 2015 to ₦985.29 billion by 2024.
This increase was driven largely by external borrowing, with foreign loans now accounting for 97.39 per cent of the state’s total debt obligations.
Edo State followed closely, posting a 791.04 per cent rise in its debt burden over the decade as its total debt climbed from ₦78.68 billion in 2015 to ₦701.10 billion in 2024.
By the end of the period under review, Edo had become Nigeria’s third most indebted state, with foreign-denominated loans making up nearly 84 per cent of its total debt profile.
Katsina State was third in the league, with its debt stock increasing by 608.55 per cent over the decade, from ₦25.39 billion in 2015 to ₦179.92 billion in 2024.
While the report notes that Katsina’s debt per capita remains below the national average, it warns that the pace and scale of new borrowing point to increasing fiscal exposure.
In Sokoto State, total debt expanded by 577.46 per cent since 2015, largely fuelled by a 375.29 per cent increase in domestic borrowing.
Despite this rapid growth, Sokoto’s debt per capita stood at ₦21,045 in 2024, which is still lower than the national benchmark.
Lagos State, Nigeria’s economic hub, completed the list of states with the worst debt growth. Its total debt stock rose by 497.38 per cent over the period, reaching ₦2.7 trillion in 2024.
This figure almost equals the size of the state’s 2024 “Budget of Renewal”, which stood at ₦2.267 trillion.
According to the report, Lagos remains the most indebted state in Nigeria, with foreign loans accounting for 66.6 per cent of its total debt stock.
Five states with a lower debt burden
In contrast, the report identified five states that demonstrated stronger debt management and fiscal discipline over the same period.
Delta State stood out as the only state to record an absolute reduction in total debt over the decade. Its debt burden declined by 12.42 per cent, falling from ₦328.08 billion in 2015 to ₦287.32 billion in 2024. According to the report, this improvement was driven mainly by a sharp reduction in domestic debt.
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Akwa Ibom State maintained one of the most stable debt profiles nationwide, recording just a 12.08 per cent increase in total debt over the 10 years. Supported by strong revenue inflows, the state is currently ranked as Nigeria’s most debt-sustainable state.
Osun State also showed fiscal restraint, with its debt growing by only 25.15 per cent over the decade. Notably, the state reduced its total debt by 10.51 per cent between 2023 and 2024 alone.
Jigawa State emerged as the second least indebted state in Nigeria as of 2024, after limiting debt growth to 29.24 per cent over the past 10 years. The state achieved a 96.89 per cent reduction in domestic debt within a single year.
Kebbi State recorded a similar performance, keeping its debt growth at 29.72 per cent since 2015 while reducing domestic debt by more than 76 per cent during the same period.
Steps to improve fiscal sustainability
The report recommended that Kaduna, Edo, Katsina, Sokoto and Lagos—the states with the heaviest debt burdens—adopt targeted measures to improve fiscal sustainability and manage rising obligations.
It noted that weak internally generated revenue and heavy dependence on Federation Account allocations remain common challenges across the states.
For Kaduna State, the report advised deeper economic diversification through expanded investment in agriculture, industry and services.
It also recommended leveraging technology and strengthening tax administration, particularly through digital platforms that can better capture high-income earners.
In Edo State, revenue growth could be driven by investments in tourism and the creative economy, including film and music, alongside stronger public-private partnerships in agriculture and transportation.
Improving infrastructure for small businesses was also identified as a critical step toward widening the tax base.
Katsina State was advised to prioritise agro-processing and value addition rather than relying on raw agricultural production.
Expanding the tax net by formalising informal businesses through digital registration was also highlighted as essential.
For Sokoto State, the report pointed to opportunities in solid minerals and commercial agriculture, including livestock and fishing. Strengthening tax compliance among high-income earners was also identified as a key measure to improve revenue.
Lagos State, the report said, should continue to rely on trade, logistics and creative industries, while sustaining investment in major infrastructure projects that support economic activity and tax collection.
Across all five states, BudgIT stressed that digitising revenue collection, reducing leakages and harmonising state and local government taxes are critical to cutting dependence on federal transfers and achieving long-term fiscal stability.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
