20 Governors Secure N458bn In Loans Amid Soaring Debt Levels.

Naira/Dollar.

At least 20 states across the federation secured loans totalling approximately N458bn during the first half of 2025, according to findings.

This development comes in the context of increasing pressure from rising external debt servicing obligations on state governments.

In total, these states spent about N235.58bn on servicing external loans during the period, marking a significant increase of N95.65bn or 68.4 per cent when compared with the N139.92bn spent in the same period of 2024.

Experts indicate that this surge reflects the growing burden of repaying debts denominated in dollars, especially as the naira continues to depreciate.

A breakdown of disbursement data from the Federal Account Allocation Committee, as released by the National Bureau of Statistics, shows that a total of N10.13 trillion was distributed among the three tiers of government in the first six months of 2025. This amount includes statutory revenue, Value Added Tax, Electronic Money Transfer Levy, and Exchange Rate Difference.

From this figure, state governments received N3.425 trillion—representing a 42.96 per cent increase from the N2.396 trillion they were allocated in the corresponding period in 2024.

In the first half of 2024, the states received N379bn in January, N366.9bn in February, N396.8bn in March, N403bn in April, N388.4bn in May, and N461.97bn in June.

However, allocations increased substantially during the same months in 2025, reaching N590.6bn in January, N562.19bn in February, N530.45bn in March, N556.74bn in April, N577.84bn in May, and N607bn in June.

Despite receiving higher allocations, a review of second-quarter budget implementation reports revealed that roughly 20 states still turned to new borrowing—both domestic and foreign—amounting to a total of N457.66bn in the first half of 2025.

At the top of the list is Oyo State, which secured a N93.4bn domestic loan. This was followed by Kaduna and Lagos states, which borrowed N62bn (foreign) and N50bn (domestic), respectively.

States that accessed foreign loans include Gombe (N20.3bn), Zamfara (N28bn), Katsina (N20.7bn), Kebbi (N7.4bn), and Jigawa (N10.98bn).

Bauchi State took a combination of domestic and foreign loans totalling N26.3bn, while Borno, Taraba, Sokoto, Niger, Kwara, and Ekiti states borrowed N18.2bn, N18.7bn, N15bn, N25.8bn, N2.18bn, and N19.8bn, respectively in foreign loans.

The list of states borrowing externally also includes Ondo (N5.6bn), Abia (N7bn), Ebonyi (N10.9bn), and Enugu (N10.7bn).

Economic analysts caution that the continued dependence on foreign loans increases the fiscal vulnerability of states, particularly in light of the weakening naira.

“Since most of the debts are dollar-denominated, every depreciation of the local currency automatically inflates repayment obligations, forcing states to channel a larger share of their revenues into debt servicing at the expense of development projects,” said Professor Taiwo Owoeye, an economist at Ekiti State University.

In addition to the rising cost of repayments, Professor Owoeye highlighted that excessive external borrowing threatens the financial independence of state governments.

“By taking on more foreign obligations, many states risk mortgaging future federal allocations to meet repayment schedules, leaving them with little room to respond to emergencies or fund critical sectors such as health, education, and infrastructure,” he said.