Nigeria’s subnational debt profile climbed slightly to N4.002 trillion in September 2025, yet a number of states continue to maintain relatively low debt burdens despite mounting fiscal pressures.

According to data from the Debt Management Office (DMO), total domestic debt across the 36 states and the Federal Capital Territory increased marginally from N3.96 trillion in June 2025, representing a 0.98% quarter-on-quarter rise.

While a few major states account for a significant share of Nigeria’s debt stock, several others remain at the lower end of the debt table, reflecting cautious borrowing and steady repayments.

Subnational Debt Rises, But Modestly

The DMO data shows that despite broader economic challenges, debt accumulation at the state level remained relatively contained during the third quarter of 2025.

Analysts note that the modest increase suggests:

• Slower borrowing momentum

• Improved debt management strategies

• Greater fiscal discipline in some states

However, Nigeria’s overall public debt dynamics remain under close watch as federal and state governments navigate revenue pressures and rising expenditure needs.

Spotlight: Yobe Among Least Indebted States

Among the least indebted states as of September 2025 is Yobe State, which recorded a domestic debt stock of N36.38 billion.

Yobe’s debt accounted for just 0.91% of total state debt, marking a 4.31% decline from N38.01 billion recorded in June 2025.

The drop indicates reduced borrowing pressure and ongoing repayment efforts within the quarter.

Why Low Debt Levels Matter

States with lower debt burdens often benefit from:

• Reduced interest repayment obligations

• Greater fiscal flexibility

• Improved creditworthiness

• Lower exposure to refinancing risks

However, experts caution that low debt does not automatically translate to stronger economic performance, as infrastructure gaps and revenue generation capacity must also be considered.

Bigger Picture: Concentration of Debt

Nigeria’s subnational debt landscape remains uneven, with a handful of economically larger states accounting for a disproportionate share of liabilities.

This concentration means that while total debt has risen above N4 trillion, several states continue to maintain conservative borrowing profiles.

What to Watch

Going forward, analysts expect debt sustainability to depend on:

• Internally Generated Revenue (IGR) growth

• Federal allocations

• Exchange rate stability

• Capital expenditure priorities

With Nigeria’s fiscal space tightening, debt management at the state level will remain a critical indicator of economic stability in 2026.

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