Foreign Borrowing Rises as 32 Nigerian States and FCT Add Nearly $1 Billion in New External Debt

Nigeria’s subnational governments increased their reliance on foreign borrowing in 2025, as 32 states and the Federal Capital Territory (FCT) collectively added nearly $1 billion in new external loans. Fresh data from the Debt Management Office (DMO), analysed by Nairametrics, shows that external debt at the state level continues to climb despite a few states managing to reduce their obligations.

Overall, the external debt stock of Nigeria’s states and the FCT rose from $4.80 billion in 2024 to $5.68 billion in 2025, marking an increase of $884.66 million. While 33 of the 37 subnational entities recorded higher debt levels, four states—Edo, Rivers, Anambra, and Bayelsa—managed to reduce their exposure, helping to slightly offset the overall rise.

The data further reveals that multilateral loans dominate state borrowing, accounting for over 92% of total external debt, while bilateral loans make up just under 8%. No commercial loans, Eurobonds, or diaspora bonds were recorded for states during the period, underscoring the heavy dependence on concessional lending sources.

In terms of individual performance, Katsina, Niger, Kogi, Plateau, and Kaduna recorded the largest increases in dollar terms. Plateau stood out with the highest percentage jump at 187.24%, while Gombe, Yobe, Benue, and Jigawa also saw sharp increases, reflecting a widespread rise in external borrowing pressure across states.

On the other hand, Edo, Rivers, Anambra, and Bayelsa were the only states to reduce their debt levels, jointly cutting $59.46 million. Despite this, the broader trend remained upward, with Lagos retaining its position as the most indebted state, followed by Kaduna, Edo, Cross River, and Bauchi—highlighting ongoing fiscal strain across Nigeria’s subnational governments.

source: nairametrics