Debt servicing costs for 29 state governments in Nigeria consumed a staggering 80.7% of their Internally Generated Revenue (IGR) during the first half of 2024.
In response to this fiscal pressure, state governors collectively borrowed N446.29 billion during the same period, despite a 40% increase in their statutory allocations from the Federation Account.
This data was derived from an analysis of budget implementation reports from various state websites and the Open Nigerian States platform, which is supported by BudgIT, a civic organization focused on transparency in government budgeting.
The report reveals that a major portion of state revenues is being diverted to meet debt obligations rather than funding essential public services and development projects.
Despite expectations that an increase in statutory allocations would provide governors with sufficient funds to fulfill their responsibilities, many states are still struggling.
In 2023, states received the highest allocations from the Federal Accounts Allocation Committee (FAAC) in seven years, following reforms such as the removal of petrol subsidies and currency adjustments, which reportedly boosted revenue by 40%.
However, instead of reducing borrowing, many states are allocating substantial resources to debt repayment while continuing to incur new debts.
For instance, states like Osun, Ondo, Kaduna, and Cross River plan to use most of their FAAC allocations for debt servicing this year due to significant deficits resulting from these obligations. This situation raises concerns about the long-term economic stability of these states and their ability to enhance the quality of life for their citizens.
Kaduna State Governor, Uba Sani, has publicly expressed concerns over the heavy debt burden inherited from prior administrations, which has hindered timely salary payments and led to increased borrowing during his tenure.
He noted that his administration inherited debts totalling $587 million and N85 billion alongside numerous contractual liabilities.
