Eight states are to pay a mixed N424.28bn in debt service and to borrow N1.21tn over the subsequent two years, with monetary commitments slated for 2025 and 2026.
Based on the states’ medium-term fiscal frameworks, the eight states in evaluate – Abia, Adamawa, Bauchi, Borno, Kebbi, Osun, Benue, and Kano – are projected to expertise various debt service and borrowing developments.
The evaluation signifies variations between 2025 and 2026, with some states going through substantial will increase in debt service whereas others concentrate on lowering borrowing.
An MTEF is a multi-year public expenditure planning train that’s used to set out the longer term price range necessities for present companies and to evaluate the useful resource implications of future coverage modifications and any new programmes.
An evaluation of the MTEF doc of the states reveals that Abia’s public debt service is ready to rise by 2.49 per cent, from N23.29bn in 2025 to N23.87bn in 2026. The state’s borrowing can be anticipated to extend by 2.49 per cent, from N364.11bn in 2025 to N373.21bn in 2026.
Adamawa State is to expertise a dramatic 170.56 per cent improve in its public debt service, from N29.19bn in 2025 to N78.99bn in 2026. Regardless of this rise, the state shouldn’t be anticipated to borrow any new funds throughout this era.
Bauchi’s public debt service is projected to rise by 22.9 per cent, from N31.23bn in 2025 to N38.38bn in 2026. The state’s borrowing, nevertheless, is ready to lower by 35.92 per cent, from N71.42bn in 2025 to N45.77bn in 2026.
Borno’s public debt service is predicted to extend by 10.02 per cent, from N20.29bn in 2025 to N22.32bn in 2026. The state can be projected to borrow extra within the coming years, with a rise of three.97 per cent in its borrowing, from N91.90bn in 2025 to N95.56bn in 2026. This rise in each debt service and borrowing displays the state’s ongoing restoration efforts.
For Kebbi State, the general public debt service is projected to extend from N1.77bn in 2025 to N2.47bn in 2026, reflecting a 39.4 per cent improve. Equally, financing loans are anticipated to rise from N35.12bn in 2025 to N38.7bn in 2026, displaying a ten.3 per cent improve.
Osun State shouldn’t be anticipated to borrow any new funds through the 2025-2026 interval. Nevertheless, its public debt service will rise by 5.57 per cent, from N23.38bn in 2025 to N24.68bn in 2026.
Benue’s public debt service is projected to extend by 2.13 per cent, from N40.07bn in 2025 to N40.92bn in 2026. The state’s borrowing, nevertheless, is predicted to lower by 20.05 per cent, from N42.62bn in 2025 to N34.10bn in 2026.
Kano’s public debt service is predicted to lower barely by 0.51 per cent, from N11.73bn in 2025 to N11.67bn in 2026. The state’s borrowing is ready to fall dramatically by 47.86 per cent, from N11.08bn in 2025 to N5.75bn in 2026.
The full public debt service for the eight states is projected to be N180.95bn in 2025, with a rise to N243.33bn in 2026, bringing the full public debt service for the 2 years to N424.28bn.
Concerning financing (loans), the full for 2025 is predicted to be N616.25bn, whereas it’s projected to lower barely to N593.09bn in 2026. This leads to a complete financing (loans) determine of N1.21tn for the 2025 – 2026 interval.
These figures spotlight the numerous monetary commitments these states are going through within the coming years, pushed by rising debt obligations and continued borrowing.
Consultants react
When contacted, the Director and Chief Economist at Proshare Nigeria LLC, Teslim Shitta-Bey, warned that the rising debt burden on Nigeria’s subnational governments is more likely to problem their fiscal stability within the coming years.
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He careworn that almost all state governments, together with the Federal Authorities, have did not successfully handle their steadiness sheets.
Talking to The PUNCH, Shitta-Bey said, “The problem right here is that many of the governments, together with the Federal Authorities are unable to handle their steadiness sheets correctly. Whereas borrowing would possibly look like a straightforward approach to run operations, it’s not essentially the correct method.”
Based on Shitta-Bey, borrowing shouldn’t be the default resolution for governments. “Governments may contemplate longer-term debt buildings that resemble fairness, which could truly be extra useful in the long term,” he defined.
The professional additionally referred to as for a complete register of nationwide belongings to assist states increase capital. He used the instance of the Nationwide Stadium, which has not been used for main actions in over some time.
“Why ought to the Federal Authorities proceed holding onto one thing just like the Nationwide Stadium when it’s not being utilized? These belongings must be producing income,” he mentioned. Shitta-Bey steered that the federal government may maintain onto such belongings however with a transparent plan to create tax income.
He additional beneficial that there must be a nationwide census of economic belongings, which may very well be used to boost funds via the capital market.
“We’d like a census for monetary belongings in order that these belongings can be utilized to boost funds via the capital markets,” he mentioned. He added that borrowing shouldn’t be inherently fallacious, but it surely ought to serve a selected objective. “Borrowing cash shouldn’t be unhealthy, but it surely must be for a objective. It’s like taking over a debt to fund a long-term funding,” he famous.
As well as, Shitta-Bey lamented the underuse of state income bonds, which have been initially designed to generate income. “States must concentrate on elevating income bonds, as a substitute of normal obligation bonds,” he suggested.
He additionally steered that states ought to concern long-term debt devices to fund infrastructure tasks. “States can increase long-term bonds to create infrastructure. These devices may very well be commercially viable and can generate returns that scale back unemployment and insecurity,” he defined.
Concluding, Shitta-Bey emphasised that “Debt will be helpful, but it surely have to be self-financing and function an funding. We have to construction our borrowing in a manner that helps long-term progress and gives tangible returns for the economic system”.
Additionally, the Group Managing Director of Cowry Asset Administration Restricted, Johnson Chukwu, raised issues over Nigeria’s rising debt profile, warning that the rising debt burden poses important dangers to the economic system and will hamper the federal government’s skill to put money into important infrastructure and social companies.
Chukwu cautioned that as debt servicing prices proceed to climb, the federal government’s sources will probably be more and more crowded out, leaving restricted funds for important growth tasks. “The danger of excessive debt servicing will in the end result in a wrestle in addressing the social and infrastructure wants of the folks,” he mentioned.
He defined that with dwindling sources, the federal government could face challenges in establishing roads, offering high quality healthcare, and assembly different important wants.
To mitigate this, Chukwu suggested the federal government to discover avenues for attracting commercially viable infrastructure investments, significantly via partnerships with the personal sector. “If the federal government can appeal to personal sector funding for infrastructure, it is going to scale back the strain on public sources and permit the federal government to concentrate on different important areas,” he added.
The PUNCH reported that about N3.87tn has been allotted for recurrent expenditure throughout 13 Nigerian states of their proposed budgets for the 2025 fiscal 12 months.
Supply: The Punch
