Nigerian states are increasing borrowing even as FAAC allocations have risen sharply in recent years, raising concerns about fiscal sustainability.
Data from the National Bureau of Statistics shows that after dropping to about N3.8 trillion in early 2025, total state domestic debt has climbed back to around N4 trillion by September. Lagos leads the debt chart, followed by Rivers, Delta, and others, while external debt has also increased.
This trend persists despite FAAC disbursements jumping from N2.8 trillion in 2022 to over N7.3 trillion in 2025. Experts say rising costs—such as infrastructure and the new minimum wage—are pushing states back into borrowing.
Most states still depend heavily on FAAC, with weak internally generated revenue (IGR). Analysts warn that without stronger revenue generation and better financial management, many states may remain stuck in a cycle of debt.
