10 Nigerian States Plan to Borrow N4.28tn to Fund 2026 Budgets
- Ten Nigerian states plan to raise N4.287 trillion from loans, grants and partnerships for their 2026 budgets
- The combined budgets of the states amount to N14.174 trillion
- Lagos, Ogun and Abia are among the states relying heavily on borrowing for capital projects
Oluwatobi Odeyinka is a business editor at Legit.ng, covering energy, the money market, technology and macroeconomic trends in Nigeria.
Analysis of state budget documents reveals that ten Nigerian states have indicated plans to raise about N4.287 trillion from loans, bonds, grants, capital receipts and public-private partnerships to fund capital projects outlined in their 2026 budget proposals.
The states are: Lagos, Abia, Ogun, Enugu, Osun, Delta, Sokoto, Edo, Bayelsa and Gombe.
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The states jointly presented budgets totalling N14.174 trillion to their respective state assemblies, signalling a growing dependence on non-recurring funding sources beyond federal allocations and internally generated revenue (IGR).
Findings show that while statutory transfers from the Federation Account Allocation Committee (FAAC), VAT receipts and IGR remain key revenue sources, many states are increasingly relying on borrowing and grants to close funding gaps and pursue infrastructure and development projects.
Economists and labour leaders, however, have raised concerns that the trend reflects weak fiscal discipline and revenue leakages rather than a lack of income, warning that excessive borrowing could place long-term debt burdens on future generations.
Lagos, Ogun, Abia lead borrowing plans
In Lagos State, Governor Babajide Sanwo-Olu proposed a N4.237 trillion budget for 2026, with about N1.117 trillion (representing 26.4%) expected to be sourced from loans and bonds to fund capital projects, despite the state’s strong IGR base.
Abia State’s N1.016 trillion budget includes a financing gap of N409 billion (40.3%), which the government plans to cover through borrowing and other non-recurring sources.
The state, however, recorded a significant reduction in domestic debt in 2025, according to data from the Debt Management Office (DMO).
Ogun State’s N1.669 trillion budget also shows reliance on loans and grants worth N518.9 billion, accounting for over 31% of its funding needs.
Experts warn of fiscal risks
Former Vice-Chancellor of Crescent University, Professor Sheriffdeen Tella, told Punch that states should prioritise living within their means and strengthening revenue management.
According to him, Nigeria’s fiscal challenge lies more in revenue mismanagement than insufficient income, adding that borrowing has become routine due to weak oversight at all levels of government.
Similarly, Assistant General Secretary of the Nigeria Labour Congress (NLC), Chris Onyeka, criticised poor budget implementation, arguing that weak enforcement has reduced budgets to mere formalities rather than binding fiscal plans.
Source: Facebook
Mixed debt profiles across states
Some states, including Osun, Delta and Bayelsa, recorded reductions in their debt profiles in 2025, while others, such as Enugu and Gombe, continue to rely heavily on loans and capital receipts to fund over 20% and 60% of their budgets, respectively.
Fiscal analysts warn that overdependence on borrowing and grants exposes states to funding delays, rising debt servicing costs and sustainability risks, especially for states with weak IGR bases.
State debts skyrocket
Legit.ng earlier reported that about 12 Nigerian states now rank among those with the highest debt per person as Nigeria’s debt profile skyrockets.
Data by BudgeIT, the social accountability platform, shows that two Nigerian states have about ₦100,000 debt per capita.
This development comes as Nigeria’s total debt profile has risen to ₦152.4 trillion, driven by increased external borrowing.
Source: Legit.ng
