Top 10 Nigerian States With Highest Foreign Debt Repayments in 2025 as FAAC Deductions Hit N455bn

• Nigeria's 36 states paid N455.38bn in foreign debt service deductions in 2025, up 25.77% from 2024
• Top 10 states accounted for 69% of foreign debt repayments, with Lagos leading at N92.80bn
• Concerns rise over fiscal sustainability as debt service pressures essential public service funding

Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.

Nigeria’s 36 states paid a combined N455.38bn in foreign debt service deductions in 2025, according to Federation Accounts Allocation Committee figures released by the National Bureau of Statistics.

The amount marks a sharp rise from the N362.08bn deducted in 2024, representing an increase of N93.30bn or 25.77 per cent year on year.

In practical terms, a bigger share of states’ FAAC allocations was automatically deducted to service loans owed to external creditors, including the World Bank, IMF, China and other multilateral and bilateral lenders.

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These deductions, treated as first-line charges, are made at source before funds reach state coffers, leaving governments with less room to fund salaries, infrastructure and public services.

How 2025 compares with 2024

According to a Punch report, monthly data show that 2025 followed a step-down pattern. Foreign debt service stood at N40.09bn in January and slipped slightly to N39.10bn in February. From March to July, deductions remained flat at N39.10bn monthly.

In August, there was another drop to N36.14bn, a level that persisted through December.

By contrast, 2024 was more volatile. Deductions began at N9.88bn in January, jumped to N24.53bn in February and peaked at N40.41bn in March.

They later fell to N21.70bn between April and July before rising again to N40.09bn from August to December.

While 2025 showed more stability, the overall annual burden was significantly higher.

Top 10 states account for 69% of the total

Foreign debt repayment exposure remains heavily concentrated. The top 10 states alone accounted for 68.57 per cent of total foreign debt service in 2025.

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1. Lagos – N92.80bn

Lagos led by a wide margin, up from N72.32bn in 2024. The N20.49bn increase represents 28.33 per cent growth. About one-fifth of all state foreign debt deductions nationwide came from Lagos alone.

2. Rivers – N48.58bn

Rivers recorded one of the steepest increases, more than doubling from N23.13bn in 2024. The 110 per cent surge added N25.45bn year on year.

3. Kaduna – N47.93bn

Kaduna’s deductions rose modestly from N45.59bn, up 5.13 per cent, but the absolute figure keeps it among the largest debt service states.

4. Ogun – N25.20bn

Ogun’s foreign debt service more than doubled from N11.99bn in 2024, rising 110.22 per cent.

5. Cross River – N21.01bn

Up 22.86 per cent from N17.10bn, Cross River remained among the top five.

6. Oyo – N20.17bn

Oyo posted a 12.98 per cent increase from the previous year.

7. Edo – N18.70bn

Edo’s deductions climbed 11.78 per cent year on year.

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8. Bauchi – N16.85bn

Bauchi recorded a 22.58 per cent rise compared to 2024.

9. Kano – N10.63bn

Kano’s foreign debt service grew by 24.67 per cent.

10. Ebonyi – N10.37bn

Ebonyi saw one of the fastest growth rates among the top group, with a 53.09 percent increase.

Regional breakdown: South-West leads

By geopolitical zone, the South-West recorded the highest foreign debt service at N162.77bn, accounting for 35.74 per cent of the national total. Lagos, Ogun and Oyo were major contributors.

The South-South followed with N100.37bn or 22.04 per cent, driven by Rivers, Edo and Cross River.

The North-West ranked third at N81.97bn, largely influenced by Kaduna and Kano.

The North-East recorded N42.42bn, while the South-East posted N40.20bn. The North Central had the lowest total at N27.65bn.

Rising concerns over fiscal sustainability

The Nigeria Extractive Industries Transparency Initiative (NEITI) has warned that several states with high debt deductions rank lower in FAAC allocation receipts, raising red flags about their debt-to-revenue ratios.

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Economists have also cautioned that rising debt service could crowd out spending on essential services if internally generated revenue does not improve significantly.

Teslim Shitta-Bey, Director and Chief Economist at Proshare Nigeria, argued that many governments are not managing their balance sheets effectively.

He urged states to rethink borrowing strategies, explore longer-term financing options and make better use of revenue bonds rather than relying heavily on general obligation debt.

Analysts say without stronger revenue mobilisation and smarter asset management, subnational fiscal pressure may intensify in the coming years.

Nigerian states, geopolitical zones with highest VAT contributions

Legit.ng earlier reported that Lagos State once again proved its economic dominance in 2025, accounting for more than half of Nigeria’s non-import Value Added Tax (VAT) collections.

Documents from the Federal Account Allocation Committee (FAAC) show that the Nigeria Revenue Service (NRS) collected N3.4 trillion from Lagos alone out of the N6.5 trillion generated as local VAT during the year.

This means Lagos contributed a staggering 52 per cent of all locally generated VAT in Nigeria, far ahead of any other state.

Source: Legit.ng