Lagos, Rivers Lead Top 10 Nigerian States With Highest Domestic Debt

Lagos, Rivers Lead Top 10 Nigerian States With Highest Domestic Debt

  • In recent times, analysts have said that a moderate amount of debt is not bad for the growth of the economy
  • According to IMF report, domestic debt starts to impede growth over a ratio of 35% of bank deposits
  • Based on data presented by the Debt Management Office, Lagos leads on the list of the most indebted state journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.

While many tend to shy away from debt, regarding it as a slavery tool to creditors, recent analysis has proven that a moderate amount of debt is functional for economic growth.

Lagos, Rivers and other Nigerian states with highest domestic debt
IMF report claims domestic debt starts to impede growth when it is over a ratio of 35% of bank deposits. Photo Credit: Lagos
Source: UGC

Moderate levels of noninflationary domestic debt as a percentage of GDP and bank deposits are said to have a favourable overall effect on economic growth.

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When domestic debt is held outside the banking system, it carries favourable real interest rates, and is marketable, while its growth contribution increases.

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A report by the International Monetary Fund (IMF) said domestic debt starts to impede growth over a ratio of 35% of bank deposits, supporting conventional worries about crowding out and bank efficiency.

The negative impact of domestic debt on private-sector investment indicates that government domestic borrowing crowds out private-sector investment.

In light of this, it is advised that the government should try to borrow domestically through the capital market by expanding the Nigerian equity and bond markets.

This is expected to enable these markets to have the capacity to provide the needed funds rather than relying solely on foreign borrowing, which inhibits private-sector investment and slows economic growth in Nigeria.

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Good news as FG settles important debt with a domestic creditor

According to the Debt Management Office, Nigeria's total domestic debt has been highlighted.

The domestic debt data report is generated from the signed-off submissions received from the 36 states of the federation and the Federal Capital Territory (FCT).

  1. Lagos State – N1.05 trillion
  2. Delta – N373.41 billion
  3. OGUN State – N278.68 billion
  4. Rivers State – N232.58 billion
  5. Cross River State – N220.20 billion
  6. Imo State – N217.11 billion
  7. Akwa Ibom State – N190.48 billion
  8. Benue State – N187.18 billion
  9. Plateau Enugu State – N173.93 billion
  10. Bauchi State – N160.81 billion

FG settles necessary debt with domestic creditor earlier reported that the Nigerian government allocated about N4.83 trillion from the earnings of Nigerian Treasury Bills (NTBs) and Bonds issued in 2024 to settle the Ways and Means advances from the Central Bank of Nigeria (CBN).

The minister of finance and coordinating minister of the economy, Wale Edun, stated this during his presentation at the Lagos Business School breakfast club.

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In 2023, the Nigerian government obtained about N2.94 trillion from the apex bank via the Ways and Means advances to service domestic debts.


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