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Seven sub-national governments increased their domestic debt stocks by a combined N355.18bn in the first quarter of 2026, according to recent Debt Management Office (DMO) data.
The Federal Capital Territory, Edo, Borno, Yobe, Benue, Kaduna, and Nasarawa drove the total domestic debt for the 36 states and the FCT up to N4.52tn.
The FCT led the increase by doubling its debt to N389.88bn, while Edo and Borno also recorded massive surges.
This rise occurred despite state governments receiving higher Federation Account allocations, which surged by 25.8 per cent to roughly N2.49tn over the same period.
In contrast, 29 state governments successfully reduced their domestic debt obligations by a collective N191.93bn during the quarter.
Delta State achieved the largest absolute reduction by cutting N34.98bn from its debt, while Enugu recorded the highest percentage drop at 23.84 per cent.
State officials and financial analysts noted that higher reported debt figures often reflect existing loan drawdowns rather than new borrowing.
Economists emphasised that sub-national governments must maintain strict fiscal discipline and direct any borrowed funds strictly toward productive, infrastructure-generating projects.
