Delta Drives N67.6bn Rise in States’ Domestic Debt to N4.59tn in Q2 2026

Nigeria’s 36 states and the Federal Capital Territory recorded a combined domestic debt stock of N4.59 trillion at the end of the second quarter of 2026, representing an increase of about N67.57 billion from the previous quarter.

The rise was driven largely by a sharp increase in Delta State’s domestic debt, according to data from the Debt Management Office.

Combined domestic debt for the states and the FCT rose from N4.524 trillion at the end of March 2026 to N4.591 trillion as of June 30, 2026.

This represents a quarter-on-quarter increase of approximately 1.49 per cent.

The data shows that while several states reduced their domestic obligations during the period, significant increases recorded by Delta, Edo and Adamawa pushed the overall figure higher.

Delta records biggest increase

Delta State recorded the largest increase in domestic debt during the quarter.

Its obligations rose by N155.45 billion, moving from N213.85 billion at the end of the first quarter to N369.30 billion in the second quarter.

The increase recorded by Delta alone was more than twice the N67.57 billion net rise in the combined domestic debt of all 36 states and the FCT.

This was possible because several other states recorded reductions in their debt positions during the same period, partially offsetting Delta’s increase.

The sharp movement also pushed Delta higher among states with the largest domestic debt obligations in Nigeria.

Edo and Adamawa also record major increases

Edo State recorded the second-largest increase during the quarter.

Its domestic debt rose by N42.56 billion, from N172.37 billion in March to N214.93 billion at the end of June.

Adamawa State followed with an increase of N37.68 billion.

The state’s domestic debt climbed from N64.70 billion to N102.38 billion during the period.

Bauchi State also recorded an increase, with its debt rising by N2.90 billion to N157.35 billion.

Yobe added N1.11 billion to reach N96.48 billion, while Katsina’s domestic obligations increased by N1.08 billion to N13.78 billion.

Nasarawa recorded a relatively smaller increase of N517 million, bringing its debt to N27.67 billion, while Abia added N306 million to close the quarter at N48.63 billion.

Lagos remains Nigeria’s biggest state debtor

Despite reducing its domestic debt during the quarter, Lagos State retained its position as the largest domestic debtor among Nigeria’s states.

Lagos’ domestic obligations fell by N9.76 billion, from approximately N1.205 trillion in the first quarter to N1.195 trillion at the end of June.

The state alone accounted for roughly 26 per cent of the combined N4.59 trillion domestic debt held by the states and the FCT.

This means that more than one-quarter of the total subnational domestic debt stock remained attributable to Lagos.

The figure reflects both the size of Lagos’ economy and the significant borrowing undertaken by the state to fund infrastructure and other government programmes.

FCT, Rivers and Enugu cut debt

Several major borrowers reduced their debt obligations during the quarter.

The Federal Capital Territory recorded one of the largest declines, reducing its domestic debt by N31.08 billion.

Its debt stock fell from N389.88 billion in March to N358.79 billion in June.

Rivers State also reduced its obligations, with domestic debt declining from N362.43 billion to N354.64 billion.

Enugu recorded the biggest reduction among the states.

Its debt fell by N45.52 billion during the quarter to N74.51 billion.

Other states that recorded notable declines included Ogun, Borno and Taraba.

Ogun reduced its domestic debt by N11.69 billion to N189.05 billion, while Borno recorded a decline of N15.72 billion to N72.71 billion.

Taraba’s debt stock also dropped by N5.02 billion to N75.90 billion.

These reductions helped moderate the overall increase in state-level domestic debt despite the substantial rise recorded by Delta and a handful of other states.

Four jurisdictions account for almost half of debt

The DMO data shows that Nigeria’s subnational domestic debt remains heavily concentrated among a small number of large borrowers.

Lagos, Delta, the FCT and Rivers collectively accounted for approximately 49.5 per cent of the N4.59 trillion total domestic debt stock as of June 30, 2026.

This means that nearly half of all domestic debt owed by Nigeria’s states and the FCT was concentrated in just four jurisdictions.

Lagos remained far ahead of other states with N1.195 trillion in domestic debt.

Delta followed with N369.30 billion, while the FCT stood at N358.79 billion and Rivers at N354.64 billion.

The concentration highlights significant differences in borrowing capacity, infrastructure financing requirements and fiscal strategies across Nigeria’s subnational governments.

Jigawa has lowest domestic debt

At the opposite end of the table, Jigawa State recorded the lowest domestic debt stock in the country.

Its domestic obligations stood at just N1.04 billion at the end of June.

Ondo followed with N6.16 billion, while Anambra recorded N9.62 billion.

The relatively low debt positions of these states contrast sharply with Lagos, whose domestic debt alone was more than N1 trillion.

However, a lower debt stock does not automatically indicate a stronger fiscal position.

The sustainability of state borrowing also depends on factors such as internally generated revenue, federal allocations, debt-servicing costs and the economic returns generated by projects financed through borrowing.

States’ debt rises alongside national public debt

The increase in state domestic borrowing occurred alongside a broader rise in Nigeria’s overall public debt.

Nigeria’s total public debt increased from N159.35 trillion at the end of March 2026 to N166.79 trillion as of June 30.

Domestic debt accounted for N91.59 trillion, representing approximately 54.91 per cent of the country’s total public debt.

External debt stood at N75.20 trillion.

The figures underline the continued expansion of government borrowing at both federal and subnational levels.

For states, borrowing can provide crucial financing for infrastructure, healthcare, education and other development programmes, particularly where available revenues are insufficient to fund major capital projects.

However, rising debt obligations can also place additional pressure on state finances, especially when debt-service costs increase faster than internally generated revenues.

What the figures mean for states

The Q2 data presents a mixed picture of state finances.

While Delta, Edo and Adamawa significantly expanded their domestic borrowing, several other states moved in the opposite direction by reducing outstanding obligations.

The overall increase of just 1.49 per cent therefore masks substantial differences between individual states.

Delta’s N155.45 billion increase is particularly significant because it exceeded the net increase recorded by all states and the FCT combined.

This shows how the debt decisions of a relatively small number of large borrowers can substantially influence the national subnational debt position.

For state governments, the key issue will remain whether borrowed funds are being deployed into projects capable of improving economic activity, revenue generation and public services.

Borrowing itself is not necessarily problematic when debt remains sustainable and financing is used for productive investments.

However, where revenues fail to keep pace with debt-service obligations, increased borrowing can reduce the amount of money available for salaries, infrastructure maintenance and other essential government spending.

With Nigeria’s states and the FCT now carrying N4.59 trillion in domestic debt, attention is likely to remain focused on how individual governments manage their obligations, particularly as wider public debt continues to rise.