States spent N455bn servicing foreign loans in 2025, new FAAC data shows

New data from the Federation Accounts Allocation Committee (FAAC), shows that Nigerian states paid N455.38 billion in foreign debt service in 2025, up from N362.08 billion in 2024. This represents a year-on-year increase of N93.30 billion, or 25.77 per cent.

The rise indicates that states devoted a larger portion of their FAAC allocations to external debt obligations in 2025, leaving less fiscal space for salaries, capital projects, and routine governance.

Monthly trends in 2025 showed a step-wise pattern rather than a smooth curve. Total foreign debt service across all 36 states was N40.09 billion in January, easing slightly to N39.10 billion in February, a drop of N994.96 million (2.48%). From March through July, deductions remained steady at N39.10 billion monthly. A further reduction came in August, when deductions fell to N36.14 billion, a 7.56% decline from July, and this level persisted through December.

By contrast, 2024 saw sharper monthly fluctuations: deductions started at N9.88 billion in January, jumped to N24.53 billion in February, peaked at N40.41 billion in March, then dropped to N21.70 billion in April and held steady through July. A second increase occurred in August 2024, stabilising at N40.09 billion for the remainder of the year.

Foreign debt service in FAAC reflects deductions made at source from allocations to cover states’ external loan obligations. While this system protects creditors, it limits the discretionary cash available to states, especially in months of constrained federation revenue.

A closer look shows a concentration of foreign debt service among a few states. The top 10 states accounted for 68.57% of the total in 2025.

Lagos led with N92.80 billion, up from N72.32 billion in 2024 (28.33%).

Rivers followed with N48.58 billion, more than doubling from N23.13 billion in 2024 (110.02%).

Kaduna recorded N47.93 billion, up N2.34 billion (5.13%).

Ogun’s deductions more than doubled to N25.20 billion from N11.99 billion (110.22%).

Cross River: N21.01 billion, up 22.86% from N17.10 billion.

Oyo: N20.17 billion, a 12.98% increase from N17.85 billion.

Edo: N18.70 billion, up 11.78% from N16.73 billion.

Bauchi: N16.85 billion, up 22.58% from N13.75 billion.

Kano: N10.63 billion, up 24.67% from N8.53 billion.

Ebonyi: N10.37 billion, up 53.09% from N6.77 billion.