As of December 2024, Nigerian states and local governments owed a combined ₦4.09 trillion to banks and the Central Bank of Nigeria (CBN), showing a slight reduction from ₦4.20 trillion recorded in December 2023.

Data from the CBN’s latest quarterly bulletin revealed that commercial and merchant banks accounted for ₦2.41 trillion of the debt, while the CBN’s exposure rose to ₦1.68 trillion, indicating increased reliance on direct funding from the apex bank.

Economists have raised concerns over the rising debt burden and fiscal instability of subnational governments. Teslim Shitta-Bey, Director and Chief Economist at Proshare Nigeria LLC, warned that most governments have failed to effectively manage their balance sheets and stressed the need for longer-term debt structures and better asset management.

Lagos-based economist Adewale Abimbola attributed fiscal fragility to economic non-viability and overdependence on federal allocations, urging states to identify competitive sectors and improve the ease of doing business to attract investments.

Macroeconomic analyst Dayo Adenubi emphasized the importance of boosting internally generated revenue by improving tax collections, particularly through consumption taxes and property levies, while maintaining citizen trust.

The experts collectively stressed that political will and effective governance remain critical to addressing Nigeria’s subnational debt challenges amid a backdrop of economic uncertainty and upcoming elections.