The Debt Management Office (DMO) has released its latest data on the total public debt stock of Nigerian states, revealing that Lagos State remains the most indebted subnational entity as of March 2026. The data, published on the DMO's website, shows that Lagos State's total debt stood at N1.31 trillion, a figure that includes both domestic and external debt.
Top Five Most Indebted States
Following Lagos, Delta State ranks second with a total debt of N616.75 billion. Akwa Ibom State is third with N431.52 billion. The Federal Capital Territory (FCT) comes fourth with N363.48 billion, while Rivers State rounds out the top five with N341.11 billion.
These figures represent a significant concentration of debt among a few states, with the top five accounting for a substantial portion of the total subnational debt. The data underscores the fiscal challenges facing many state governments as they manage infrastructure projects and recurrent expenditures.
Debt Composition and Trends
The DMO's report breaks down the debt into domestic and external components. For Lagos, the domestic debt is the larger share, reflecting its active borrowing from local financial markets. External debt, which is typically denominated in foreign currencies, exposes states to exchange rate risks.
According to the DMO, the total public debt stock for all states and the FCT increased by 3.6% from N10.95 trillion in December 2025 to N11.34 trillion in March 2026. This growth indicates a continued reliance on borrowing by state governments to fund budgets, despite calls for fiscal prudence.
Implications for State Finances
High debt levels can strain state budgets, as a significant portion of revenue is diverted to debt servicing. This can limit funds available for development projects and social services. The DMO has repeatedly advised states to improve their internally generated revenue (IGR) to reduce dependence on federal allocations and borrowing.
Economic analysts note that the debt burden varies widely among states, with some having manageable debt-to-revenue ratios while others face potential insolvency. The data serves as a tool for investors and policymakers to assess the creditworthiness of individual states.
Context and Next Steps
The DMO's publication is part of its mandate to promote transparency in public debt management. The figures are expected to inform fiscal policy discussions at the federal and state levels, particularly in the context of the 2026 budget cycle.
Moving forward, states with high debt levels may need to explore debt restructuring or refinancing options to ease repayment pressures. Meanwhile, the DMO continues to monitor the situation, with the next quarterly report expected in June 2026.
