State governments across Nigeria spent N800.42bn servicing debt during the first half of 2026, a 39.5 per cent increase compared with N573.66bn in the same period of 2025, according to an analysis of state budget implementation reports. The N226.75bn rise in debt-service payments outpaced growth in both recurrent revenue and total expenditure across the 33 states with comparable figures, showing a growing strain on state finances.
Lagos State accounted for nearly one-third of all debt-service payments, spending N261.80bn, up from N76.78bn in the first half of 2025, a jump of approximately 241 per cent. The state represented 32.7 per cent of total payments and 81.6 per cent of the aggregate increase nationally. Excluding Lagos, debt servicing across the remaining 32 states increased by approximately 8.4 per cent. Taraba ranked second with N40.75bn in debt-service payments, followed by Kaduna with N40.29bn, Edo with N37.66bn and Ogun with N32.84bn. Together, these five states paid N413.35bn, accounting for 51.6 per cent of the total.
The analysis revealed significant disparities in how state revenues aligned with debt obligations. Ten states recorded debt-service bills exceeding their internally generated revenue. Taraba's debt-service payments of N40.75bn exceeded its internally generated revenue of N13.88bn by approximately N26.87bn, with payments equivalent to about 294 per cent of IGR. Bauchi followed with debt-service payments of N31.21bn against internally generated revenue of N13.82bn, producing a gap of approximately N17.39bn. Borno spent N28.54bn servicing debt but generated N16.59bn internally. Adamawa, Benue, Gombe, Bayelsa, Sokoto, Yobe and Cross River also fell into this category, together representing 30.3 per cent of the assessed states.
The pressure on state budgets intensified as debt servicing absorbed a larger share of total expenditure. Across the 33 states, total expenditure increased from N6.99tn in the first half of 2025 to N8.18tn in the corresponding period of 2026. Debt servicing absorbed 9.8 per cent of expenditure in the first half of 2026, up from 8.2 per cent a year earlier. This meant nearly N10 of every N100 spent by the states went towards servicing debt, compared with approximately N8 in the corresponding period of 2025. At the lower end, Nasarawa recorded the smallest debt-service payments at approximately N2bn, followed by Jigawa with N2.39bn and Kebbi with N2.61bn.
For states where internally generated revenue did exceed debt servicing, repayments still consumed substantial portions of locally raised funds. Niger's debt-service bill was equivalent to about 80 per cent of internally generated revenue, compared with approximately 78 per cent in Plateau and 73 per cent in Kaduna. The analysis covered 33 states after Akwa Ibom did not separately disclose debt-service payments and comparable first-half reports were not located for Osun in 2026 or Rivers in either year.