Oil-producing states in Nigeria have slashed their domestic debt stock by about N610.84 billion between June 2023 and March 2025, aided by substantial inflows from the 13 per cent derivation fund, according to the latest subnational debt data from the Debt Management Office (DMO).
As of June 2023, the combined domestic debt of the nine oil-producing states stood at N1.66 trillion, accounting for 28.6 per cent of Nigeria’s total state-level debt of N5.82 trillion. By March 2025, this had dropped to N1.05 trillion, representing 27.2 per cent of the country’s total subnational debt of N3.87 trillion.
Delta State, one of the biggest beneficiaries of derivation revenue, led the debt reduction drive, cutting its obligations from N465.40 billion in June 2023 to N204.72 billion by March 2025, a fall of more than 55 per cent. Akwa Ibom followed with a 40 per cent drop, from N199.58 billion to N118.21 billion, while Bayelsa trimmed its debt from N134.50 billion to N73.53 billion. Imo State also reduced its debt significantly, from N220.83 billion to N122.09 billion.
Other oil states such as Edo, Anambra, Abia, and Ondo recorded similar declines, with Ondo posting the sharpest proportional cut, from N74.03 billion to just N11.76 billion.
However, Rivers State bucked the trend, posting a debt increase of more than 60 per cent, from N225.51 billion in June 2023 to N364.39 billion by March 2025, despite being one of the top derivation earners.
Debt repayment impact
Budget performance reports show that the nine oil-producing states generated a combined N1.39 trillion as Internally Generated Revenue (IGR) between Q3 2023 and H1 2025. When compared with the N610.84 billion in domestic debt repayments within the same period, this means nearly 44 per cent of their IGR was spent servicing loans instead of funding new projects.
The figure could climb higher when DMO releases data for Q2 2025.
State-level IGR data shows Rivers led with N507.23 billion, followed by Delta (N250.36bn), Akwa Ibom (N134.81bn), Edo (N132.51bn), and Bayelsa (N101.85bn). At the bottom were Ondo (N68.83bn), Abia (N69.87bn), Imo (N47.51bn), and Anambra (N73.04bn).
The sharp debt reduction underscores the role of the 13% derivation windfall in stabilising state finances, although it also highlights Rivers’ growing divergence from the fiscal discipline trend among its peers.
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