Market News

By Philip Shimnom Clement

There are brewing questions over the state of accountability at the subnational level as federal allocation to the 36 states and the Federal Capital Territory (FCT) continues the growth trajectory, hitting two trillion naira in the month of July.

Daily Trust had earlier reported how states are still borrowing billions despite increased revenue as a result of the removal of fuel subsidy by President Bola Ahmed Tinubu in May 2023.

Last week Friday, the Federation Account Allocation Committee (FAAC) announced that it disbursed a total of N2.001 trillion to the three tiers of government for the month of July, marking the highest monthly allocation this year.

The revenue, for the month of July 2025, was shared among the Federal Government, states, and local government councils during the August 2025 FAAC meeting.

However, despite the huge revenues accrued to states, many states still wallow in borrowing from both local and international sources while others are using the funds on what analysts call projects that have nothing to do with the development of citizens at the grassroots.

Despite increased revenue, many states still borrowing

Meanwhile checks by Daily Trust indicated that despite huge allocations, no fewer than 10 states increased their debt by over N417 billion in the last one year.

A breakdown of the data from the Debt Management Office’s quarterly reports on subnational debt show that Rivers, Enugu, Niger, Taraba, Bauchi, Benue, Gombe, Edo, Kwara, and Nasarawa increased their combined debt stock from N884.9bn in Q1 2024 to N1.3tn in Q1 2025.

The figure represents a 47.2 per cent year-on-year increase, raising questions on why states keep borrowing despite receiving huge allocation from FAAC

The data also shows that the 10 states’ combined domestic debt increased quarter-on-quarter, from N1.26tn in Q4 2024 to N1.30tn in Q1 2025, an additional N42.3bn, representing a 3.4 per cent increase in just three months.

Further breakdown show that Rivers State topped the list with a domestic debt stock of N364.39bn as at Q1 2025, which is the highest among the 10 states.

Although the figure remained unchanged from Q4 2024, it marked a year-on-year increase of N131.82bn or 56.7 per cent, compared to N232.58bn in Q1 2024.

Enugu State’s debt rose from N82.48bn in Q1 2024 to N188.42bn in Q1 2025, indicating a rise of N105.95bn or 128.4 per cent. Enugu also posted the most significant quarterly growth, adding N69.14bn between December 2024 and March 2025.

Niger State followed with an increase of N57.68bn year-on-year, moving from N86.07bn to N143.75bn, a 67 per cent rise. The state also saw a quarter-on-quarter rise of N3.02bn.

Taraba State more than doubled its domestic debt from N32.64bn to N82.93bn, indicating a year-on-year rise of N50.29bn or 154.1 per cent. Taraba’s quarterly debt also rose slightly by N1.54bn.

Additionally, Bauchi State raised its debt stock from N108.39bn to N142.40bn, representing a year-on-year increase of N34.01bn or 31.4 per cent. However, quarter-on-quarter, Bauchi recorded a slight decline of N1.55bn.

Benue State also saw a year-on-year increase of N13.09bn, from N116.73bn to N129.82bn, translating to an 11.2 per cent rise. The state also grew its debt by N7.25bn between Q4 2024 and Q1 2025.

Gombe State had its debt increased from N70.81bn to N83.66bn year-on-year, adding N12.85bn or 18.1 per cent. However, the state reduced its debt from N89.24bn in Q4 2024, indicating a quarterly decline of N5.58bn.

Edo State, which owed N72.38bn in Q1 2024, increased its debt to N82.40bn by Q1 2025, a rise of N10.02bn or 13.8 per cent. On a quarter-on-quarter basis, Edo recorded the sharpest decline among the 10 states, reducing its debt by N30.60bn from the N113bn recorded in Q4 2024.

In the same vein, Kwara State’s debt increased from N59.07bn to N60.10bn year-on-year, up by N1.03bn or 1.7 per cent. Its quarterly increase stood at N1.02bn.

Nasarawa State, likewise increased its debt from N23.76bn to N24.73bn year-on-year, representing a rise of N968m or 4.1 per cent.

Further checks by Daily Trust show that the 10 states’ combined domestic debt of N1.30tn accounted for 33.67 per cent of the total N3.87tn domestic debt of all 36 states and the FCT as of Q1 2025.

July allocation highest payout of 2025

Further analysis by Daily Trust showed that the N2.01trn revenue shared among states is the highest allocation for the year 2025.

A breakdown of the FAAC allocation for the year 2025 showed that a total sum of N1.703 trillion, being January 2025 Federation Account Revenue, was shared between the Federal Government, states, and local government Councils.

From the N1.703 trillion total distributable revenue, the Federal Government received the total sum of N552.591 billion, while the state governments received the sum of N590.614 billion.

It said that the LGs received N434.567bn.

Also, the Federation Account Allocation Committee (FAAC) shared N1.678 trillion among the federal government, states, and local government areas (LGAs) for February 2025.

The Federal Government received a total sum of N569.656 billion and the state governments received a total sum of N562.195 billion.

It stated that the LGAs received total sum of N410.559 billion.

In March, the Federal Government, States and the Local Government Councils shared the sum of N1.578 trillion, being March 2025 Federation Account Revenue.

From the total sum, the Federal Government received N528.696 billion and the State Governments received N530.448 billion while the LGs got N387.002billion.

In the same vein, from the Federation Account Allocation Committee, FAAC, the Federal Government, 36 states, and 774 local governments got N1.681 trillion as revenue for April 2025.

In May, The Federation Account Allocation Committee (FAAC) disbursed a total sum of N1.659 trillion as revenue generated in May 2025 to the Federal Government, state, and local government councils.

For the month of June, FAAC disbursed the sum of N1.818 trillion to the three tiers of government (the Federal, State, and Local Governments) as Federation Allocation.

Similarly, according to a communiqué issued by the committee, the N2.001trillion distributable revenue comprised several components: distributable statutory revenue.

From the total distributable revenue of N2.001 trillion, the Federal Government received N735.081 billion. The State Governments received a total of N660.349 billion, while the Local Government Councils got N485.039 billion.

Accountability at sub-nationals still elusive – Experts

Policy analyst, Prof. Jibrin Ibrahim stated that due to the fact that states have overtime been unaccountable, there is the need to ensure that the current increase in revenue is monitored and accounted for.

“We have to start rethinking both revenue generation and revenue allocation on the basis of current transformations in the economy and therefore, what is ongoing now is extremely important.

“This is important because of the terrible state of accountability in states especially as they keep receiving higher allocations. We have to think what type of economy we are building especially a reward system around that is what is most critical. And I think in doing that, we have to ensure that there is significant inclusiveness in terms of the discussion and monitor these state governors and what they do with these huge monies,” he said.

Also speaking, an Economist, Dr. Hussein Abdul noted that Nigeria must come to a point where it discourages laziness by subnationals in the name of FAAC allocation.

He said it has transcended to even the legislative arm where lawmakers use Appropriation to conduct constituency projects.

“We are encouraging laziness by states as the day goes by, most of these governors just sit and wait for handouts from FAAC and instead of using it for the good of the people, they siphon the money or do other things for their personal gains.

“We read a report recently where it was revealed that while Nigerians are hungry state governors are building multi-billion Naira government houses. Where is the money coming from? We need to start beaming our searchlight on these people as soon as possible and ensure accountability,” he said.