No fewer than ten Nigerian states are planning to raise about ₦4.287 trillion through loans, bonds, grants, capital receipts and public-private partnerships to fund their 2026 budget proposals, according to an analysis of approved estimates.
The states — Lagos, Abia, Ogun, Enugu, Osun, Delta, Sokoto, Edo, Bayelsa and Gombe — collectively presented budgets totaling ₦14.174 trillion, with a significant portion expected to come from non-recurring revenue sources rather than statutory allocations.
Findings show that many states are increasingly turning to borrowing and external financing as internally generated revenue (IGR) and federal transfers prove insufficient to support large-scale infrastructure and development plans.
Experts warn of fiscal risks
Economists and fiscal analysts have raised concerns over the growing dependence on debt, warning that weak financial discipline, revenue leakages and poor budget implementation — rather than revenue scarcity — are driving the borrowing culture.
Former Vice-Chancellor of Crescent University, Prof. Sheriffdeen Tella, said states should focus on living within their means and improving revenue collection instead of piling up debt.
According to him, the Federal Government’s heavy borrowing has weakened fiscal restraint across all tiers of government, encouraging unchecked debt accumulation that could burden future generations.
Lagos, Abia, Ogun lead borrowing plans
Lagos State, which has the largest sub-national budget, proposed a ₦4.237 trillion spending plan for 2026. While ₦3.12 trillion is expected from IGR and federal allocations, the state plans to raise ₦1.117 trillion — about 26.4 per cent — through loans and bonds to finance capital projects.
Abia State’s ₦1.016 trillion budget leaves a ₦409 billion funding gap, representing over 40 per cent of total expenditure, to be covered through borrowing and other non-recurring sources. Despite this, Abia recorded one of the largest domestic debt reductions in 2025, cutting its debt stock by over 57 per cent, according to Debt Management Office (DMO) data.
Ogun State’s ₦1.669 trillion “Budget of Sustainable Legacy” also relies heavily on borrowing, with ₦518.9 billion expected from loans and grants to fund capital projects. The state recorded a slight increase in external debt during the first half of 2025.
Rising debt across regions
Enugu State plans a ₦1.62 trillion budget, with ₦329 billion expected from loans and capital receipts. DMO data shows Enugu currently has the highest domestic debt stock in the South-East.
Osun State, Delta State, Edo State and Sokoto State are also relying on loans and grants for between 30 and 40 per cent of their proposed budgets, although some have recorded debt reductions in recent years.
Gombe State stands out as the most borrowing-dependent, with over 60 per cent of its ₦535.7 billion budget expected from loans and capital receipts.
Labour raises concern over budget enforcement
Assistant General Secretary of the Nigeria Labour Congress (NLC), Chris Onyeka, criticised weak budget enforcement, arguing that low budget performance and unchecked violations have rendered the budgeting process ineffective.
He noted that while borrowing itself is not a crime, debt becomes problematic when funds are mismanaged or diverted, stressing the need for accountability and strict adherence to approved budgets.
Call for sustainable revenue
Fiscal experts warn that heavy reliance on loans and grants exposes states to funding delays and rising debt-servicing obligations. They advised state governments to prioritise sustainable revenue sources and strengthen transparency to ensure long-term fiscal stability.
