Nigeria’s state governments are drowning in a financial quagmire, with foreign debt repayments surging by a staggering 68.4 percent in the first half of 2025, totaling 235.58 billion naira. This alarming spike, up from 139.92 billion naira in 2024, is not just a statistic but a screaming warning of an impending economic catastrophe.
And who’s to blame? The federal government and its current leadership, whose reckless policies and lack of foresight have pushed Nigeria’s states to the brink, threatening the livelihoods of millions. From Lagos to Rivers, the ripple effects of this mismanagement are already hitting hard, and the worst may be yet to come.
The federal government’s handling of Nigeria’s economy has been nothing short of disastrous. The naira’s relentless depreciation against major currencies like the dollar has inflated the cost of servicing foreign loans, forcing states to fork over billions more just to meet obligations. January 2025 alone saw a 305 percent jump in payments, with 40.09 billion naira sucked out of state coffers compared to 9.88 billion the previous year.
This isn’t a one-off; every month from February to June hovered around 39.10 billion naira, with increases as high as 80.1 percent. The federal government’s so-called economic reforms, particularly the botched attempt to stabilize the forex market, have only deepened this crisis. Instead of shielding states from currency volatility, they’ve left them exposed, bleeding funds that could have built schools, hospitals, or roads.
The mechanism is insidious. The federal government deducts these debt payments directly from states’ monthly revenue allocations before they even see a kobo. This leaves governors scrambling to fund basic services, and citizens, like those in Rivers State, where ambitious energy and port projects are now at risk, bear the brunt.
Lagos, the economic powerhouse, paid 49.58 billion naira, a 52.8 percent hike, while Rivers shelled out 26.34 billion naira, a jaw-dropping 470 percent increase. Even smaller states like Jigawa and Yobe, with payments of 1.39 billion and 1.46 billion naira respectively, saw rises of over 50 percent. No state is spared, and the federal leadership’s silence on this is deafening.
This isn’t just about numbers; it’s about people. When states like Bayelsa or Adamawa spend over 300 percent of their internally generated revenue on debt servicing, what’s left for teachers’ salaries or rural clinics? In the South-South, Rivers residents are already feeling the pinch as development projects stall.
Across the North, states like Kaduna and Bauchi, with payments up 6 and 28.5 percent, respectively, face similar woes. The federal government’s failure to hedge against currency risks or push for diversified revenue streams has turned states into hostages of global financial markets. It’s economic malpractice, plain and simple.
The leadership’s inaction is not just negligent but reckless. President Tinubu’s administration has touted reforms as a path to prosperity, but what prosperity comes when states are forced to prioritize foreign creditors over their people? The 51 percent rise in debt servicing costs from the last quarter of 2024 to the first quarter of 2025 shows no sign of slowing.
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Seven states are spending beyond their entire revenue on debts, with some, like Bauchi, hitting 190 percent. This isn’t sustainability; it’s a death spiral. Without urgent intervention, be it debt restructuring, currency stabilization, or federal bailouts, these states risk defaulting, which could trigger a broader economic collapse.
The federal government’s refusal to confront this head-on is a betrayal of Nigerians. Governors aren’t blameless, but they operate within a system where the federal purse strings dictate their fate. The leadership’s obsession with short-term fixes and political posturing has ignored the long-term catastrophe looming.
Imagine a Nigeria where states can’t pay workers, where infrastructure crumbles, and where public services vanish because every naira goes to foreign banks. That’s the future we’re hurtling toward unless the government wakes up.
Rivers State, with its oil wealth and grand ambitions, mirrors the national struggle. It’s 470 percent debt payment spike reflects not just local borrowing but a federal failure to create an environment where states can thrive without leaning on volatile foreign loans.
The same story plays out in Edo, Cross River, and beyond. Nigerians deserve leaders who will tackle this crisis with urgency, not platitudes. The federal government must act, restructure debts, bolster the naira, and empower states to generate revenue locally, or risk plunging the nation into chaos. The clock is ticking, and the people are watching.
