ANALYSIS: Most Nigerian States Accrue Debt That Far Outweigh Revenue

Today, we will look at the revenue figures for the states and compare them to the debt figures. The analysis will be by GPZ. But before then, let us analyse the Debt Per Capita. i.e. the debt stock (excluding cash) divided by the state population. The attached chart shows the debt per capital of states (North & South) based on the projected population figures of 2011/2016.


The Debt Per Capita of states in the North Central grew by 98% from N10,600 in 2011 to N21,000 in 2017. With the biggest from Nasarawa State.


Debt Per Capita grew in the North East by 181% from 4,800 in 2011 to 13,500 in 2017. The biggest contributor to this is Borno State.


Debt Per Capita in the North West grew by 206% from 3,500 in 2011 to 10.700 in 2017. The biggest contributor being Kano State.


Debt Per Capita grew by 102% from 8300 in 2011 to 16800 in 2017 due mainly to the contribution of Ebonyi with its 12% reduction.


In the South South, Debt Per Capita grew by only 38% from 29,000 in 2011 to 40,000 in 2011 on the back of Bayelsa’s good performance.


Debt Per Capita grew by 193% from 10,400 in 2011 to 30,500 in 2017. Osun State recorded over 900% while Oyo State recorded over 607%.


In 2011, the top 6 debtors accounted for 50% of debt stock while in 2017, they account for only 40%. What this shows is that in later years (2016 – 2017), the debt was more broadly distributed that was the case in 2011. The Chart below shows the top 10 States with the worst debt stock ranking & the top 10 States with the best ranking. You can see clearly that Osun State moved up 24 places from 28th in 2011 to 4th in 2017. While Ebonyi State moved down by 19.

Lagos, Delta, Cross River & FCT remained in the top 6 from 2011/2017. Bayelsa & Rivers exited replaced by Osun & Akwa Ibom.


75% of Total Revenue is from FAAC. with Nassarawa State being the highest with 89%. (Highest % increase in debt).


86% of revenue is from FAAC. With Borno and Yobe State recording 93% and 91% respectively.


In the North West, 79% of revenue is from FAAC with Kebbi State and Jigawa State having the biggest percentages at 91%.


75% of revenue is from FAAC. The highest is from Ebonyi State with 92%. The highest IGR is from Anambra State with 33%.


64% of revenue in the South South is from FAAC with the highest from Bayelsa State at 88%. The highest IGR is from Rivers State at 51%.


Courtesy of Lagos State and Ogun State, South West has the lowest FAAC at 32% with IGR at 79% & 78% respectively. Highest FAAC is Ekiti State.

Note: By “Highest FAAC”, I mean highest FAAC RATE compared with IGR.

In the meanwhile, let’s compare the Debt Stock to the Total Revenue. Before then, a few words about “Debt Sustainability”. Debt Sustainability analysis is the acceptable standard of measuring the ability of a Country or State to sustain its debt.

There are mainly 3 ways of measuring Debt Sustainability: 1. Debt to GDP 2. Debt to Revenue 3. Debt Service to Revenue

1. Debt to GDP 2. Debt to Revenue 3. Debt Service to Revenue

2. Debt to Revenue 3. Debt Service to Revenue

3. Debt Service to Revenue

The first one (Debt to GDP) is an “Output Based Indicator”. While the last two are basically “Revenue Based Indicators”. The last debt sustainability analysis for Nigeria was done for 2016 & can be downloaded on DMO site. For us to analyse debt sustainability of States by Output, we would need the GDP for States. NBS does not provide this yet.

This means we are left with using the Revenue Indicators: Debt to Revenue and Debt Service to Revenue for the analysis. I decided to go with Debt to Revenue mainly because the data required for such analysis is readily available.

A few things to note. The FG established different threshold for measuring its debt according to the different indicators. So for instance, threshold for Debt to GDP is 56% based on “Peer Grp” factoring. While Threshold for Debt to Revenue is 350%.

In other words, the debt sustainability of any State will be considered high if it is within the country specific threshold. According to the DMO, debt to revenue of FGN, States and FCT looks fairly okay because it stood at 292% (lower than 350%.)

Note: This is a combination of all the States (including FG & FCT). If FG alone is considered, the projection is 395.3%.

My analysis, therefore, focuses on showing the debt to revenue per State & specifically the States that cross d 350% threshold. The attached Chart shows the debt to revenue per State. For Northern States and for Southern States.

Among the 36 States, 5 States crossed the 350% Country Specific Threshold and they are: Osun Ekiti Cross Rivers

Osun State

Ekiti State

Cross Rivers State

Imo State

Plateau State

Please note that for the FCT, it is inclusive as I don’t have the records of IGR. So the analysis is based mainly on FAAC. Now whether you accept this methodology is irrelevant. What’s relevant is knowing how debt sustainability for states is measured.

Yinka Ogunnubi is a finance professional based in Lagos.