The total debt of Nigeria's 36 states as of June 2024 has escalated to N11.47 trillion, despite increased allocations from the Federation Account Allocation Committee (FAAC).

This represents a major rise from the N10.01 trillion recorded in December 2023, marking a 14.57% increase. The surge in debt is primarily attributed to a sharp rise in external debt, exacerbated by the devaluation of the naira. External debt for the states and the Federal Capital Territory climbed from $4.61 billion to $4.89 billion, reflecting a 6.14% increase.

In naira terms, this figure surged by a staggering 73.46%, from N4.15 trillion to N7.2 trillion, following the devaluation of the naira from N899.39/$1 in December 2023 to N1,470.19/$1 by June 2024.

Domestic debt for states and the FCT, however, saw a massive decline of 27.12%, dropping from N5.86 trillion to N4.27 trillion. Despite these challenges, the FAAC disbursed N3.473 trillion to the three tiers of government in the second quarter of 2024, with the federal government receiving N1.102 trillion, state governments N1.337 trillion, and local government councils N864.98 billion. Notably, nine oil-producing states received N169.26 billion as their derivation share from mineral revenue.

Report emerged that Rivers State recorded the most major debt increase, rising by 151.80% from $80.94 million in December 2023 to $203.81 million in June 2024, an increase of $122.86 million.

Conversely, Enugu State achieved the most substantial debt reduction, slashing its debt by 32.83% from $120.45 million in December 2023 to $80.91 million in June 2024.

Economist Paul Alaje highlighted concerns about the sustainability of such debt levels, noting that debt servicing costs consumed 80.7% of the internally generated revenue of 29 state governments during the first half of 2024.