States and local governments in Nigeria have repaid N547.5 billion in bank debts over nine months, according to a Central Bank of Nigeria (CBN) report on the federation account allocations.
The deductions were made from the monthly revenue allocations shared by the Federation Account Allocation Committee (FAAC) between January and September 2025. The CBN noted that the funds were deducted at source from allocations meant for state and local governments.
Breakdown of the report shows that state governments repaid N383.73 billion during the period, while local governments paid N163.8 billion. The CBN said deductions were based on prior loan agreements and commitments with commercial banks.
In January, total deductions stood at N60.51 billion. The figure fluctuated monthly, peaking at N66.3 billion in March and dropping to N53.7 billion in July. The repayment trend remained steady through September.
Experts say the deductions, though necessary, reduce funds available for infrastructure and public services in many states. A financial analyst, Tunde Ojo, said, “Loan repayments are squeezing state budgets. Governors need to rethink excessive borrowing.”
Meanwhile, the Debt Management Office (DMO) recently warned that Nigeria’s subnational debt levels remain high. It advised states to boost internally generated revenue and limit new loans.
The rising deductions come amid calls for fiscal discipline and transparency in how states manage borrowed funds. Many civil society groups have urged both federal and state governments to publish detailed debt records and repayment plans.
Analysts warn that without reforms, rising debts may weaken subnational development.
