Nigeria's states collectively borrowed more money in 2025, with total subnational debt jumping 9.89 percent to N4.36 trillion from N3.97 trillion the previous year. Yet a handful of states refused to follow this pattern, keeping their debt levels flat or even reducing what they owe to creditors. Data from the Debt Management Office, compiled by the Nairametrics Research Team, identifies ten states that have managed to stay among the least indebted across the country.
The ten least indebted states demonstrate a deliberate approach to fiscal management that contrasts sharply with the broader trend of rising state borrowing. These states have either restrained their appetite for new loans or worked down existing obligations. The list serves as proof that states can manage their finances without relying heavily on debt, even as the national average climbs steadily higher.
The surge in overall subnational debt reflects growing pressure on state governments to fund infrastructure, wages, and services without sufficient internally generated revenue. Many states depend on monthly allocations from the federal government and borrow heavily to bridge shortfalls. The nine percent increase in total debt stock signals that most states are taking on fresh loans rather than living within their means.
States appearing on the least indebted list have adopted different strategies to keep debt low. Some have focused on improving internally generated revenue through taxation and business ventures. Others have simply avoided major borrowing projects or scaled back spending plans. These contrasting approaches show that low debt is achievable through either generating more money or spending less.
The Debt Management Office tracks subnational debt to monitor the financial health of state governments and warn when borrowing becomes unsustainable. High debt levels force states to spend more on debt service, leaving less money for schools, hospitals, and roads. The ten states with lowest debt burdens have more fiscal flexibility to invest in development projects.
Investors and credit rating agencies watch state debt closely because it affects their ability to borrow and the interest rates they must pay. States with clean balance sheets can access cheaper loans. Those drowning in debt find it harder to borrow and must pay higher interest when they do. The least indebted states maintain this advantage in the capital markets.
The pattern of low debt among these ten states will likely influence how other governors approach borrowing in the coming year. If these states continue delivering services and development without heavy debt, their model may inspire others. The federal government will also monitor whether encouraging states to borrow less helps stabilize the broader economy.
State finances have become critical as the federal government pursues fiscal tightening and inflation remains elevated. States cannot rely on increasing federal transfers to solve their problems. Those that have managed debt responsibly position themselves better for the economic headwinds ahead. The Debt Management Office will release updated figures in the coming months showing whether the least indebted states maintain their discipline.
