Kaduna records highest debt deduction from FAAC in 2024 – NEITI
A report by the Nigeria Extractive Industries Transparency Initiative (NEITI) has stated that 51.2 billion from the N159.7bn in gross allocations for Kaduna State was deducted as debt servicing in 2024. The report titled “Beyond Federal Allocations: The Cost of Borrowings and Debt Servicing at State Level in Nigeria” provides fresh, evidence-based insights into how […]
Nigeria Extractive Industries Transparency Initiative (NEITI)
A report by the Nigeria Extractive Industries Transparency Initiative (NEITI) has stated that 51.2 billion from the N159.7bn in gross allocations for Kaduna State was deducted as debt servicing in 2024.
The report titled “Beyond Federal Allocations: The Cost of Borrowings and Debt Servicing at State Level in Nigeria” provides fresh, evidence-based insights into how debt servicing obligations are constraining states’ capacity to fund essential services, local infrastructure, and poverty reduction initiatives.
It stated that Kaduna is followed by Ogun State with 27 percent (N33bn from N123bn), Bauchi with 26 percent (N37bn from N142bn), and Cross River with 24 percent (N28bn from N119bn).
It said the high-debt states contrast sharply with low-debt performers such as Borno with only 2.63 percent debt reduction obligations; Jigawa 2.74 percent; Benue -3.58 percent and Nasarawa -3.82 percent) debt burden exposure.
“Other states with low debt burden commitments include Kebbi 4.06 percent; Bayelsa -4.46 percent and Anambra 4.54 percent, where prudent borrowing and efficient fiscal management have preserved over 95 percent of gross allocations for direct development spending.”
It explained that the decision to undertake the research is rooted in its statutory mandate under the NEITI Act 2007 and in line with global EITI Standards, which require disclosures on revenue allocations and subnational transfers.
“States in Nigeria receive substantial monthly allocations from the Federation Account, much of it derived from extractive revenues. However, when between 10 and 30 percent of these allocations are deducted at source for debt servicing, the fiscal space for grassroots infrastructure, social services, and poverty alleviation is severely diminished. By shedding light on the scale and implications of these deductions, NEITI is providing citizens, policymakers, and development partners with reliable evidence to drive fiscal discipline and prudent debt management.”
The report also flags contractual obligations—notably in Ogun (N6bn) and Ondo (N7.73bn) tied to public-private partnerships (PPP) and infrastructure projects.
It warned that opaque contract terms and excessive deductions can undermine future fiscal space.
“Conversely, 18 states, including Abia, Adamawa and Akwa Ibom, reported zero contractual deductions, signaling more cautious or strategically timed borrowing.
It said Delta State receiving N581.27bn, five times the N108.32bn received by Nasarawa showed such disparities are compounded by high debt-servicing ratios in smaller-allocation states and could deepen fiscal inequality and stall regional development.
The report recommended establishing State Debt Management Offices (DMOs) in all 36 states, mandatory real-time debt reporting and quarterly public disclosures, linking federal bailouts/support to improvements in IGR and fiscal transparency and revising the revenue allocation formula to address vertical and horizontal imbalances.
The NEITI Executive Secretary, Dr. Orji Ogbonnaya Orji, stressed that this is “not a name-and-shame exercise, but a mirror and a map” a mirror to reflect fiscal realities, and a map to guide states toward resilience, transparency and equitable growth.
Dr Orji cautioned that “Debt, when managed efficiently, can be a tool for financing development at the grassroots. But when servicing obligations consume up to a third of monthly revenues, it becomes a threat to the future of public service delivery and economic stability.”