Imo, Akwa Ibom, and Ogun States have emerged as leaders in domestic debt reduction among Nigerian states, achieving substantial cuts between the second quarter of 2023 and the same period in 2026. Imo State topped the list, reducing its domestic debt by N141.34 billion, followed closely by Akwa Ibom with a reduction of N118.05 billion and Ogun with N104.15 billion.

According to data from the National Bureau of Statistics, Imo State's domestic debt decreased from N220.84 billion in Q2 2023 to N79.50 billion in Q2 2026, marking a remarkable 64% decline. Despite this significant reduction in domestic obligations, Imo's external debt saw an increase from $77.81 million to $109.20 million, reflecting a rise of approximately $31.38 million over the same period.

Akwa Ibom also made notable progress, cutting its domestic debt from N199.58 billion to N81.53 billion, which is a 59.1% decrease. However, its external debt rose from $43.54 million to $81.84 million, an increase of about $38.30 million.

Ogun State's domestic debt reduction was significant as well, dropping from N293.20 billion to N189.05 billion. This represents a 35.5% cut, yet its external debt surged from $111.62 million to $225.12 million, an increase of around $113.50 million.

Other states that recorded substantial domestic debt reductions include Plateau, Oyo, and Abia. Plateau State reduced its debt from N157.62 billion to N59.37 billion, while Oyo cut its obligations from N162.40 billion to N66.40 billion. Abia also saw a significant reduction, lowering its debt from N142.47 billion to N48.63 billion. However, all these states experienced increases in their external debts during the same period.

Interestingly, Bayelsa State was the only one among the ten states analyzed that recorded reductions in both domestic and external debt. Its domestic debt fell from N134.51 billion to N43.49 billion, while its external debt decreased from $59.80 million to $54.29 million.

The overall trend indicates that while some states have successfully managed to reduce their domestic debt, this has not always correlated with a decrease in external debt. In fact, nine out of ten states analyzed saw an increase in external obligations, highlighting a complex financial landscape for state governments in Nigeria.

As the federal government grapples with its own debt servicing costs, which reached N8.93 trillion in the first nine months of the year, the focus on managing both domestic and external debts will remain critical for state governments moving forward. The figures reveal that debt servicing accounted for 61% of the total revenue recorded during this period, underscoring the financial pressures faced by various levels of government in Nigeria.