Oil-producing states in Nigeria have reduced their domestic debt burden by about N610.84bn between June 2023 and March 2025, largely due to record inflows from the 13 per cent derivation fund, according to fresh analysis of Debt Management Office (DMO) data.
In June 2023, the combined domestic debt of the nine oil-producing states stood at N1.66tn, representing 28.6 per cent of Nigeria’s total subnational debt of N5.82tn. By March 2025, the figure had dropped to N1.05tn, accounting for 27.2 per cent of total state-level debt of N3.87tn. Delta State led the way, cutting its debt by more than half, from N465.40bn to N204.72bn, while Akwa Ibom and Bayelsa reduced theirs by over 40 per cent and 45 per cent respectively. Ondo State recorded the sharpest proportional decline, slashing its debt from N74.03bn to just N11.76bn. Rivers State, however, stood out as the only oil-producing state whose debt rose, climbing by more than 60 per cent to N364.39bn within the period.
Revenue records show that the nine oil-producing states generated a combined N1.39tn in Internally Generated Revenue (IGR) between Q3 2023 and H1 2025. About 44 per cent of this — equivalent to the N610.84bn debt repayments — went into servicing loans instead of financing new projects. Rivers topped the IGR chart with N507.23bn, followed by Delta (N250.36bn) and Akwa Ibom (N134.81bn). At the lower end, Imo recorded just N47.51bn.
Between July 2023 and June 2025, the nine oil states received a record N1.67tn in derivation funds, according to Federation Account Allocation Committee (FAAC) disbursement reports. Delta alone earned N520.27bn, followed by Bayelsa (N332.05bn), Akwa Ibom (N330.27bn), and Rivers (N309.77bn). Collectively, these four states took about 90 per cent of the total allocation, leaving the remaining five states with just N140bn.
Despite the windfall, analysts and opposition figures argue that the funds have not translated into visible development across the Niger Delta. Critics point to persistent poverty, infrastructural decay, and delayed salary payments in some states, raising concerns that the derivation inflows are being absorbed by recurrent spending rather than transformative projects.
