Lagos, Rivers lead top 10 Nigerian states with highest domestic debt

While many tend to shy away from debt, regarding it as a slavery tool to creditors, recent analysis has proven that a moderate amount of debt is functional for economic growth.

IMF report claims domestic debt starts to impede growth when it is over a ratio of 35% of bank deposits.

Moderate levels of noninflationary domestic debt as a percentage of GDP and bank deposits are said to have a favourable overall effect on economic growth.

When domestic debt is held outside the banking system, it carries favourable real interest rates, and is marketable, while its growth contribution increases.

A report by the International Monetary Fund (IMF) said domestic debt starts to impede growth over a ratio of 35% of bank deposits, supporting conventional worries about crowding out and bank efficiency.

The negative impact of domestic debt on private-sector investment indicates that government domestic borrowing crowds out private-sector investment. In light of this, it is advised that the government should try to borrow domestically through the capital market by expanding the Nigerian equity and bond markets.

This is expected to enable these markets to have the capacity to provide the needed funds rather than relying solely on foreign borrowing, which inhibits private-sector investment and slows economic growth in Nigeria.

According to the Debt Management Office, Nigeria's total domestic debt has been highlighted.

The domestic debt data report is generated from the signed-off submissions received from the 36 states of the federation and the Federal Capital Territory (FCT).

Lagos State – N1.05 trillion

Delta – N373.41 billion

Ogun State – N278.68 billion

Rivers State – N232.58 billion

Cross River State – N220.20 billion

Imo State – N217.11 billion

Akwa Ibom State – N190.48 billion

Benue State – N187.18 billion

Plateau Enugu State – N173.93 billion

Bauchi State – N160.81 billion