Fresh figures from the Central Bank of Nigeria’s latest quarterly statistical bulletin show that subnational debt fell slightly by ₦112 billion or 2.7 per cent, from ₦4.20 trillion in December 2023 to ₦4.09 trillion in December 2024. This indicates a marginal improvement in the debt profile of state and local governments.
A breakdown of the December 2024 data reveals that commercial and merchant banks held the largest share of the debt at ₦2.41 trillion, accounting for 58.9 per cent. This was a decline of ₦233 billion from the ₦2.64 trillion recorded at the end of 2023. In contrast, exposure to the Central Bank increased from ₦1.56 trillion in 2023 to ₦1.68 trillion in 2024, making up 41 per cent of the total and pointing to growing reliance on direct funding from the apex bank.
For the first time, the bulletin recorded ₦3.77 billion in loans from non-interest banks to subnational entities. Primary mortgage and microfinance banks had no outstanding claims.
Monthly analysis of the 2024 data shows fluctuations in subnational borrowing. In January, claims by Nigerian financial institutions on state and local governments rose to ₦4.29 trillion, a 20.01 per cent increase from ₦3.57 trillion in January 2023. However, the figures dipped to ₦4.10 trillion in February, ₦4.09 trillion in March, and then fell sharply to ₦3.52 trillion in April. This marked a 14.07 per cent month-on-month decline and the only year-on-year drop of 5.68 per cent for the year.
Throughout 2024, the bulk of the credit came from the Central Bank and commercial and merchant banks. In January, the CBN accounted for ₦1.56 trillion (36.38 per cent), while commercial and merchant banks held ₦2.73 trillion (63.62 per cent). This distribution remained largely consistent, though April saw a shift as the CBN’s share rose to 45.17 per cent and commercial banks’ share fell to 54.71 per cent, possibly reflecting tighter lending conditions.
After April’s decline, claims rebounded to ₦4.04 trillion in May, rising 14.74 per cent, and peaked again in June at ₦4.29 trillion. From July through December, total claims remained relatively stable, staying above ₦4 trillion.
Year-on-year comparisons show significant increases in most months. February rose by 12.96 per cent from the previous year, March by 11 per cent, and June recorded the largest jump—up ₦1.01 trillion or 30.65 per cent compared to June 2023.
By December 2024, total claims had edged down to ₦4.09 trillion from ₦4.20 trillion the year before, indicating a modest year-on-year decrease. Non-interest bank exposure remained minimal throughout the year, averaging ₦4.03 million until it dipped slightly to ₦3.77 million in December.
The increasing share of claims held by the CBN underscores growing dependence on the apex bank by subnational governments, especially during periods when commercial banks appear to tighten lending. Meanwhile, the retreat of commercial banks—from ₦2.73 trillion in January to ₦2.41 trillion in December—may reflect heightened risk aversion or stricter regulatory oversight amid high inflation and aggressive monetary tightening by the CBN.
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