KADUNA STATE GOVERNMENT’S DEBT ANALYSIS

Subnational debt in Nigeria has risen significantly as state governments seek to finance infrastructure and service delivery amid declining revenues and volatile federal allocations. This study examines the debt profile, fiscal transparency, and sustainability of Kaduna State, which, as of June 30, 2025, ranked second among Nigerian states in total debt stock at approximately ₦1.03 trillion. The findings reveal an overwhelming dominance of external obligations, which account for 97.5% of total debt, amounting to roughly $658.71 million (₦1.01 trillion). This heavy reliance on foreign-denominated debt has heightened the state's exposure to exchange rate volatility and naira depreciation. Furthermore, the analysis indicates mounting fiscal strain, with debt-servicing costs increasingly crowding out development priorities. In 2024, approximately 32.06% (₦51.2 billion) of Kaduna’s gross federal allocations were deducted at source for debt servicing, one of the highest ratios in the country. With a debt-to-revenue ratio estimated at 199.29%, the state’s liabilities far exceed its current revenue-raising capacity, limiting investments in education, healthcare, and infrastructure. To safeguard its developmental trajectory, the study recommends that Kaduna State prioritise domestic revenue mobilisation, enhance transparency around debt, and implement robust currency risk management strategies.