States across Nigeria owe a combined N1.06tn in outstanding obligations to contractors and retirees despite receiving record revenue inflows in 2024, according to new data from BudgIT’s 2025 State of States report.
The report shows that contractor arrears stood at N434.87bn, while pension and gratuity backlogs amounted to N626.81bn, highlighting ongoing fiscal strain at the state level even in a year of significantly increased earnings from federal disbursements and internal revenue collections.
BudgIT revealed that 30 states carried one or both categories of debt in 2024. Twenty-six states owed contractors, while 27 states owed pension and gratuity payments to retirees.
Only three states — Borno, Kano, and Nasarawa — reported zero liabilities in both categories, making them the only subnationals without outstanding obligations to contractors or pensioners in the 2024 fiscal year.
Kaduna State emerged as the largest debtor with a combined outstanding balance of N139.36bn. This includes N56.07bn owed to contractors and N83.29bn in unpaid pensions and gratuities — the largest retirement backlog recorded in the country.
The findings underscore concerns about financial discipline and long-term fiscal sustainability at the subnational level, despite many states posting stronger revenues than in previous years.
