States across Nigeria owe contractors and retirees a combined ₦1.06tn in outstanding obligations despite receiving record revenues in 2024, according to new data from BudgIT’s 2025 State of States report.

The report shows that contractor arrears stood at ₦434.87bn, while pension and gratuity arrears amounted to ₦626.81bn, underscoring persistent fiscal strain at the subnational level even as federal allocations more than doubled and many states recorded higher internally generated revenue.

Thirty states reported owing either contractors or retirees during the 2024 fiscal year. Twenty-six carried contractor debts, while 27 reported unpaid pensions and gratuities.

Only three states — Borno, Kano and Nasarawa — recorded no arrears in either category. Kaduna State emerged as the highest debtor, with a combined ₦139.36bn owed in 2024.

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Kaduna’s arrears included ₦56.07bn owed to contractors and ₦83.29bn in pension and gratuity liabilities, the largest pension backlog nationwide. Ogun followed with ₦107.18bn in outstanding payments, split between ₦81.54bn in pensions and ₦25.64bn owed to contractors.

Benue ranked third with ₦99.68bn in arrears, followed by Edo with ₦95.46bn and Enugu with ₦90.18bn. Others with sizeable backlogs included Imo (₦57.25bn), Akwa Ibom (₦43.71bn), Delta (₦42.35bn), Oyo (₦41.97bn) and Plateau (₦40.98bn).

Together, these 10 states account for nearly half of the ₦1.06tn owed nationwide.

At the lower end of the ranking, Kano and Nasarawa reported no arrears, while Lagos recorded only ₦48.74m in contractor debts and no pension backlog. Ebonyi followed with ₦88.89m, then Borno with ₦1.10bn, Jigawa with ₦1.79bn and Katsina with ₦2.22bn.

BudgIT reported total liabilities across 35 states — excluding Rivers, which produced no audited accounts due to the 2025 state of emergency — at ₦1.24tn. The organisation said Rivers was excluded because its 2024 budget was nullified by a court ruling and deemed unconstitutional for reporting purposes.

Beyond contractor and pension arrears, states owed ₦33.74bn in salary and staff claims, ₦62.33bn in judgment debts and ₦73.25bn in other liabilities.

Despite unprecedented revenue inflows — including ₦11.38tn in FAAC allocations, more than double the previous year’s — BudgIT said many states continued to prioritise recurrent spending over clearing legacy debts, causing arrears to persist.

Budget pressures were particularly acute in four states — Kaduna, Benue, Adamawa and Taraba — where total liabilities exceeded internally generated revenue for the year. Kaduna owed nearly twice its IGR, while Benue’s arrears were almost five times its domestic revenue. Adamawa and Taraba also carried pension debts larger than their 2024 IGR.

The report attributed the growing burden to structural weaknesses, rising personnel costs and long-running pension backlogs.