In public finance, there comes a moment when governments must choose between political convenience and economic responsibility. One path offers the illusion of prosperity through endless borrowing; the other demands painful discipline, difficult decisions and delayed gratification. Few political leaders willingly choose the latter because fiscal restraint rarely attracts applause. Yet it is precisely at such moments that leadership is tested.
Across Nigeria, many state governments are struggling under the weight of mounting debt. Rising inflation, exchange rate depreciation, declining purchasing power, volatile oil revenues and growing infrastructure needs have combined to create one of the most difficult fiscal environments since the return to democratic rule in 1999. Borrowing has become the default response to virtually every developmental challenge. While debt itself is not inherently harmful, excessive dependence on loans has steadily reduced the fiscal independence of many states.
Kaduna offers a compelling case study of what happens when a government decides to confront that reality rather than postpone it.
When Governor Uba Sani assumed office on May 29, 2023, he inherited a fiscal situation that many economists would describe as dangerously fragile. The state carried approximately $587 million in external debt, ₦85 billion in domestic liabilities, and more than ₦115 billion in outstanding contractual obligations. These were not simply numbers on a balance sheet. They represented financial commitments that immediately constrained governance.
The severity of the crisis became evident almost immediately. In the administration’s first month, Kaduna received only ₦3.6 billion as net statutory allocation after about ₦7 billion had been deducted to service existing debts. Ironically, the monthly wage bill alone stood at approximately ₦5 billion, meaning that federal allocation could not even cover salaries, let alone finance healthcare, education, agriculture, infrastructure or security.
It was a textbook illustration of how debt can quietly erode the capacity of government to govern.
Unfortunately, Kaduna’s predicament is not unique.
Across Nigeria, several states now devote substantial portions of their monthly allocations to servicing debts accumulated over many years. The danger is not merely the size of these obligations but the shrinking fiscal space they leave behind. Governments become trapped in a vicious cycle where new loans are obtained simply to repay older ones while development spending steadily declines.
The challenge became even more severe following the depreciation of the naira. Because a significant share of Kaduna’s obligations was denominated in foreign currencies, exchange rate movements dramatically increased the state’s debt burden. What had once appeared manageable suddenly expanded to nearly ₦1 trillion in naira terms not because Kaduna borrowed more money, but because the value of the naira declined sharply.
This is one of the least appreciated risks of foreign borrowing.
Loans negotiated in dollars often appear affordable at the point of signing. However, when local currencies weaken, repayment obligations can multiply overnight, leaving governments with financial burdens far beyond what they originally anticipated. The result is that debt servicing begins to crowd out expenditure on critical public services.
By 2025, Kaduna’s average monthly debt deductions had risen to about ₦6.7 billion, and in February 2026 they reportedly peaked at ₦8.2 billion. Only federal intervention prevented the state from receiving virtually no net allocation. Today, Kaduna records one of the highest debt deductions among Nigeria’s thirty-six states.
Many governments confronted with such circumstances might have chosen the politically easier route: negotiate fresh loans, restructure old debts through additional borrowing or postpone difficult fiscal reforms.
Governor Uba Sani chose a different path. Since assuming office, the administration has maintained a strict policy of avoiding fresh borrowing. Instead, it embarked on an aggressive programme of expenditure control, financial discipline, improved revenue management and systematic debt repayment.
The results are beginning to emerge. Within three years, Kaduna has reportedly repaid more than ₦90 billion of inherited debt while continuing to finance government operations and deliver public projects.
This achievement deserves attention not because debt repayment is an end in itself, but because of what it signifies.
Debt servicing consumes resources that could otherwise finance classrooms, hospitals, roads, irrigation projects, rural electrification, water schemes and social protection. Every reduction in debt obligations expands the fiscal room available for productive investment.
In simple terms, money previously used to pay creditors becomes available to serve citizens.
Perhaps the most remarkable aspect of Kaduna’s experience is that fiscal prudence has not translated into developmental paralysis.
Critics often assume that reducing debt inevitably means suspending infrastructure projects. Kaduna has challenged that assumption.
Despite severe fiscal constraints, the administration has completed more than seventy roads covering over 1,200 kilometres across all twenty-three local government areas. These projects extend beyond urban centres to rural communities where roads directly affect agricultural productivity, market access and local commerce.
The reconstruction of the historic Ahmadu Bello Stadium represents another strategic investment. Beyond sports, modern stadiums increasingly function as economic assets capable of hosting entertainment, conferences, cultural festivals and regional competitions that stimulate local economies.
Similarly, the development of a modern central bus terminal reflects an understanding that transportation infrastructure influences commerce, urban mobility and investment attractiveness.
Human capital has also remained central to the administration’s priorities.
Three modern vocational and skills acquisition institutes have been constructed in each of the three senatorial zones to prepare young people for employment in an economy increasingly driven by technical competence rather than traditional academic qualifications alone. At a time when youth unemployment continues to threaten social stability across Nigeria, investments in vocational education carry significant long-term economic implications.
Healthcare has likewise received sustained attention through the upgrading of hospitals and primary healthcare facilities, while school construction and rehabilitation continue across various parts of the state. These investments reinforce an important principle of public finance: fiscal discipline should never come at the expense of essential social services.
Indeed, the ultimate purpose of prudent financial management is to improve citizens’ quality of life.
Kaduna’s approach also offers broader lessons for Nigeria’s fiscal federalism.
For decades, public debate has tended to equate development with borrowing. Successive administrations at federal and state levels frequently measured performance by the size of loans secured rather than by the efficiency with which public resources were managed. Yet borrowing is only one instrument of development finance.
Equally important are expenditure efficiency, value-for-money procurement, internally generated revenue, public-private partnerships, elimination of waste and disciplined budgeting. Governments that strengthen these areas often discover that they can deliver more development with fewer borrowed resources.
This shift in thinking may prove increasingly important as Nigerian states confront a more uncertain economic future. Global economic volatility, fluctuating oil prices, climate-related disruptions, inflationary pressures and exchange rate risks are unlikely to disappear soon. States that continue relying heavily on debt-financed governance may find themselves increasingly vulnerable to external shocks beyond their control.
Kaduna’s experience suggests that resilience begins not with larger budgets but with better financial management.
Of course, challenges remain.
The state’s foreign obligations continue to extend until at least 2037, meaning debt servicing will remain a significant fiscal burden for years to come. Exchange rate volatility could still increase repayment costs, while growing demands for infrastructure and social services will continue to test government finances.
Fiscal discipline is therefore not a destination but an ongoing process requiring consistency, transparency and political courage.
Perhaps equally important is public communication.
Citizens naturally judge governments by visible projects rather than by improvements in fiscal indicators. Few voters celebrate reduced debt in the same way they celebrate new roads or hospitals. Consequently, administrations pursuing fiscal consolidation must continually demonstrate how prudent financial management translates into tangible improvements in daily life.
Fortunately, evidence increasingly suggests that Kaduna is attempting to strike that balance.
The state’s performance has attracted recognition beyond its borders. In the 2025 Phillips Consulting State Performance Index (pSPI), Kaduna ranked third among Nigeria’s thirty-six states, earning an Excellent Four-Star Rating. The assessment combined objective performance indicators with citizen feedback across governance, fiscal management, economic development, infrastructure, healthcare, education, agriculture, security and social inclusion.
While no ranking is perfect, such recognition reinforces the growing perception that sound fiscal management can coexist with measurable development outcomes.
Ultimately, Kaduna’s story is not merely about repaying debt. It is about redefining governance in an era of economic uncertainty.
It challenges the long-standing assumption that governments must continuously borrow to develop. It demonstrates that fiscal responsibility, when combined with strategic investment, can produce sustainable progress without mortgaging the future.
Nigeria’s states face immense development needs. Roads must be built. Schools require rehabilitation. Hospitals need equipment. Farmers need support. Young people need jobs. These demands are legitimate and urgent.
But the manner in which governments finance those ambitions matters just as much as the ambitions themselves.
Borrowing remains a legitimate policy tool when directed towards productive investments capable of generating long-term economic returns. However, borrowing without fiscal discipline merely transfers today’s political comfort to tomorrow’s taxpayers.
Kaduna’s experience offers an alternative narrative.
It is the story of a government that inherited one of Nigeria’s heaviest debt burdens, resisted the temptation of additional borrowing, pursued fiscal discipline under extraordinarily difficult conditions and continued investing in infrastructure and human development.
Whether other states adopt similar strategies remains to be seen.
But in a turbulent economy where financial resilience increasingly determines developmental success, Kaduna’s debt rethink deserves careful study not simply as a political achievement, but as a practical lesson in responsible governance. For Nigeria, where public debt continues to dominate economic conversations, that may prove to be Kaduna’s most enduring contribution.
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