State accessed ₦27.3bn in new borrowing in Q2 despite receiving ₦131.26bn in federal allocations between January and June 2026.

The Abia State Government borrowed ₦28,980,744,658.52 between January and June 2026 under its Capital Development Fund (CDF) receipts, according to the state’s 2026 Second Quarter Budget Performance Report.

The borrowing came amid a significant increase in the state’s revenue from the Federation Account Allocation Committee (FAAC), following the removal of the petrol subsidy.

The development also comes less than a year before the 2027 governorship election, in which Governor Alex Otti is expected to seek re-election.

CDF receipts comprise concessional and low-interest financing from institutions such as the World Bank, African Development Bank (AfDB) and Islamic Development Bank, which are on-lent through the Federal Government.

They can also include domestic financing from commercial banks, Central Bank of Nigeria infrastructure facilities and state-issued bonds. Such funds are generally earmarked for specific capital projects.

Abia had projected ₦431 billion in CDF receipts for the 2026 financial year. However, only ₦28.98 billion had been accessed during the first six months of the year.

Governor Otti signed the state’s ₦1.016 trillion 2026 budget into law in December 2025.

FAAC receipts rise

The report showed that Abia received ₦131,262,772,938.39 in federal allocations between January and June 2026, representing 40.6 per cent of the state’s full-year FAAC projection of ₦323,310,067,800.

During the second quarter alone, covering April to June, the state received ₦71,523,147,800.84 in FAAC allocations.

The increase in federal allocations followed the changes in revenue distribution after the removal of the petrol subsidy, which significantly altered the amount shared among the Federal Government, states and local governments.

For Abia, the higher allocations represent a substantial increase compared with the period before the subsidy removal, when monthly FAAC receipts for many states were considerably lower.

Revenue and capital spending

The report further showed that Abia generated a combined ₦166,943,664,398.01 from FAAC allocations and internally generated revenue (IGR) between January and June.

That figure represents 30.8 per cent of the state’s annual revenue target of ₦541,787,055,430.

Capital revenue stood at approximately ₦29 billion, representing 6.5 per cent of the ₦457,678,967,870 projected for the year.

Of the total ₦28.98 billion borrowed during the first half of the year, ₦27.3 billion was accessed between April and June, meaning the bulk of the borrowing occurred in the second quarter.

The period also coincided with increasing political activity ahead of the 2027 general elections.

₦109.5bn spent on capital projects

Abia recorded ₦109,545,424,723.60 in capital expenditure between January and June, against an annual capital expenditure budget of about ₦811.8 billion.

Of that amount, ₦64,496,604,586.68 was spent during the second quarter.

The figures have prompted questions about the state’s decision to access additional financing despite the increase in federal allocations.

Some analysts who spoke to journalists argued that the state’s increased FAAC inflows, which they said now exceed ₦20 billion in some months, should reduce the need for additional borrowing.

However, the budget report does not, by itself, establish that the borrowing was connected to the 2027 election or that the funds were used for political purposes. CDF financing is generally tied to specified development projects, and the nature and terms of individual loans would need to be examined to determine their specific use.

The figures therefore place Abia’s 2026 borrowing within a broader debate over how the state should balance increased federal revenues, capital investment and debt financing ahead of the 2027 elections.