Kwara State N20bn Bond Facility: Kwara State PDP’s Stand

We praised the decision of this Honourable House when we received an invitation to participate in the public hearing convened by the House on the above subject matter. We then saw it as evidence that the House shared the people’s concern on this sensitive issue. But when the public hearing which was scheduled for Friday 18th December was cancelled less than twelve hours to the scheduled time, it became a disappointment and a thing of worry to us and perhaps the general public of Kwara State. The need for the public hearing cannot be over emphasized. Though this is not the first time that a bond/ loan of this magnitude would be taken; the public hearing, if allowed to hold, could have been the first time a public hearing will be convened on an important issue of this nature. And there had been a raging controversy on the issue of this bond in the public domain for quite a long time. Hereunder are our observations and stand on the issue of the bond facility.

WHY THE BOND?—We understand that the main reason why the Kwara State government seeks the resolution of the Kwara State House of Assembly to secure N2Obillion Bond from the stock market for its proposed 2016-2023 infrastructural development; is because of the dwindling federal allocation. From the history of similar state involvement in taking of bond/loan facilities in the past, this claim cannot be entirely true. When the government of Dr Bukola Saraki took a bond of N17Billion naira before its expiration in 2011, the statutory allocation of the state was high and in good shape. While it is on record that the government that preceded that of Governor Bukola Saraki took no such loans; financing the programs of the state through borrowing have been the practice of Kwara State from 2003-date. Therefore, when the economy of the state was in boom through regular and surplus federal allocations, the state was neck deep in debt.

DEBT PROFILE OF KWARA STATE— There is the need for this government to come to the open about the debt profile of the government of Kwara State. If this is not done, the people of this state will be free to speculate and guess the extent of the financial indebtedness of the state. Unconfirmed sources have claimed that both the money owed to various banks, contractors, Pensioners, salary arrears and including the foreign components of our debts portfolio cannot be less than the sum of N250billion. When government decides to come up with its figures this claim will be verified. But the recent ones that we know are: the N15.6billion commercial loan recently converted to bond by the federal government with the expiration of payment due in July 2034, bailout fund of N5billion recently taken to clear the arrears of salary of workers, another N5billion bailout to clear part of the salary arrears of the local government workers and pensioners, N10billion naira recently accessed from both GTB and Sterling banks etc.  Thus apart from the N250billion yet to be verified debt, in 2015 alone and before the now controversial N20billion bond facility, Kwara is in the debt crisis of N36billion. If the State goes ahead to borrow the sum of the controversial N20billion, Kwara State in 2015 alone would have borrowed the sum of N56billion. We are therefore of the view that, before this state should approach the capital market or any bank for that matter for any facility, the people of Kwara State are entitled to know the debt profile of the state.

PREVIOUS N17BILLION BOND—In 2009, the government of Dr Bukola Saraki of which the present government is an offshoot, approached the capital market for N30billion facility, N17billion was however granted. The government said it would do the following with the money: water project, Kwara State University, a new government Secretariat, Medical Diagnostic Centre, Kwara trailer park, International Hotel and Conference Centre, Amusement Park, various roads Infrastructure, Irrigation projects, Kwara Diary, Land Acquisition Compensation and Loan Underwriting Commission. On all the above projects specific values were put to justify the taking of the loan. Kwarans can now judge whether all the projects listed above are on the ground today or not. The fact is: if N17billion was spent on metro plaza, mere event centre along Asa Dam Road, Medical Diagnostic Centre, Kwara State University, renovation of Kwara stadium, Cargo shed at the international Airport: are these in the area of priority of a rural backward state of Kwara? And how far has the money been utilized to lay an economic foundation that can even assist in the repayment of the loan? Though, on the ground the value of what the N17billion was spent may not be visible; if indeed the money had been paid, it must have been settled through loan swamping in some other banks or from the monthly statutory allocation. It has been established that when these people in government borrow, they do not spend well. People of Kwara should not support taking of further loans by this administration.

QUESTIONABLE FITCH AUDIT REPORT—Before the taking of 2009 bond there was this audit report that gave the government of Kwara State A+. Perhaps that might be part of the conditions for taking of the fund. While we do not impugn on the international reputation of FITCH, it is unthinkable that a government that took a bond of N17billion and did not spend it on what the loan was taken, is in 2015 given an award as the most financially transparent government in Nigeria. May be the recent award was given in preparation to the granting of the bond facility. All that can be said is that award or not, the sum of over half a trillion (N544,214,273,209.30) naira had accrued to the people of Kwara State either from the Statutory Allocations, Internally Generated Revenue, grants and loans between 1999 to date; yet the conditions of the people of Kwara State remain unchanged. No other report can indict the government more than this. If for this reason alone taking a loan, of N20billion naira is unjustifiable.

NEEDED INFORMATION ON THE N20BILLION----There are some information that must be in the public domain which should be part of a robust debate before this bond can be approved by the people of Kwara State. In the document issued under the hand of Governor AbduFatah Ahmed to the Speaker of the Kwara State House of Assembly, not less than fifteen projects are listed as proposed 2016-2023, N20billion bond utilization programme. These projects are in Education, Health, water, road infrastructures etc. What is immediately observed is that except in the case of renovation of some hospitals, no monetary value was placed on these proposed projects. If this is not done, people will not have good judgement on the veracity of the values of the proposed projects. It will also be difficult for the people to monitor the implementation of the proposed projects. It is therefore imperative that Kwarans should know the monetary values of each of the proposed projects listed to be executed by the government with the bond. Secondly, there is the need to know the tenure of this bond and whether there is moratorium or not. Already the people of Kwara State through some existing loans have debts hanging on our neck until at least 2034 which is about 19 years ahead. Could it not be that with an additional N20billion naira, it could be up to fifty years of debt repayment and servicing? Therefore what exactly is the tenure of this bond? Thirdly, government document talks of ‘proposed 7 year (2016-2023) N20billion Bond for some critical developmental projects in Kwara State’. The meaning of this is that this government shall incur a lot of money beyond its tenure. The tenure of this government ends in 2019, it wants to incur expenses for another term of four years. The implication of this is that after taking this bond and whether the government delivers on its promises or not, we should not expect any infrastructural developments until after 2023. This however has been the experience in Kwara State between 2011 and 2015. After Governor Bukola Saraki took a bond of N17billion in 2009, there had been no meaningful development in Kwara State between 2011 till now. The only paraded achievement of Governor Fatah is the renovation of some hospitals. He could not have done otherwise as his predecessor had put the state in debt crisis. Fourthly, the utilization document has not addressed the REAL NEEDS of the people of Kwara State. Any agenda that fails to address the issues of poverty arising from unemployment is a misplaced priority in Kwara State. The bond utilization document fails to address the issues relating to agriculture that engages not less than 70% of our population, encouragement of small scale industries by giving soft loans to artisans and co-operative societies etc. Government good policy on agriculture and solid mineral exploitation will certainly diversify the economy of Kwara State. The implication of government’s proposed critical developmental projects is that though we may have some good roads, hospitals and schools; overwhelming population of our people will roam the streets unemployed. What therefore is the economic policy of this administration?

HOW DO WE PAY BACK? We are often told that the bond can be serviced through Internally Generated Revenue. This is not quite true now that the federal statutory allocation is dwindling. A month’s federal allocation cannot pay the wage bill of the workers of Kwara state. If wages must be regularly paid the monthly Internally Generated Revenue must be joined with the monthly Statutory Allocation. The alternative is to pay our workers sparingly and risk labour unrest. It could therefore be said that contrary to government claim, Kwara State does not have the capacity to service loan or bond if taken.

WHAT GOVERNMENT NEEDS TO DO---It has been amply established that the economy of Kwara State have not been properly managed for the past more than twelve years of the last two governors of Kwara State. It will therefore be unreasonable to expose the state to further debts through the same hands. But then the government and governance must go on. We believe too that this time calls for sacrifice and economic belt tightening. The discipline that can lead to our economic rebirth, survival and progress should however start from the people in government. We therefore recommend the following to be done instead of taking a bond of N20billion.

 

1. REPEAL THE GOVERNOR’S PENSION LAW—At the twilight of Governor Bukola Saraki’s administration there was enacted by the parliament a law to give millions of Naira to ex Governors and the Deputies. If this law is not immediately repealed there will soon be an army of retired governors and their Deputies in this state that the state resources would not be able to sustain them.
2. FLAMBOYANT LIFE STYLE OF GOVERNMENT OFFICIALS—In a state like Kwara where poverty is prevalent, those in government should not alienate themselves from the governed through flamboyant false style of living that the economy of the poor state cannot sustain. The first life style that should go is the regular chartered aircraft by the chief Executives. To maintain our Chief Executive on air over months and years have been established by studies to be in the region of billions of naira. We need a governor that is part of us not one that is alienated from the people of this state. In the same vein Government should cut down expenses in the areas of purchase of exotic cars that is out of tune with the economic reality of the state.
3. REDUCTION IN THE NUMBERS OF POLITICAL OFFICE HOLDERS----The era of many commissioners, Special Advisers, Special Assistant and Personal Assistant is gone. Even where it is established that the gap between the Permanent Secretary and the Director in the Civil Service is unreasonable; it should be slashed. Slim political office holders should be maintained.
4. PROPER AUDIT OF THE CIVIL SERVICE--- When Kabba/Okene people, now in Kogi State were part of Kwara State, the work force was about 23,000 people and with a total salary of about N350million monthly. The claim that Kwara State now pays about N1.5billion as monthly wages for its Civil Servants may not be entirely true. Something must be fishing, either an over bloated civil service or a ghost worker syndrome.
5. REDUCE BUDGET OF GOVERNMENT HOUSE- Studies has shown through the yearly budgetary provisions for government house that the budget of this sector is often greater than that of health, Education and agriculture. And consistently budget of government house is yearly on the increase. Government house budget is basically for the comfort of the State Chief Executives. It is not used for feeding the Chief Executive but also provide for the security of their Excellences. At this time of austerity, governors and Deputies should seriously sacrifice.

These and many others should be tried before we embark on taking of a bond of N20billion. Sacrifice and curtailment of expenses by our leaders will elicit confidence among the people. The confidence elicit will bring commitment and it is only then that Internally Generated Revenue drive of government can be actualized. 

From the above analysis of Kwara economic situation, the economy is too weak and fragile to be exposed to further borrowing. We recommend that for now, all further capital projects can no more be undertaken by this administration. The administration had better embarked on payment of salaries and emoluments, pension and commitments to contractors other emoluments and maintenance of services until further notice.

Akogun Iyiola Oyedepo                                      Barrister Abdulwaheed Yusuf

Chairman PDP Kwara State                                 Secretary PDP Kwara State