51 BUSINESSFEATURE Rising concerns over Niger’s bond loans
Ahmed Tahir Ajobe, Minna
The move by the Niger State government to access Sukuk bond and other facilities for infrastructural development across the state has continued to elicit concerns with mounting opposition from key stakeholders in the ruling All Progressives Congress (APC).
The State Executive Council gave the nod to Governor Abubakar Sani Bello to obtain N21.5 billion Sukuk bond. The fund, according to the state officials, would be released in two tranches over the period of two years with N12.5bn expected to be accessed in the first tranche while N9bn would be released in the second tranche.
According to the Commissioner of Finance, Alhaji Zakari Abubakar, projects to be undertaken with the fund include Minna township roads, construction and rehabilitation of General Hospital Kontagora, construction of Mariga Ultramodern Market, Kontagora water supply, Suleja trailer park and Minna Mining city among others.
He said the government is negotiating for a 17 per cent interest with a sevenyear repayment plan. He emphasized that most of the projects the fund was meant to finance were revenue yielding, adding that the underlying aim was to increase the state’s Internally Generated Revenue (IGR).
Barely a week after the proposal was made public, the council also approved the request to access $266m from the Islamic Development Bank and $330m from the Kuwait Fund for Arab Development, which will also be invested in salvaging decaying infrastructure across the state.
However, as the state government awaits the legislative arm’s assent to the requests, opposition over the desirability of the facilities has continued to mount. The opposition first started in form of a protest from the Niger South Senatorial District in Abuja.
The Abuja protesters had hinged their opposition to the proposed loans on what they referred to as an “uneven” distribution of the projects among the three senatorial districts in the state.
They argued that Zone A was marginalized and questioned the alleged concentration of most of the projects in Governor Bello’s Zone C.
Few days after the Abuja protest, the senator representing Niger East, Barrister David Umaru, addressed a press conference on the matter in Minna.
In an address titled “Stop this loan, don’t mortgage Niger State”, the senator said although he belonged to the same party as the governor and is one of its key stakeholders and founding member, posterity would not forgive him if he failed to speak out against the gesture, which he claimed was a calculated attempt to further impoverish the state.
He said he was disturbed by the administration’s obsession with accessing bond facilities but also more concerned about its inability to judiciously manage the accrual to the state in the form of monthly statutory allocations and other interventions from the federal government.
He pointed out that despite increasing budget at 36.3 percent and 9.4 percent for 2016-2017 and 2017 and 2018 respectively as well as bailout funds and Paris Club refunds of about N250bn, the government has consistently proved incapable of delivering democratic dividends to the people, arguing that the administration would further plunge the state into more debts and consequent impoverishment.
The senator reminded the people of how the state is still bearing the brunt of similar facilities accessed by the administration of Dr Muazu Babaginda Aliyu, especially the huge debt bonds amounting to over N27bn borrowed from the capital market.
He said over N8.2bn of the bond debts still hangs on the state government, waiting to be repaid with nothing tangible to show for it.
The commissioner of finance acknowledged during the post-Exco briefing on the Sukuk bond that there was an outstanding N8.1bn of the N27bn bond accessed by the administration of Dr. Aliyu yet to be paid.
He said out of the amount taken by the last administration in three tranches, the first N6bn has been fully paid, adding that the outstanding N2.1bn from the N9bn bond would be repaid in 2021 while the N12bn bond has an outstanding balance of N5.4bn balance, which would also be repaid by 2021.
He explained that at the inception of Gov Bello’s administration, the government had sought for elongation of tenure for the repayment of the bond to reduce pressure due to the economic downturn.
The senator pointed out that the disheartening issue about the bond taken by Aliyu was that most of the projects that it was meant for were abandoned midway, while others were not started at all except roads in the Tungan area of Minna town.
Like the senator, the move by the state government to access the bond facilities did not also go down well with the member representing Bida/Gbako/Katcha federal constituency at the National Assembly, Muhammadu Bala Faruk, who described it as anti-people.
In a speech titled, “Niger State House of Assembly members kill the Sukuk bond now” the lawmaker questioned the desirability of the loans when the state is bogged down with huge debts.
He also faulted the terms and conditions of accessing the loans, the repayment mode, even as he argued that the purported interest payable lacked transparency.
“More importantly is the fact that the spread of the proposed projects to be executed through this particular Sukuk bond is skewed in favour of Zone C to the complete disregard of both Zone A and Zone B both of which must be equally involved in the repayment of the loan,” he observed.
The member also faulted the timing of the bond coming close to electioneering campaigns, alleging that the bond could be used for election purposes.
However, some government officials and party stakeholders have risen in defense of Governor Bello’s move and spoken in favour of the loans.
The Commissioner of Information, Malam Danjuma Salau and a party stalwart in the state, Alhaji Abdulkadir Shehu Na-Funtua, described the opposition against the loans as self-serving.
They observed that governments all over the world have pushed infrastructure improvement to the very top of the strategic agenda, adding that due to global financial crisis, there was urgent need to look out for new sources of funds to help narrow the gap.
According to them, the Niger State situation is quite troubling especially with comatose infrastructure which were left to decay overtime, adding that the state government ought to be commended for stretching itself to address the problem.
They accused those opposing the loans as attempting to whip up sentiments by alleging that the projects proposed to be carried out with the facilities were not evenly distributed, saying that for the first time, there was equity and fairness in project distribution across the state.
He emphasized that most of the projects the fund was meant to finance were revenue yielding, adding that the underlying aim was to increase the state’s Internally Generated Revenue (IGR)