Mixed Reactions Trail Ekiti’s N23b Debt For Ekiti State that receives monthly allocation of about N2.7 billion from the federation account and nets in Internally Generated Revenue (IGR) of N500m, the debt burden of N23 billion may appear huge when juxtaposed with what the state generates every month; but a breakdown of the debt, the payment schedule and what the loans were used for seems to have justified the debt, many believe. When Governor Kayode Fayemi took over the mantle of leadership on October 16, 2010, he specifically promised that he would approach the capital market to raise money in order to execute various projects of his government, especially the Urban Renewal Projects and other “Legacy Projects.” After a long debate on the merit and otherwise of the bond, there seemed to be a consensus prompting the State House of Assembly to approve the proposed N20 billion bond. The bond was raised in 2011. Apart from this bond, the administration inherited foreign debt of about N4 billion from the old Ondo State, which the Commissioner for Finance, Mr. Dapo Kolawole, said was expended to build Ero and Ureje dams that provided portable water for the State. Kolawole also disclosed that the administration inherited about N8.5 billion from the ousted Chief Segun Oni’s administration, the repayment of which it is grappling with simply because the loan was not well structured. The State owes, at least, N4 billion local debt. Kolawole, however, stressed that the Federal Government is yet to offset its N8.5 billion debt to Ekiti. According to him, “this money was part of the expenses on the federal roads in Ekiti State. As at present, the Federal Director of Works in Ekiti State has confirmed N8.5 billion and there are still more works going on some Federal Government roads”. Out of the N20 billion bond raised from the capital market, N6 billon has been paid as at last month. Justifying the essence of the loan, the Commissioner observed that any government working to meet the yearnings of its people, especially in the area of infrastructure development, must not shy away from raising money with favourable repayment conditions. According to him, out of the 20 roads earmarked for construction (using proceeds from the bonds issued), 11 were completed and commissioned prior to the second anniversary of the Fayemi administration, while nine will be commissioned before the last quarter of the year. But the chairman of the Peoples Democratic Party (PDP) in Ekiti State, Chief Makanjuola Ogundipe, is of different opinion. The bond, according to him, has plunged the State into unnecessary debt. Ogundipe said it has become clear that the present administration cannot offset the debts before the expiration of its tenure, meaning that the coming administration will not only meet empty treasury but also huge debts. He also criticised the government for not spending the borrowed funds on projects that will provide employment opportunities for unemployed youths in the State. According to him, “there is no way anybody can justify this loan because all what we see Fayemi doing is repairing the roads already tarred by the PDP administration.” But a public analyst and economist, Dr Kunle Famakinwa, dismissed Ogundipe’s position as lacking in substance, considering the conditions under which the State obtained the loan. According to him, it is normal for government — State or federal —to obtain loan to finance projects as no government can embark on any meaningful project with its paltry monthly allocation and IGR.
Posted on: Tue, 18 Jun 2013 01:35:39 +0000
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