The Edo debt Issue by Pastor Ize-Iyamu 2015

The Punch Newspaper reported on August 4th 2015 that President Mohammadu Buhari had requested the approval of the Senate for a $75m credit facility from the World Bank on behalf of the Edo State Government. The money when converted at the official rate of N196 to a dollar is N14.7 billion. The president explained that the amount was the second tranche of the $225m development policy programme approved for the State by the World Bank in 2012, and which was to be implemented in three tranches of $75m per annum. The first tranche is said to have been successfully implemented by Edo State in 2014 and on this basis the World Bank approved the release of the second tranche in 2015 subject to the approval of the National Assembly.

The President wrote the Senate that Edo State government had informed him that the key programme objectives of the loan were already beginning to show in terms of increased influence of private investment in the State. He also added that “the loan has had tremendous impact in the closed private sector employment opportunities and equally increased internally generated revenues. He therefore noted that an accelerated approval of this request by the Senate would help to sustain the gains already achieved with the first tranche.

This letter has opened a Pandora’s Box. The first tranche of $75m which has been completely spent by Edo State government was not meant for the execution of capital projects but for the development of a policy programme meant to increase private sector investment and internally generated revenue in Edo State. On the face of it, the programme appears laudable but the harsh reality is that nothing tangible has been done by the government to promote, encourage or attract private investors not to mention creating employment opportunities. It is therefore shocking to learn that N14.7billion loan has been collected from the World Bank and spent on a non performing programme. Paradoxically the State government has shown disdain to potential investors and cannot claim to have attracted them to the State. To also assert that the loan was used to grow the IGR is a shocking claim that would be difficult to substantiate, especially when it is common knowledge that the IGR has since stagnated.

During Oshiomhole’s recent face-off with the former Minister of Finance Dr. Ngozi Okonjo Iweala, it was revealed that the governor’s grouse with the former Minister was her refusal to accede to his request for approval for loans for the State. She had sought the opinion of the Debt Management Office (DMO) which strongly advised against the request on the ground that the debt profile of the State was too high. She accepted this advice and rejected the loan request and thereby incurred the wrath of the governor who apparently was desperate to get the loan. It is offensive to Edo people that the first loan request President Buhari will make to the National Assembly is on behalf of Edo State which under Oshiomhole’s watch is the fourth most indebted State in Nigeria after, Lagos, Kaduna and Cross River with regards to external loans.

President Buhari ought to have carefully investigated Oshiomhole’s claim on how the first loan was utilised before recommending it to the National Assembly for approval. It appears that the President was moved by partisan consideration or stampeded into doing what is clearly a disservice to the people and future of Edo State. Ironically, no government in Edo history has gotten the kind of financial allocation that this present government has received. In the past seven years the State government and the 18 local government councils combined have received over N712 billion. Compare this for example to what Chief Lucky Igbinedion and the 18 local governments received from June 1999 to May 2007 (an eight year period) which is N196, 650,837,309.93. (One hundred and ninety six billion naira plus) In spite of this financial position, Lucky Igbinedion paid all the debts he incurred as Governor before he vacated office and handed over on a clean financial slate. Governor Oshiomhole at the twilight of his tenure should tidy up the State finances and not entangle it in monumental debts.

The domestic debt of the State is unknown but figures from the Debt Management Office at the end of 2013 shows the State is owing N48,190,150,127.26. Many people have posited that the debt profile is now worse and one would have expected the State government to clarify the true position but curiously the governor usually known for his garrulous posturing has kept mute. We are aware that N25 billion was obtained from the capital market in December 2010 at 14% interest for the construction of a power plant and road project, redeemable 2017 after Oshiomhole has left office. Can this proposed power plant be the Azura-Edo N1 billion power project that the former President Dr. Goodluck Jonathan flagged off in 2014? We ask this because the Azura-Edo power plant is been financed by the International Finance Corporation (IFC) with a debt facility of $80 million to Azura Power West Africa Limited. IFC is also mobilizing $212.5 million for the project in long term financing from a pool of eight development finance institutions. The balance of debt financing according to the IFC is being provided by the International commercial lenders, co arranged by Standard Chartered Bank and Rand Merchant Bank. Does Edo State government have shares in Azura Power West Africa Limited or is the government financially involved in their project and loans? We are however informed by IFC that the project is being developed by a consortium of investors led by Amaya Capital Limited, while the other shareholders are America Capital Energy and Infrastructure, the African Infrastructural Investment Fund, Al-diyah International Ltd, Pan African Infrastructure Development Fund and the Assisted Resource Management Company Limited. Edo State government is not mentioned as an investor or shareholder in this project.

How much is the State government owing financial institutions? The House of Assembly has just approved a N3.1 billion loan bailout request by the state government from the federal government. Considering all the allocation the government has received coupled with the increased IGR, why is the State government borrowing so much and for what? The red roof achievement of the government is actually a Universal Basic Education (UBE) programme which the Federal government funded 65%. Can the State government not itemise the projects they have executed and at what cost, so that we can examine their performance and prudence?

In the 2014 Edo State budget of N160, 061,501,498.17 (one hundred and sixty billion plus), a staggering N20, 814,874,790 (twenty billion plus) was appropriated for debt servicing. What this means is that around 13% of the State total budget was used for debt servicing not repayment. This is unacceptable. We appeal to the governor to drastically cut down his huge expenditure and take urgent measures to reduce the debt burden. The Senate has however approved the loan request despite strong opposition to it. We can only hope and pray that the governor utilises this tranche more judiciously. #TheFutureIsNow

Editorial 2015

I find this interesting because of the author. Mr Ize-Iyamu is not Joe Public but a major stakeholder in Edo State who worked as a major player in the engine of government in recent government of Edo state from 1999 to 2003.

Here he seeks to explain a major financial matter concerning the state government as if he was me without his profile.

He ought to know and if he did not as he appears not to know, he is either negligent or being mischievous. The application of the world bank loan was approved in the Edo state House of Assembly. Mr Ize-Iyamu has his supporters in that place, members of his party who hold alligence to him.

At the time in 2012 when the request for approval to the ESHOA for the loan where was Mr Johnny come latterly. I did not see his FB write up or any other write up for that matter where he urged his supporters to reject the request and seek public support to rejecting the application.

Without particular evidence but using the timeline of Mr Ize-Iyamu’s political affiliation, (he was director general of the Oshiomhole re-election campaign) he chose not the interest of the state but of his political bedfellows. The hypocrisy of his write up is therefore not thinly disguised.

My quarrel with people who now oppose loan facility and question the actions of the government should have known the place to fight for their position but are now putting the cart before the horse.

This rejoinder does not in any way accept the position of the government nor reject the position of those who now sing from the hill top with their rejection of the loan. I merely suggest that their timing and place of opposition is wrong. The place for opposition was and is at the Edo state House of Assembly and the time was 2012. I really do not care for after the match midfielders and heat without light.

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