Senate, Reps approve N14.7b loan for Edo
President Muhammadu Buhari had on Tuesday, 4th August 2015 written to the Speaker of the House, Yakubu Dogara on the need to approve the $75 million loan on behalf of Edo State Government.
Adopting the report of its ad-hoc committee on local and foreign debts, the Senate noted that the approval was in recognition of the fact that the loan request was part of N44.1 billion ($225 million) total credit facility for the state, which the upper chamber had already approved in 2012.
Chairman of the committee, Senator Kabiru Gaya, while presenting the report to the Senate explained that, “Funds from the loan facility will be used to finance key programmes of the state to stimulate internally generated revenue, develop key infrastructures that will attract private investment and of course increase employment opportunities.
“It is worthy to note that World Bank normally presents strict criteria for intending borrowing organisation to fulfill as a pre-requisite to assessing the facility. It is gratifying to note that Lagos and Edo states are the only sub-national governments in Nigeria to meet the stringent conditions of the World Bank to qualify for the Development Policy Operation.
Gaya stated that, “Edo State has reasonably justified the borrowing and has acceptable debt sustainability level and therefore eligible to borrow.” But Senator Uroghede Matthew (PDP, Edo South) was swift in expressing his reservations about the loan, which he anchored on the position of his constituents.
Informing the Senate that he had received over 2,000 text messages urging the Senate to reject the loan request, Matthew expressed regret that Nigeria’s Debt Management Office (DMO) had ranked Edo as the fourth most indebted state in the country. While presenting the loan request to the Senate, President Buhari had in a letter titled: “Request for approval to obtain $75 million USD credit facilities from the World Bank for Edo State,” stated: “I am writing to seek the consideration from the National Assembly an approval for the request from Edo State Government to obtain a $75 million credit facility from the World Bank.
“You may wish to know that the World Bank had approved a development policy programme for the total sum of $225 million to Edo State Government in 2012 to be implemented in three tranches of 75 million per annum. “The first tranche was approved by the National Assembly in the 2012/2014 Federal Government external ruling borrowing plan.”
The House of Representatives during its Committee of the Whole chaired by the Deputy Speaker Sulaiman Yusuff Lasun late yesterday considered and approved the report of its Ad-hoc Committee on the loan. Presenting the findings, Chairman of the Ad-hoc Committee, Babangida Ibrahim, who laid the report of the loan sought by Edo State Government said that the facility is to enable the government consolidate on budget implementation for the 2015 fiscal year.
He said, “The present $75 million request is the second tranche of $225 million global amount, the first tranche having been disbursed in 2013. The World Bank Country Office having been satisfied with the utilization of the first tranche has now approved the second tranche of $75 million.” He further explained that only Edo and Lagos, out of the 17 state governments that previously applied for the World Bank facility qualified for it in the past four years.
He also noted that Edo State has a debt ratio of about 29 percent as against the current ceiling of 40 percent set by the DMO. He said the DMO cleared the loan that it is carefully articulated for development and that it is budget-driven and not project-specific, adding that it is to be used to support programmes of the state government which are already in progress.
Ibrahim explained that the Federal Ministry of Finance also corroborated the presentation of DMO and that informed their favorable recommendation for approval. The facility was therefore approved. He explained that the loan would help the state government to tackle issues such as education, infrastructure and rural development, and noted that the government is operating at the acceptable borrowing limit.