Bonds to settle debts on the roads
Babatunde Raji Fashola, Minister of Power, Works and Housing may be accused of anything but lack of enthusiasm for the job, the capacity for doing it or constant re-tooling for the best delivery would not be on the charge sheet. When he told a delegation of the government of Enugu State that the Federal Government had concluded arrangements to refund the money some state governments spent rehabilitating federal roads in their states, that statement bore the signature of a thorough consideration. To make the refunds possible, the minister explained, the Federal Government would issue bonds, the proceeds of which would be used to repay the debts the Federal Government owes the affected states. This was in response to incessant pleas from states, including Enugu, for the refund of hundreds of billions of naira (Enugu’s is over N25 billion) they had expended in rehabilitating some federal roads that were in disrepair in their domains.
If that, as suspected, has not taken cognizance of the applicable interest amount, then the debts owed the states must have excluded another huge sum due to time value of money which can clearly be appreciated from the worsened rate of inflation in the country. The result, therefore, is that the debt to states like Enugu must really be monstrous!
Indeed, the minister was credited with confirming that the Federal Government had “carefully assessed” the various claims by the affected states but did not state categorically that the claims had been found genuine and absolutely correct. So, given the likelihood of exaggerated claims, the Federal Government must ensure that it would not refund monies not, in the first instance, used for the maintenance or rehabilitation of its roads.
Indeed, it must be very ‘careful’ not to refund monies based on bloated claims. Similarly, monies that had been corruptly siphoned into private pockets in the guise of federal roads rehabilitation and maintenance must not be refunded. Thus, a thorough forensic examination/audit, which should include physical identification of the roads and assessment of the quality of work done compared with the amount claimed, is recommended.
The intention of the government to issue bonds to settle its indebtedness to the affected states is heart-warming and the good news many had long awaited. It is a welcome development especially given the poor financial position of most of the affected states. If achieved, it would hopefully empower the states to deploy funds to other areas of critical need. And in doing so, quite a number of new jobs would be created which would positively impact on productivity and unemployment rate in the country.
Despite the benefits that will accrue from the refund of the funds by the Federal Government, the situation that necessitated states having to spend their money to intervene in the poor state of Federal Government roads should not be allowed to arise again. With the Federal Government owning a very small percentage of the roads network in the country compared to what is owned by states and local governments, it is unimaginable that the same Federal Government would be unable to maintain or rehabilitate its roads. Indeed, only negligence or irresponsibility could have prevented the Federal Government from caring for its roads to the extent that the states had to intervene to save the situation. Given its huge take from the common purse and its relatively minimal impact on the people, the Federal Government was in a better position to have intervened where the states were failing or having difficulties.
What has happened so far clearly raises fundamental issues on the identity and structure of Nigeria, one of which is the need for the entrenchment of federalism in its pure meaning in the country. If federalism had been on course, the federating units would take full responsibility for their people and directly cater for their areas, having had control of their resources, without looking forward to any re-imbursement from the central government. The second issue is the imperative of setting up a National Roads Fund that can be the responsibility of all the governments to contribute to and accessed when the need arises.
It should nevertheless be appreciated that it is ironic that the Federal Government, in the recent past, while the debts owed some states subsisted, chose to bail the states out of financial difficulties instead of repaying or reducing its indebtedness to them. That was outright financial mismanagement. In the circumstance, the wisdom that led to a bail-out is not only questionable but overreaching. Had the bail-out funds been deployed to defray the indebtedness, the need for the Federal Government to aggravate the country’s domestic debt burden via issuance of the contemplated new bonds would not arise. Given this situation, a great lesson ought to be learnt by the government that issues need to be thoroughly thought through and optional choices developed for application in the best interest of the nation.
No Comments yet