Worries over Sanwo-Olu’s planned N250b bond
• PDP, ADP, NCP, Bode George call for caution
• Loan will be put to proper use – Governor’s aide
The proposed N250 billion bond by Governor Babajide Sanwo-Olu, which he said his administration was constrained to apply for due to a couple of reasons, has continued generating concern among stakeholders in Lagos State.
Among other reasons, the governor, in a letter read by the Clerk of the Assembly, Mr. Sani Azeez, had noted that the lack of revenue for the remaining months of the year and not being in a position to propose a supplementary budget, which informed a re-ordering of the 2019 budget, had made it necessary to consider the bond option.
Sanwo-Olu broke down the proposed loan as a fixed rate bond of N100 billion from the capital market and an internal loan of N150 billion. He explained that the budgetary provisions of recurrent and capital budget of ministries, departments and agencies were not likely to be utilised before the end of the year, saying that N34.050 billion could be re-ordered. The governor argued that the budget as at 31st August 2019 had a 71 per cent overall performance, which was below the set target of 100 per cent while further analysis showed that the recurrent expenditure stood at 80 per cent while capital expenditure was at 64 per cent performance, portending a 49:51 capital/recurrent ratio against the target of 55:45, among others.
However, the governor’s explanation seems not to have gone down well with some stakeholders, who complained that the level of infrastructure development in Lagos over years has not been commensurate with the volume of loans the ruling party had obtained since 1999.
The state’s chapter of the Peoples Democratic Party (PDP) therefore called on the Assembly to reject the request, saying any attempt by the lawmakers to approve the loan would be a declaration of a vote of no confidence on themselves.
The Publicity Secretary of Lagos PDP, Mr. Taofik Gani called on the citizens to reject the loan. It stressed: “The request was made under very unclear needs and unless the governor allows public defense of it, we hold that 60 per cent of the sought loan is to be shared amongst the governor, the lawmakers and notable chieftains of the APC, essentially to placate the chieftains of the ruling party.”
According to the PDP, the governor had in his loan request letter stated that the state would have no new Internally Generated Revenue (IGR) for the remaining months in the year. “We declare this assertion as very uninformed and a deliberate to divert the state IGR. We have intelligence report that the state IGR is now between N60 to N70 billion monthly, but that the actual collections are never made public.”
The party urged the Assembly to summon the governor and his Commissioner for Finance to explain how the state would not have IGR for the remaining months in the year. “Indeed the time is due for Alpha Beta Company to be reappraised and brought to account,” the party added.Lagos gubernatorial candidate of the Action Democratic Party (ADP) in 2019, Mr. Babatunde Olalere Gbadamosi urged the people of Lagos to be on the alert over the planned bond. According to him, “When Sanwo-Olu took over power and promised to re-ordered the budget of his immediate predecessor, Akinwunmi Ambode, what came to my mind was that he intended to downsize the budget like what Governor Seyi Makinde did in Oyo State. But with what is happening it is as if he (Sanwo-Olu) lied to the people of Lagos during the debate we had before the governorship election.”
The ADP flag bearer said another challenge with governance in Lagos under the APC was the lack of transparency in budget implementation. He said that there was no detail as to how the money is being applied and how they intend to spend it.On the N250billion bond, Gbadamosi refrained from doing an appraisal, saying, “I don’t know what the loan is meant to be for and even if they explained, there is reason to be skeptical considering what has happened to loans obtained by the ruling party in the past. My fear is that the loan is a local debt of which interest rate will not be lesser than two digits. We are worried about the future of Lagos.”
He, however, said that the manner with the state had been administered under the control of APC in the last 20 years would require the electorate to stand up and yawn for a change. “We cannot continue to have governments that would be obtaining loans to cater for the well being of APC leaders,” he added.
Gbadamosi also said the reason Sanwo-Olu could not borrow from outside was because the government had exhausted its goodwill, hence the need to resort to local debt.
Another gubernatorial candidate in the state, Mr. Ayodele Akele, who contested on the platform of the National Conscience Party (NCP), also expressed concern over the planned loan. He specifically tasked the state lawmaker to scrutinise the loan before giving its the nod.
According to him, “The level of indebtedness of Lagos State is becoming alarming and it poses a serious danger to its future. The loans have been piling up since the era of former Governor Bola Tinubu and there are no critical things to show for it in terms of development and alleviation of poverty.”Ayodele also expressed concern over the lopsided composition of the Assembly, which he says makes it difficult for it to check the excesses of the executive in terms of budget spending. “Lagos is really in danger; where we have the same party controlling the entire local government structure, the House of Assembly and the government, the government can do anything and go free.”
Meanwhile, former National Chairman of PDP, Chief Olabode George in a telephone interview, described the loan as procedurally sloppy, morally reprehensible and strategically ill advised. According to him, “Since year 2000, we have been shouting that the Alpha Beta Company, which has been the tax consultant to Lagos must be audited. The state is the greatest debtor outside the debt owed by the Federal Government, both locally and internationally. Now they want to go and borrow another N250 billion; what happened to the ones we have borrowed?”
Meanwhile, the Chief Press Secretary to the governor, Mr. Gboyega Akosile, assured that the loan would be put to proper use.According to him, “Sanwo-Olu is a financial expert and he understands that loans obtained for capital projects must not be used for recurrent expenditure. I am assuring the people of Lagos that the administration is not financially reckless. The governor is taking his time to ensure Lagos is on sustainable financial target.”