Nigeria Content Online

A
year ago the Ogun State government announced that it was going to the
capital market to raise a N50 billion bond, to finance a number of
projects, ranging from an airport to stadia to roads and industrial
parks. The state government did approach the Securities and Exchange
Commission, but didn’t go much farther than that. A feud with the State
House of Assembly led to the issuing by the House of “Resolution 167”,
which placed an embargo on the fund-raising process.

Barely a year after Governor Daniel announced the
bond plan (the first phase would have seen the state raising N28
billion), the Ogun State government is now lamenting that the state is
insolvent, and desperately needs to borrow money to pay salaries, fund
the running of government, repay part of its not-insubstantial debt,
and carry out debt servicing. The lofty infrastructure projects for
which the bond had originally been meant (according to what Governor
Daniel said in 2009) have evidently fallen to the bottom of the
priority list.

It is curious that, barely a year to the end of
the Daniel administration, Ogun State government is desperate to raise
billions of naira from the capital market, for the purpose of paying
debts, most of which were incurred by the same government. This
argument was made most eloquently by the Vice Chancellor of an
Abeokuta-based private university, Crescent University, Professor
Sheriffdeen Tella. In a letter to the State House of Assembly,
commending it for the decision not to give approval to Governor
Daniel’s bond plans, the economist described the Ogun State
Government’s plan as “ridiculous” arguing that any fresh debts incurred
at this time ought to go into profit-yielding investments, not into the
payment of old debt. He asked the government to reveal “what was done
with earlier loans and why such projects are not yet bringing returns
to offset such loans.” It all sounds like unimpeachable common sense.
But apparently the Ogun State government doesn’t see it that way. The
state commissioner of information, Sina Kawonise, speaking on behalf of
the government, lashed out at the Vice Chancellor. “You cannot describe
him as a renowned economist; he is an ordinary economist… To me, his
view is ill-informed; borne out of ignorance, and simply the view of a
motor park economist,” Kawonise said.

The Ogun State government is not alone in this
desperate bid to take on billions of naira worth of fresh debt even as
it enters its final days in office. Governor Oyinlola of Osun State
also wants to take an N18 billion loan from a consortium of banks. Like
their Ogun counterparts, Osun State’s legislators are wary.

Clearly there is a new epidemic in town – a last
minute mad rush for cash by state governments that have only months
left in office. Last June, Governor Gbenga Daniel, defending his
state’s fundraising plans, pointed to other states treading a similar
path. He said that more than 20 other states were “currently at various
stages of floating their own bond programmes.” We are worried by the
fact that these days most state governments seem to do nothing else
than complain that they are broke, and desperately need money to meet
their obligations. A look at newspaper headlines in recent times will
confirm this. We suspect that this refrain is no more than an excuse to
go in search of fresh loans, which will inevitably be used to fund the
war chests, presumably for the coming elections, and for life post-2011.

We wonder why our governments assume that the only
way to tackle insolvency is to seek new debt. What have they done about
cutting wasteful expenditure and putting an end to inflated contracts
and white elephant projects? What steps have been taken to eliminate
ghost workers, the bane of the Nigerian civil service? Someone needs to
urgently remind the Ogun State Information Commissioner that no amount
of thuggish indignation on his part will answer the questions that
Prof. Tella has raised.

It is high time Nigerians rose vociferously to
oppose these irrational decisions by the state governors. At this time
we desperately need more voices of reason, like Professor Tella. This
is also the time for state houses of assembly to prove to Nigerians
that they are not mere rubber stamps of the executive. Our state
governors have done enough harm already, failing to deliver good
governance even at the most basic levels. On no account must they be
allowed to mortgage an already fragile future.