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The burden of monitoring how states disburse proceeds from the
bond market remains that of the citizens. This admonition is coming as more
states have approached the bond market in the last few months to raise funds
while others are lined up to also access funds from the capital market.

Abraham Nwankwo, the Director General of the Debt Management
Office (DMO), said even though the Securities and Exchange Commission (SEC) has
the primary responsibility to ensure that states utilize such proceeds for the
purpose they are meant for, the citizens are empowered by the Constitution to
question government on how state funds are utilised.

According to the figures from the Nigerian Stock Exchange, 12
states, from 1999 to date, have raised about N374.6 billion from the bond
market. In the last one year, Imo, Bayelsa, Kaduna, and Ebonyi have approached
the capital market to raise N18 billion, N50 billion, N8.5 billion and N20
billion.

The Act

“The Fiscal Responsibility Act gives you as an individual or
organisation the locus standi to go to court to ask a public officer or
institution to explain why he is in contravention of the law. We are tired of
Nigerians complaining in the air. Once you have your facts, go to court and
complain,” Mr Nwankwo said

Part 12 (52) of the Act states that “A person shall have legal
capacity to enforce the provision of this Act by obtaining prerogative orders
or other remedies at the Federal High Court, without having to show any special
particular interest.” Mr Nwankwo said no state can raise funds from the bond
market without meeting the guidelines of SEC.

Lanre Oloyi, spokesperson of the Securities and Exchange
Commission (SEC), however, said state governments that raise funds from the
bond market are expected to deploy the proceeds for that which they stated it
would be used for. “There have not been any issues about funds
misappropriation,” he said. “The market is rule based and due process must be
followed and complied with. If there are instance of states not acting
responsibly, they would have been so advised.” He added that SEC has the
responsibility to ensure that states use the funds judiciously, adding that the
commission conducts monitoring exercise and on-the-spot assessment.

Self regulation

Mr Nwankwo said there should be self regulation and self
monitoring. “That is why we are trying to help every state to have a capable
debt management office so that in the next two years instead of asking us, you
should ask the debt management office in your state,” he said. “It is the
responsibility of all of us to demand explanation of how funds are managed.”

He also explained that 13 states spread across the six geo-political zones
have completed their domestic debt data reconstruction (DDR) exercise working
in collaboration with the DMO. This provides a harmonized computerized total
debt data base which indicates total state debt obligations and other state
commitments at a specific period in time. He said the 13 states so far have a
cumulative debt profile of N200 billion. “By the end of December 2010, the DDR
exercise will have been completed for 16 states while by year 2012, the
exercise would have been completed by all the 36 states of the federation,” he
said.