OPINION: KWSG vs Opposition on the Issue of Bonds: Matters Arising. By Hassan A. Saliu

Date: 2016-01-07

INTRODUCTION

Of recent, the Kwara State government has been in the news most times for good reasons that are connected with democracy in action. Several issues have come up in which the State is intricably tied. One of such was the issue of the Senate Presidency in which the former governor of the State, Dr. Bukola Saraki, was involved. Another was the issue of minimum wage on which some governors have threatened to reduce. On the part of the State, however, Governor Abdulfatah Ahmed has assured the workers that nothing of such would take place in the State.

Most significantly, the issue of warehousing all parastatals of the State under the State conglomerate business outfit - Harmony Holdings, ostensibly for more accountability and cost-saving measures has been a subject of intense controversy with the State government having to take out advertorials in the papers to educate the public on the issue and by so doing, presenting its own perspective of the issues involved.

This paper is, however, concerned with the issue of N20 billion bond that the State government has been allowed by the House of Assembly to access to fill the huge infrastructural gap in the State which is put at N255 billion. So much concern and interest has been generated on the issue by some stakeholders including some opposition elements in the form of position papers. On its part, the State government has been pushing out information on its decision to borrow N20 billion from the capital market. The media and the public space generally have been seized on the matter to the extent that some confusion does exist due to the lot of sentiments that have been injected into an otherwise simple financial transaction.

My motivation for writing this paper is a response to the calls by observers that we professionals especially teachers of politics should not always keep quiet on issues of public importance. We should see our interventions as the continuation of our public intellectualism which the Nigerian nation does need at this time of our history. Let me however correct the notion that this author has been too quiet on so many issues of public interest. Any regular listener or reader of the dailies would recall my interventions that have created some discomfort due to their punchy perspectives and pointedness. As a Kwaran, I have never kept quiet in giving kudos to the State government and the opposition on some occasions and knocks on some other occasions, while pointing at the political correctness and approaches to enhance the content of governance in the state. I have done these though not as a practicing politician rather as a public intellectual. I hope to continue to do so as long as there is a need for my intervention.

I have elected to participate in the debate on the bond issue because I have identified some gaps in the arguments of the State government and those who are opposed to it. I will present the strands in the positions of the two before I try to narrow the gap in their positions. I will after raise some wider issues for the government, opposition and the general public to ponder over on the issue of rapid development for our dear State. I begin with a review of the position of the State government.

GOVERNMENT'S POSITION

I rely on the media reports, reports of the proceedings of the House of Assembly, media chats of Governor Abdulfatah Ahmed and his aides on the issue of N20bn bond and most significantly, the advertorial in The Nation newspapers by Dr. Muyideen Femi Akorede on 29th December, 2015 to distill the following arguments for the State government:

It has been argued by all sources on the issue of bond that given the reality of about 50 per cent drop in Federal allocation to the State, the government has no choice than to resort to borrowing to make up the shortfall and drive the development process in the State. This argument is a valid one that even the opposition elements have acknowledged. Where there is divergence is how to go about bridging the shortfall in the allocation. For the State government, the correct part is to approach the capital market for its strategic intervention. Based on the good record of the State in loan repayment, the best partner to approach is the capital market.

After all, the bond of N17 billion taken by the Bukola Saraki government in 2009 had been liquidated, leading to the state's good record with the Central Bank of Nigeria and some financial rating agencies. There are projects on the ground to show that the borrowed money had been judiciously utilized. This time around, especially with the downward trend in federal allocation, there is a more compelling need to borrow money to make more impact on the development climate of the State.

It is also implied in the position of the government that there is really nothing wrong with the idea of borrowing to meet some emergencies or unforeseen financial demands. The trend all over the world is for governments to borrow either in the short run or on a long term basis. The highlight of the proposed 2016 Federal budget is the hefty amount that the Buhari government wants to borrow. What then is wrong with the Kwara State government borrowing N20 billion out of the N56 billion required to meet the financial requirements of capital projects in its 2016 State budget?

According to the State government, it has commissioned a study on the level of infrastructural development in the State. The study has revealed that the State would require the sum of N255 billion to fix the infrastructural gap in the State. In our own clime, physical infrastructural development complements the now famous stomach-infrastructure to show the performance level of a government.

Any unfavourable score on these two elementary yardsticks for measuring performance in our country would easily return a negative verdict to a government. The current State government is aware of this expectation and it therefore, wants to certainly add to its list of achievements by embarking on the sinking of 938 bore holes, construction of two new campuses of the State University at Osi and Ilesha Baruba, dualise the Zango-UITH road and Olunlade-Ganmo road, upgrading of Oro General Hospital, among other high priority projects to the government. The crave for enduring legacies by the Abdulfatah Ahmed administration cannot be excused in the desire to borrow the N20 billion bond from the capital market.

From the programmes outlined by the government including the repayment proposals, future governments of the State would not be encumbered as the bond will be paid back in the year 2023, four years after the expiration of the tenure of the current State government. In the interval, the government is paying attention to the internally-generated revenue with the revenue growth rate of N500 million per month as a way of cushioning the biting effects of the loan/bond.

Aware of the resentment of the people to the bond, the Governor, Alhaji Abdulfatah Ahmed, has promised that the money will not be diverted to other uses; every bit of it will be used for the purpose intended. The government, after dropping the idea of a public hearing on the matter, convened a meeting of "5000 strong stakeholders" at the Banquet Hall, opposite the Government House, Ilorin on the 19th of December, 2015, to get people's input. And from the report, those in attendance overwhelmingly endorsed the idea of borrowing from the capital market. The House of Assembly has subsequently given the nod to the Governor to go ahead with the loan. It must be remarked that the Assembly on two previous occasions, had turned down the request of the State government on the issue of bond for lack of sufficient information on what the loan was meant for. The final approval thus means that the cracks in the relationship between the executive and the legislative have been resolved as both arms are now united as far as the issue of bond is concerned.

THE PERSPECTIVE OF THE OPPOSITION

Three sources represent the views of the opposition in this paper. These are the position paper written by Akogun Oyedepo and Barrister Abdulwaheed Yusuf that appeared in the Sahara Reporters of 23 December, 2015, the widely circulated paper written by Moddibo Kawu on Kwara bond, which first appeared in the Vanguard of 24th December, 2015, and later in several other newspapers. The last was the excerpts of the stand of the Labour Party in the state in the bond window as contained in THISDAY newspapers published on 30th December. 2015.

From the sources, there is ample evidence to suggest that the opposition is opposed to the idea of borrowing money once again from the capital market. The first issue they have raised is the confusion and the lack of transparency in lumping together a lot of projects that cannot be executed with the anticipated borrowed money. It is clear that a more painstaking effort at assigning costs to the envisaged projects would have helped the opposition in reacting more concretely to the projects and their cost implications. In their conclusion, therefore, there will be recourse to more borrowing if all the earmarked projects are to be executed. This, in their view, will add more pressure on the resources of the State and thus worsens its debt profile. For these reasons, they are not in support of the loan.

They have punctured the argument of the State on the drop in revenue as a justification for the loan. It would be recalled that in 2009, the opposition has argued, the allocation from the Federal Government was still healthy and buoyant. Yet, the then State government still went ahead to borrow. There must be another reason for the borrowing in the judgment of the opposition that is not yet in public domain.

From the separate sources, one can deduce the strong feeling that all the earmarked projects are not those desired by the State. People generally are talking about their emolument and empowerment that can make them to contribute more to the development of the State. How can people whose salaries have not been paid ever be appreciative of all the projects that have been lined up for execution? They have asked.

Another strong ground for the opposition to the loan is the perception that all the previously contracted loans under the era of continuity have not been judiciously utilized. They feel that diversion of funds has been taking place in the State. More so, as not all the projects lined up for execution in 2009 have been successfully delivered. It therefore, doubts the rating of the State by some financial rating bodies, claiming that the favourable rating is doubtful. Much as statistics and global ratings in general are still indicative of the global trends, the strong reservations which both J.J. Rawlings and Charles Soludo have expressed on them should throw more light on their controversial utilitarian value. Just as it happened in 2009, as argued by the opposition, there is no proof that anything has changed in the financial environment of the State, i.e. the loan can still be diverted. On this score, the State governor has given a personal assurance that there will be no diversion of the borrowed funds. All the money will be spent on the listed projects.

The opposition, in rejecting the loan, has queried some of the fundamentals that informed the idea of borrowing. As far as the opposition is concerned, it does not believe the monthly wage bill of the State is anything near N1.2 billion that the state government has presented. Relying on some historical facts, it believes a padding of sort must have taken place. So for it, the starting point is to look inwards and cut areas of wastage to be informed by the economic strength of the State. Four suggestions on cost-saving measures have been given for the state government to explore further. One can sense from the tone of its language that it does not believe that the economy of the State needs any life-support. All what it requires is the re-structuring of the expenditure profile of the State.

It was no doubt upset with the truncation of the democratic process when the House of Assembly in an untidy manner cancelled the advertised public hearing on the issue of bond. Eventually, a meeting of the stakeholders later held at the Banquet Hall, opposite the Government House, Ilorin, without the critical voices that should have been allowed to air their views on the matter. This shoddy arrangement has strengthened the perspective in some quarters that there is definitely something the government is hiding on the loan. This invariably, has made the opposition to be adamant in its rejection of the loan proposal.

One can also glance from the opposition the fear that with the current debt profile of the State, the current government is already piling up enormous financial obligations for future governments of the State. For instance, the N20 billion loan would not be paid back by the current government. Indeed, the life span of the loan is eight years; four of the years will come up during the tenure of the current government that will end in 2019 and the succeeding administration will carry the burden throughout its term which terminates in 2023. It is thus concerned about the issue of morality in government. It is certainly repulsive to the opposition that the state easily resorts to borrowing to finance projects that can be financed without recourse to more borrowing.

Left to it, the government ought to reassess itself and sees what value it is adding to the lives of kwarans through its loan regime.

RECONCILING THE TWO SIDES AND THE WIDER ISSUES

A deeper look at the foregoing review would suggest that, while some of the key issues have been identified and discussed, there are other fundamentals that have been glossed over. In view of the lessons that discussing them would have for all the parties in the controversy, this author will devote the remaining pages of this paper to raising and analyzing them.

Borrowing has become an important aspect of public financial management. For some crucial and justifiable reasons, no nation can totally avoid one form of borrowing or the other. There will always be resource gap and the desire to fill it will always present itself. However, the experience of contemporary public financial management has indicated that monitoring the borrowed funds and the commitment to the already listed projects are the challenges facing the managers of States across the world. The State government, no doubt, is justified by the current resource flow to the State to resort to borrowing. There is, however, the need to allay the fear of the critical public on the possibility of diverting the N20 billion bond to other uses, which the opposition suspects may not add any value to the efforts at developing the State.

It is not out of place for the government or specifically the House of Assembly to have a standing committee on the State debts apart from the less effective one that the Assembly may currently have. This committee can monitor the execution of the earmarked projects and funds utilization for the benefit of the people. There is nothing stopping the opposition parties to pay a closer attention to the borrowed funds to ensure more accountability. Questions can be asked and alarm can be raised if there are infractions to the Act. Their interest should not be limited to mere opposition to the loan. The reality of the State government going ahead to take the loan should provoke more activism on their part especially with the promise made by the Governor that there will be no diversion of funds under the bond window.

The level of accountability is generally low in most Third World nations. Government everywhere should be accountable to the people. The loan window should therefore, be an opportunity to put democracy in full swing by raising the level of accountability in governance. All the critical stakeholders should not go to sleep after giving support to the government. Nowhere accountability is most inevitable than in the financial management. The instrumentality of public hearing is a window open to the people to air their views on issues of public interest. It is a good lubricant for the effective functioning of democracy. But on this occasion, it was truncated under unconvincing reasons. And that has given undue suspicion to the motives of the government. Even when a change in venue and date was inevitable, all the invited people should have been properly notified. There is nothing wrong in the Governor attending the session if he feels compelled and convinced about the issue but shutting out the invited people by the House has done an incalculable damage to the process of procuring the loan.

Democracy does not anticipate the guerrilla tactics. The people in power must appreciate the fact that unnecessary partisanship in governance can be anti-development. Once election has been conducted, the governor is the governor of the entire state. Nothing should be done to muzzle the opposition, no matter the level of irritation associated with its operations/activities. The feeling of "we" versus "them" that pervades the political air in Nigeria is abnormal. The people with power should necessarily be thinking outside the box by eliciting inputs, good ones from the spectrum of the society to deliver the much anticipated development to the State. Surely, it is not everything that comes from the opposition that should be considered inimical, just as not everything that flows from the government should be condemned. In between the government and the opposition, something good can come to the State.

In the same vein, the opposition needs to slow down and allows the elected government to put all its cards on the table. Vigilance is a political virtue but too much of it can derail the State in achieving its developmental goals. It is absurd as some opposition elements have been doing to openly call the elected officials thieves without any court verdict to back up their claims.

The negative impact of this is that some political actors may inadvertently believe that democracy, which is usually a battle of wits, where superior arguments should carry the day, is warfare where excessive preparations, including guerrilla approach, are required. One can certainly make one's points without being vulgar and the resort to intemperate use of language.

The mantra of continuity is good but it needs to be more entrenched. The position of the government that the initial N17 billion had been paid back is good but more efforts should have been spared on what the previous loan had been spent on and explanations offered on the projects not later covered by the 2009 bond. By so doing, people would have been able to follow more systematically the arguments of the State government.

Surprisingly, the opposition too has failed in not raising specific issues on the projects executed with the 2009 borrowed funds and those not later covered by the bond. In other words, the opposition needs to be more organized to put the State government in the mould of preparing well for the public. Perhaps, some may be wondering why there is controversy on the issue of bond for the State. Politics generally, in its base conception, is divisive and tendering towards partisanship. Different political parties have different approaches to issues of public interest. So, it should be expected that they will necessarily differ in their handling of public issues. The government needs not to see the opposing views as distasteful. People are only venting their opinions on the bond. Nothing should be done to personalize the issue. Politics and the way it has been played in Nigeria have created a pool of Doubting Thomases or cynical audience who views everything government does with suspicions.

The message to the government from all this is that it should get more prepared and notes the rising tendency of speaking out against the government. There should be nothing to it than the exercise of people's political rights as guaranteed by the constitution. The saying that the "minority will have its say and the majority will have its way" should always be borne in mind by both the ruling party and the opposition. Democracy is not really a war.

In future financial transactions, the government must show more concern and respect to the people by not lumping all the projects together. Rather, a carefully selected list of projects should be prepared with their assigned costs for people to meaningfully relate with the government on the issue. Instead of the opposition to hammer on this major oversight, it has gone overboard in throwing mud in all directions, including personalities that are no longer on the stage at the State level to make its points. Obviously, the amount being sought cannot finance the long list of projects that has been given. The opposition also forgets that it is its responsibility to effectively monitor the execution of the projects. It can still do that now that the loan has been approved. If it does, the government should not feel unease as it is the norm under the democratic practice. I want to personally encourage the government to take note of the observations on cost and execution schedules in its next public appearance on the issue of bond.

It is worth noting that some other gaps in government's presentations created the heightened concern over the bond issue in the State. In this year's appropriation bill laid before the House of Assembly by the Governor, the sum of N56 billion has been set aside for capital projects. The balance of N36 billion that will be left after the bond is fuelling the suspicion in some circles that more borrowing will take place before the end of the budget year. Although the government has placed a lot of hope on internally generated revenue, there are still concerns on its ability to raise the required taxes based on socio-economic conditions prevailing in the State and the targets of the envisaged taxes. It is not an idle talk therefore, to expect that more money may have to be borrowed that will further swell up the debt profile of the State.

With the character of the opposition in the State and the usual reluctance of the executive arm to be over sighted, one feels compelled to call on the State House of Assembly to carry its business of approving the loan transaction to its logical conclusions. After two rejections before the final approval, it should show more interest in the loan administration as the representatives of the people. Its mediating role is capable of dousing the tension that is building up on the loan issue.

Two important lessons of the loan debate should be borne in mind. The indigenes of the State are getting more inquisitive about what is happening around them. Also, the failure of the state government to meet its financial commitments to its workers caused by some internal and external factors have literally sensitized the people in making them to show more than a casual interest in the state administration especially the financial transactions. All these, among others, should compel the fine-tuning of the governance environment to meet the expectations of the people in terms of being placed at their service and welfare. More is still desired in the state to make it a model in aggressive pursuit of development.

The piece at this point will make some suggestions on the revenue drive of the state government. The background to the sorry financial state of Kwara is the continuous fall of the revenue which all meaning Kwarans should assist the state government in overcoming. There are abundant sources of revenue that the state is keeping its eyes off. Water supply is a legitimate and less controversial source of income. I argue that if the entire bond size is being borrowed to fix the water problem in a determined and sustainable manner, there would have been no much controversy on it. Water is essential yet it has remained a milk cow in the state with every government borrowing to tackle it without success. Provision of adequate water can bring about affordable levy which most citizens will be eager and ready to pay. A monthly levy of 1000 naira per household can generate a lot of income for the state with lesser social cost than the direction the government is currently looking at. What stops the state government from partnering with Unilorin to build a Kwara hall for student accommodation? One may want to ask: If other groups are doing so, why not the state government? A parcel of land can be obtained on campus with the understanding of the management to develop hostels for 4000 students at a favourable commercial rate. At a rate of between 30,000 and 40,000 naira per bed space (normally a room should have four bed spaces), such an investment can bring in good money to the government and spare it the path of overburden the already distressed populace.

Also, with the high jump in the staff population of the University, there should be a good return to the state in the form of taxes that the staff pay. Whatever is obstructing remittances on the part of the University and other federal establishments located in the state should be removed to improve on the economic climate of the state. These highlighted sources and others if explored can reduce the propensity to approach the banks and the capital market for capital to finance less generative projects that have become a kind of stigma and irritation to some critical minds. It is necessary to argue that in future, borrowing should be informed by projects that can generate enough income with which to liquidate the contracted loans. One observes in this regard that borrowing from the capital market to sink boreholes under normal circumstances cannot pass the rigour of vetting by our financial experts.

On a final note, the point should be stressed that the integrity of the state government is at stake. The Governor has put his honour on the line by promising to deliver all the projects that come under the new bond regime. He should walk the talk by ensuring that no diversion of funds takes place under his watch to improve on the overall accountability. Also, he should ensure that the citizens are regularly briefed on the progress made in executing the identified projects. It is only by so doing that he can allay the fears of people on possible diversion of the borrowed funds and restore confidence in his government.

CONCLUSION

The paper has examined the issue of bond being sought by the Kwara State government. After given adequate coverage to both the perspective of the State government and the position of the opposition, it attempted to reconcile the two opposing sides.

The strong point of the paper is on the wider issues raised after presenting the two perspectives. The three vital points made are: there is need to allow for flourishing of the democratic tradition in future engagement of the State government with the people; there should be full disclosures on financial transactions that require people's participation; and lastly, the opposition should shun sensationalism in holding the government to account by doing more research to put it on its toes. No one attaches much value to the opposition when it is even less prepared than the ruling party in its engagement of the public space.

I note the interest that the issue of bond has generated and argued that it is all in the interest of the State. There is no winner or loser in the debate. Rather, all Kwarans have a reasonability to make the State a model in aggressive pursuit of development.

Professor Hassan Saliu lectures in the Department of Political Science, University of Ilorin, Ilorin.

 

 


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