FG approves request by Lagos state to borrow $200m from World Bank
Federal government on Wednesday gave nod to the request by the Lagos State government to borrow additional $200 million from the World Bank to finance its massive social infrastructures. The approval was one singular item that dominated the
meeting of the Federal Executive Council, FEC, held at the presidential
villa, Abuja.
Briefing State House Correspondents at the end of the meeting, the
Minister of Information, Alhaji Lai Mohammed and the Minister of Works,
Power and Housing, Mr. Babatunde Fasola stated that the loan would
enable the state government to meet its infrastructural
needs. Specifically speaking, Fasola who is the immediate past governor
of the State said that the loan was initially $600 million, revealing
that the agreement was made in 2011.
According to him, it was agreed that the money would be released in
tranches if $200 yearly but suffered delays due to political differences
between the state government and the the previous PDP led federal
government. He said: “The point to make is that this is not a new loan.
It is a segment of a programme of developmental initiatives and it was
approved in 2010 with a total sum of $600 million for Lagos State to be
disbursed in tranches of 200 million each year starting from 2011-2013.
“But it suffered delays as a result of partisan political differences
in the last dispensation. After the first tranch was disbursed, there
was a freeze on the second tranch. The initial agreements we had with
the World Bank was a 40-year loan, a 10-year moratorium, 0.5 percent
interest. “But because of the delays that subsequently characterised the
partisan interference that took place, our profile as a nation also
changed. We had become a bigger economy although money was being lent to
us not now as a highly indebted nation anymore. So by the time this one
was approved now because of the delays, we had lost the opportunity of
40 years as it is now a loan of 25 years.
“The moratorium has reduced to five years instead of 10 years. The
interest rate had gone up to 2.5 percent, but what is still
heart-warning about it is that it helps to finance
infrastructure. Fasola who expressed gratitude to the present regime of
president Mohammed Buhari for facilitating the process remarked that the
loan would make life easy for the people.
He also said that the initiatives should be taken seriously by the
States to enable them compete with one another. “It’s is heartwarming
that this administration has taken it on and again fast tracked it so
that the Lagos State government can continue its developmental
programmes of infrastructure renewal, taking people out of poverty,
reducing inequality because that’s the way to really distribute wealth
in a society.
“That the World Bank has had the confidence now to lend sums
tantamount to sub-national government is a testament of financial
discipline, strong governmental structures and the establishment of
institutions, rather than the World Bank writing programmes for those
states and Edo has also benefitted, so also were Ekiti and I think
Rivers and I believe this is the way to grow the economy of Nigeria. The
States should develop their initiatives, show them to WB, which commits
them to certain programmatic reforms in order to be entitled, so it is a
very competitive thing.
“Perhaps people continue to wonder if these monies are paid. Loans
like these are actually deducted at source at monthly FAAC meetings. So
the risk of defaults of these kinds of loan is very minimal. So, these
are part of deductions that come to every state once the FAAC accounts
are rendered, your loan obligations would be factored”, he said.
Asked why Lagos, an APC-controlled state was the first beneficiary,
the minister said “I mentioned partisan differences because I remember
when the delays came up, I was told by the then Minister of Finance that
she was getting complaints from PDP Governors that it was only APC
states that were benefitting at the time from the World Bank loans. So
we got access when we were in opposition, because we qualified and we
met the competitive conditions and one of the resolutions we have taken
is that we must encourage other states who meet these kinds of
conditions across the party lines to be able to access them, because it
is competition that really brings productivity”.
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