In one fiscal year, within 10 months, the government of Kogi State would be raking in about 22.6 billion Naira loan debts, as the state House of Assembly has approved the request by Governor Yahaya Bello to borrow 3 billion Naira from Zenith Bank.
The loan, according to the Speaker of the House, Matthew Kolawole who read the request letter, would be used to fund the Nigeria Covid-19 Action Recovery and Economic Stimulus projects in the state.
Kolawole said the repayment would be done on monthly basis from the state allocation on frontline charge.
Speaking through his Chief Press Secretary, Femi Olugbemi, the Speaker explained that the loan is a Federal Government facility granted all the states to cushion the effects of Covid-19 pandemic in the country, adding that the N18.7bn, which would be disbursed in six tranches (6months instalment) of N3.1bn each, is expected to be repaid monthly for 30years, approximately (360 months).
“The fact is that the Federal Government of Nigeria as part of deliberate policies and plans to assist states to cushion the effects of COVID-19 pandemic in their various states initiated and approved the loan facility to support state governments.
“In line with the laid down procedure, each of the State Houses of Assembly across the country must approve the loan which has over thirty years plan for repayment before it can be accessed hence the Kogi State House of Assembly under Rt. Hon. (Prince) Matthew Kolawole in discharging its constitutional responsibility gave the facility the needed legal backing for the state to access its fund that will enable the state to meet up with some of its financial obligations.
“President Muhammadu Buhari approved the bridge facility for all the 36 states of the Federation and it will be accessed from the Central Bank of Nigeria, CBN. The facility was meant to give support to States following the resumption of monthly deductions for the repayment of their various loan facilities.
“It will be recalled that the Federal Government had earlier suspended the monthly repayment of the loan facilities by States due to the effects of Covid-19 pandemic”.
The N900 million loan was said to be used for the payment of counterpart funds for the 2021 Universal Basic Education Projects.
The letter stated that government needed the approval to develop the State Basic Education subsector.
The Lawmakers gave the Governor a go-ahead, without hesitation.
With the spate of loan collection by the government, and the allegedly fixed 20 billion Naira conundrum with the Economic and Financial Crimes Commission, stating that the state renowned for percentage salaries to school teachers and local government workers, has gone flat broke would no longer be news,
Recall that in 2020, appearing before the Senate, the state Commissioner for Finance, Budget and Economic Planning, Asiwaju Asiru Idris stated that the state was taking a 100 million dollars World Bank loan, which according to him, would be repaid in the next 25 years.
Idris explained that the debt profile of Kogi was within the acceptable range for the state to go borrowing.
“Kogi’s debt profile as at December 31, 2019 is N123 billion. We can still borrow because we have looked at the analysis of the loan, and the very important factor to borrowing money from the World Bank is that the repayment/deduction must not be more than 40 per cent of the allocation for the preceding twelve months.
“Checks on our debt profile deduction is 28 per cent against the threshold of 40 per cent. It also shows that your total liability should not exceed 250 per cent of the total amount of loan you are seeking,” he said.
The state, he added, has calculated and what it submitted is 128 per cent.
Idris said there was no cause for alarm over the intended loan as the state was buoyant enough to sustain its present and expected debts.
“The $100 million, when accessed, will be used to build roads, electricity and other social amenities within the Alape Crop Processing Zone.
“This will in turn make the place and the state accessible to investors to come in and do agriculture businesses; a development that will generate income and employment for the state.
“We are not borrowing for consumption; we are borrowing to build capital projects. This is in line with the state governor’s fight against insecurity, because if you there is no food security, then any fight against insecurity will be a mirage.”
He said all ministries had also been mandated to look inwards and contribute to the economic development of the state in line with the fiscal discipline directive of the governor’s agenda.
Few months after, February 2021, the state Government went ahead to sign two agreements with the World Bank and International Fund for Agricultural Development (IFAD) for subsidiary loans of $62m and $10m respectively.
The Finance Commissioner, Idris, signed the agreements on behalf of the state government.