Fashola Defends N160 billion Huge Lagos Debt

Posted by African Examiner Featured, Latest Headlines Wednesday, September 10th, 2014

Lagos Governor, Babatunde Fashola on Wednesday defended vehemently the over N160 billion debt the state incurred from the World Bank for capital development, as plans were in place to pay back the debt.

Speaking after inspection tour of the Light Rail Terminus, Orile-Iganmu area of Lagos, wondered why people were making hues and cries over the debt profile of the state, saying it never borrowed in secret.

Lagos State Governor Babatunde Fashola

“When we were doing the DPO, you were there. I have been to the House of Representatives to say that we have a loan application with the World Bank for 600 million Dollars,” he said.

Fashola maintained that Lagos is the only sub -national government in Africa that has benefitted from such a facility, adding, “Of all the sub-national governments in the whole of Africa, we are the only beneficiary government. The only other two countries where their sub-nationals have benefitted is in Brazil and in India.”

“The thing to understand is that there was a debt of about One billion dollars which is roughly around N160 Billion. I could not decipher the intent and purpose of the publication, but if it was to inform the public, the State has always kept the public informed every time she borrowed money and if there were other intentions, only those who make the publications will know what their intentions are,” he said.

The Governor added that when people talked about debt of a State like Lagos, they forgot that after Nigeria, South Africa and Egypt and one other country in Africa, Lagos is the fifth largest economy in the whole of Africa.

“When people are talking about one billion dollars debt to a population of 21 million people, they should also be measuring the responsibility as the debt is being measured and should not be kept in isolation.

“Our rating as a State is the same as Federal Republic of Nigeria-BB Minus stable, with a positive outlook and we are the only State in the Federal Republic of Nigeria that has that rating,” he emphasized.

Fashola explained that what those who have been publishing the debt profile did not say was that no state in Nigeria could borrow money from any other multi- national agency outside the country without the Federal Government’s approval.

“So what they did not say is that they approved it. No state can raise money by bond the way we have done without the Federal Government’s approval. They would not do it. The Security Exchange Commission (SEC) and the Nigeria Stock Exchange (NSE) are all Federal Government regulatory bodies through which we must pass. So if they say okay, it must mean that there must be something good about that debt,” he said.

He noted that the first tranche of the bond that was taken during first tenure has been paid, adding that the next one would fall due around 2016 or 2017. “We are already making the provisions and the provision which will be there will be in excess of what will be needed to pay it”, he added.

Speaking on what support the State has received from the Federal Government, Fashola said there has been no support by way of direct cash as the projects were being carried on with the State’s strength and with the support of the people of Lagos who pay taxes, adding that Lagos has taken her destiny into her own hands.

“As a Federal Government, we can’t borrow money outside the country without them giving us the approval and that is all and even at that in the last two years, there were a lot of delays and frustration which led to my going to the House of Representatives to get them to pass this and even now may be this week the credit was finally made and so we are going to pay as a State not the Federal Government,” he explained.

According to him, “Nobody has done us any favour. The law just says that if any part of the country is going to borrow money, the country must approve but the debt is our own and that is why they are publishing and we acknowledge it as our debt. We have never moved away or denied it”.

“We have always said we took the money and this is part of where the money is going. You can see people constructing, you can see supply and you can see labourers. That is how an economy works, people are taking value from government infrastructure initiative, from government borrowing funded by tax payers money so anybody who is worried must either not know his economics or must have a voodoo intention to achieve.”