Lagos State Governor Babatunde Fashola, yesterday, explained the rationale behind the decision of the state to take a bond worth over N160 billion from the World Bank.
According to the governor, the economy of the state had recorded exponential growth over the years and had been consistently rated high by international rating agencies. Criticisms that the state was borrowing too much are therefore unfair, he said, adding however, that strategies had been put in place to ensure repayment of the loan in due period.
“I think it was the debt management office of the Federal Government that published the report that we have a debt of about N160 billion. I don’t know the intent of the publication but if it was to inform the public, I think we have always kept the public informed anytime we borrow money. If there are other intentions behind that, only those who make the publication would know what the intentions are.
“But you see, when people talk about debt of a state like Lagos, they forget that after Nigeria, South Africa, Egypt and one other country, we have the fifth largest economy in Africa. When you are talking of about a billion naira debt to a population of over 21 million people; because if you are measuring the debt, you also have to measure the responsibility. Those are the things people keep in isolation.”
“The truth is that what they don’t also say is that no state in Nigeria can borrow money outside, from any multilateral agencies without the approval of the Federal Government. 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 FG’s approval.
“Securities and Exchange Commission is one of Federal Government`s regulatory agencies through which we must pass.If they say okay, it means there must be something good about the debt.”
“Our rating as a state is the same as that of the Federal Republic of Nigeria, BB Minus-Stable with a positive outlook. We are the only state in Nigeria that has that rating.
“The first bond that was taken during my first tenure has been paid, the first tranche. I think the second tranche will be due around 2016 or 2017 and we are already making provisions. The provisions that will be there will be in excess of what is needed,” Fashola said.
The comments were made by the governor while responding to questions from newsmen after an inspection tour of the ongoing construction of the light rail terminus at Orile-Iganmu, Lagos.
He expressed satisfaction over the level of work done so far on the project, but aired his disappointment that the work did not move as smoothly as expected.
He however, expressed optimism that the project would be completed in another 12 months.