IN recent months, this column has given pretty much space to political events in the oil rich Rivers state. It’s not for nothing. It’s partly because, on a lighter side, politics in Rivers state is a fun to follow. But, more importantly and sadly, Rivers state has come to represent some of the things we hate to see in our politics. Spate of killings and general insecurity have not ceased to rivet national attention.
These ugly happenings became more frightening before and after last year’s General Elections in which the Peoples Democratic Party (PDP) in the state trounced the All Progressives Congress (APC). The defeat of Dr Dakuku Peterside who was the handpicked candidate of the immediate past governor, Chibuike Amaechi, by Nyesom Wike of the PDP remains one of the highlights of that election.
But, has Peterside who has now become the captain of Ahab haters of Wike allowed the governor to work? Not really. And why? Ever since he was defeated, Peterside and his army of APC whips, have not let go. They have remained sore losers, always blaming the loss of the party at the poll on sundry, unacceptable factors even after the Supreme Court has delivered the final verdict on that election.
This is the irony: Wike’s political opponents are never happier than when they believed they have forced him on the wrong side of the argument. Only recently, the fiery tone of Peterside’s attack on Wike tore a painful wound in the troubled and desperate politics the APC in Rivers state is now known for. It’s pure political gymnastics that has given politics a bad name in our country today. In one of his latest attacks Peterside accused Wike of excessive borrowing. The man and his party had raised false alarm that the governor by the loans he has procured from banks might “mortgage the future of the state and that of the citizens.
Peterside alleges that the governor has borrowed so much and spent so much on trivia matters. Last week, he claimed that the elected government in the state would “end very soon”. These unbridled attacks, in particular, that of loans taken by the Wike administration, have opened the debate on the essence of borrowing to run governance. It also raises vital questions. These include: What’s the fuss about these loans? Were the loans spent on trivia as alleged by Peterside? Or are the loans part of the government plan to meet its financial obligations? In other words, are the loans not part of the government’s fiscal estimates for the year to augment shortfalls in revenue caused by current multiple economic challenges which even the ruling APC at the centre is struggling to cope with? Four basic credit factors from the essence of all credit analysis and the business borrower. These are the borrower’s character and soundness, the intended use of loan funds, the primary source of loan repayment and secondary sources of repayment.
It’s important therefore to revisit to Amaechi’s stewardship as given by him on the eve of his departure as Rivers state governor, May 28, 2015. According to him, the state under his watch “maintained an economic and fiscal rating only associated with solid economies”. But he had revealed few days to his leaving office that Wike would have little or no money to run his government. And it proved to be true. Amaechi’s undoing which seems to be haunting APC in the state is that he failed to disclose total debts he left behind except the N17.7bn he said he borrowed from banks. More worrisome also was that Amaechi, now Minister of Transportation, refused to present any handover note to Wike. For me, that’s where he shot himself and APC in Rivers state in the foot.
After his inauguration, Wike said he inherited “empty treasury”. He alleged that his predecessor sold off the state’s power assets worth over $320m and looted the proceeds, thereby leaving behind a huge debt profile for the new government.
The question that arises is: How does a new government constrained by such huge debt not borrow? Wike had argued that because of this, his administration was compelled to mortgage the state’s share of the Value Added Tax (VAT) for 20 months to secure loans to complete some strategic projects reportedly abandoned by the Amaechi administration. But that seems not enough to meet the challenges inherited. Wike said he had no option but to borrow. The loans included N12bn from the Central Bank. Out of this, N10bn was used for the completion of the Sakpenwa-Bori road project and the Tam -David West airport road. Other loans which were duly approved by the State House of Assembly are N20bn from Access Bank, N9bn from Zenith Bank and N10bn from the Excess Crude account. All of them got the approval of the state legislature.
Wike had long explained how the loans would be used and on what projects. Some of the loans he added, would be repaid through the state’s Internally Generated Revenue (IGR) and the Indorama Petrochemical project, Eleme. Recall that Amaechi admitted his administration left a N15.7bn debt from Zenith Bank and another N2bn unpaid loan from CBN. Again, it’s not unusual for any government to borrow from any financial institution. The questions should be: what are the loans meant for? Are such credit facility utilized for the purpose for which it was meant? With proper management, Rivers state has the financial muscle to repay any loan taken. The annual IGR of the state is over N100bn, second only to Lagos state that generates over N284bn IGR annually.
Let’s look at Federal Government borrowing records in six months of this year. Between January and June, the Buhari administration has borrowed N600bn. The amount is 33 percent of the N1.8trn of domestic and external borrowing provided in the N6.1trn 2016 budget. But no problem, as this is still within the acceptable borrowing threshold of the N900bn is beside the &1bn Eurobond borrowing from the International Capital Market to fund the 2016 budget, as inflation, sluggish growth and other challenges constrain government from meeting its promises to the people.
What every government ought to do when it borrows is to do what Wike is doing with the loans he has taken: invest it in capital projects that will have multiplier effects in the development of the state so that the loans can generate income to repay itself. The central goal of government is economic growth and the welfare of the people.
The truth of how Nigeria has come to this sorry state is that when government borrow, it fails to invest on productive projects that will yield dividends and stimulate the economy. As any banker will tell you, the paramount factor in a successful loan is the honesty and goodwill of the borrower. So far, Wike’s Rivers has not shown it’s a dishonest borrower.
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