Dedicated to Nigeria's socio-political issues
October 3, 2007 - December 2, 2007
THE DEBT CRISIS IN EKITI STATE
(Being the speech delivered by FEMI FALANA at the Annual Business Meeting of the Ekitikete International Forum held at the Hilton, Silver Spring, Maryland, United States, on Saturday, October 11, 2003)
Fowarded Mobolaji E. Aluko, Ph.D.
Permit me to express my
heartfelt appreciation and gratitude to your esteemed organization for inviting
me to the 2003 Annual Business Meeting of Ekitikete International Forum.
However, due to some pressing domestic engagements, I regret my inability to be
physically present in your midst on this auspicious occasion. All the same you
can continue to count on my unalloyed support in your determined bid to make
immense contributions to the development of Ekiti State.
As you are no doubt aware I
contested the last gubernatorial election on the platform of the National
Conscience Party. Even though I lost the election my participation in the
farcical exercise afforded me the rare opportunity to appreciate the enormity of
the crisis of underdevelopment in Ekiti State. During the electioneering
campaign I took particular interest in the crippling debt burden coupled with
the large-scale corruption which have combined to stultify accelerated growth in
As the eminent status of Nigeria as the second most corrupt country in the world has just been confirmed by Transparency International, I am not going to waste your precious time by discussing corruption. Since we are all familiar with the debilitating effects of corruption in our society I have decided to address this distinguished gathering on the debt crisis in Ekiti State which has assumed a dangerous dimension.
HOW MUCH IS OWED?
Since his assumption of
office as the governor of Ekiti State last May, Mr. Ayo Fayose has repeatedly
maintained that he inherited a debts stock of N7 billion. Not unexpectedly, his
predecessor, Otunba Niyi Adebayo, has challenged such claim by insisting that he
left a debt of barely N500 million.
Instead of politicizing what
has become a serious crisis the government owes it a duty to inform the people
on the actual level of indebtedness of the State. However, contrary to the
figures being bandied around I wish to say, without any fear of contradiction,
that the Ekiti State government is indebted to the tune of N32.7 billion.
Out of the aforesaid sum the external debt is fixed at US$198 million (i.e. N24.4 billion) while the local debts stock is N8.3 billion at July 30, 2003. Further details of both external and internal debts of N32.7 billion are as follows:
Principal yet to be redeemed
For a state whose recurrent
revenue oscillates between N8.5 billion and N10 billion per annum,
a debt stock of almost N33 billion is definitely a clog in the wheel of
meaningful development. Apart from the monthly deduction of about N200 million
from the meager statutory allocation of the State to service the external and
internal components of the debt stock, there is no clear-cut debt management
agenda or program designed to address a precarious economic crisis.
As a matter of fact there are
no reliable data or information on the total indebtedness of Ekiti State.
According to a group which recently completed a study of the debts profile:
of trend and growth of the Ekiti State domestic debt is not possible
limited level of information available at this point in time. In fact
is available on historical evolution of the entire State debt stock.
preliminary visit to the Debt Management Office in Abuja has only
establishing the existence of information on the external debt of the State. “
(See Assessment of Ekiti State Debt Management, August 2003, by
Okonji, DFID, Ado Ekiti.)
It would be recalled that
following the Supreme Court decision on the so-called “resource control suit”
last year the Federal Government decided to hand over to the States the payment
of external debts incurred by them. In the course of sharing such liabilities
the sum of $263 million was imposed on Ekiti State out of the unpaid
consolidated external debts incurred by the old Ondo State.
Although the projects for which such debts were incurred by the Ondo State government cannot be located in Ekiti State the Adeniyi Adebayo regime accepted the responsibility to service and pay such colossal external debts. As a matter of urgency the Ekiti State government should re-open negotiations with the Ondo State government and Federal Ministry of Finance with a view to verifying the genuineness of the external debts. On Nigeria’s foreign debt which is unarguably riddled with fraud the President of the Institute of Chartered Accountants of Nigeria, Chief. J.K. Randle has recently observed:
frankly, it is a mess. Those who are familiar with the origin of the debts
going back 25 years would no doubt recall that most of the debts actually started off as private-sector debts which through our own ineptitude (and blatant corruption) somehow crystallized into Nigerian government debts.
To make matters worse most of the goods never reached Nigeria and as for projects which were supposedly financed by the debts, we have in the archives of government a staggering catalogue of non-existent and abandoned projects. To put it mildly, Nigeria was simply hoodwinked into accepting the debts….the so-called reconciliation was merely a comparison of papers submitted by the creditors with papers (sometimes forged or tampered with) at the Central Bank and bingo, the figures were reconciled” (THISDAY, Friday, October 3, 2003)
Whatever figures that may finally be agreed upon,
Ekiti State should make a strong case for debt cancellation from the Federal
Government which guaranteed the loans. More so, that Ekiti State was not given
a matching grant when it was created in October 1996. Alternatively, the
Federal Government should be approached to give Ekiti State a moratorium of not
less than 10 years. At the same time Ekiti State government should persuade the
oil producing Ondo State to take over a substantial portion of the external debt
in the interest of justice and fairplay.
N4 Billion Revenue Bond
In a bid to fund some of its programs the Adebayo administration secured revenue bonds of N4 billion through the capital market. Out of the said sum, N2.3 billion collected by the defunct regime was channeled towards road construction. For reasons best known to the Fayose government those road projects have been suspended. Meanwhile, in line with the terms of the Bond the sum of N137 million is deducted at source, on a monthly basis for repayment of the loan. As at September 30, 2003, a total sum of N2.7 billion
Has been paid by the State Government. In order
to reduce the burden of further payment of the principal and the interests of
24.5% on the N4 billion loan the State Government should rush back to the
capital market to renegotiate the terms of the bond.
N4.6 Billion Supplier/Contractors’ Debts
In view of conflicting claims between the
Government and contractors over the latter’s debt of N4.6 billion there is the
urgent need to embark on a comprehensive review and verification of all debts
incurred since October 1996. In similar circumstances the Adebayo regime set up
the Justice Ojuolape Panel to investigate contracts awarded between 1996 and
1999. The report and government white paper on the Panel’s recommendations will
provide some useful guide in this regard.
With respect to the unpaid N228 million belonging
to the 16 local governments this may be written off if the creditors are made
aware of precarious nature of the debt crisis. No doubt, this will be a major
contribution of the local governments towards bailing out the State from the
Only last week the House of Assembly of Ekiti
State publicly accused Governor Ayo Fayose of running the State like his private
estate. In particular, he was alleged to have engaged in extra-budgetary
allocation of the scarce resources of the State. Instead of attacking the PDP-controlled
legislature of sabotage or treason the government should be made to appreciate
that the Ekiti people have been taken for a rid for too long. Any move to
compound the precarious economic crisis of the State from any quarters
whatsoever deserves to be resisted by all men and women of goodwill.
Apart from enforcing the principle of probity and
transparency in governance though compliance with the Appropriation Law all
patriotic indigenes of Ekiti State ought to join the campaign for the complete
democratization of our society. The masses that bear the brunt of the debt
crisis must be informed and mobilized to free themselves from the shackle of
grinding poverty in a land of opportunities.
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