Governor Babatunde Fashola
A completion board meeting convened by the Lagos State Government Thursday authorised the state to float Series 1 Bond Issuance of N80 billion to enable it complete some on-going infrastructural projects.
The amount is the first tranche of the state’s N167.500 billion debt issuance programme expected to terminate in November 2019.
Speaking at the meeting, which took place at the Lagos House, Alausa, Governor Babatunde Fashola, emphasised that the debt to be raised would not be used to pay salaries or buy fuel, but would go into “hard critical long tenure infrastructure that would give the people an opportunity to look to tomorrow with confidence.”
According to Fashola, projects like bridges, roads, schools, hospitals and clinics are some of the projects to which the funds would be deployed.
The governor said: “It is not in doubt that our country is living on infrastructural deficit that is about 40-year old and the time for urgent renewal of that infrastructure to sustain even our own businesses was yesterday and not even today. Now, if you do not borrow today, the cost of cement would not go down and this is the only way we can beat the prices.
“It will take care of projects like Badagry Express road expansion, the blue line, ferry terminals, health institutions, completion of the Ayinke house project, maternal and child care centres that we are building to reduce infant and maternal mortality and all of those life defining structures that will take us much more closer to the Lagos that we all aspire to live in.”
The governor said the issuing houses, the book runners, the rating agencies, joint stockbrokers and receiving banks were not interested in floating the debt instrument, “but because they are also beneficiaries of the infrastructure as their businesses depend on the existence of the physical infrastructure in the state.”
Fashola explained that for each year’s budget, the state government decided that infrastructure renewal was going to be a critical tool for sustaining economic growth and combating poverty.
“This is the first time a debt issuance of this size is being undertaken by any state and it also represents the fourth time Lagos State is approaching the market,” he disclosed.
Speaking earlier, the Managing Director of the lead issuing house/ book runner, Chapel Hill, Mr. Bolaji Balogun, described the bond issuance as the largest ever issued by any state.
Commenting on the risk involved in raising debt, Fashola declared: “There is always risk. In banking and financing, there is always risk. In this case, the risk is, can we pay back and the answer is yes.”
According to the governor, “These are long term assets and infrastructures that will give the State the ability to support the many people who choose to live here. Our budgetary policy has been infrastructural renewal for sustainable economic growth and poverty eradication.”
Noting that government, just like life, is a continuum, Fashola said there was need for every government to continue to plan ahead for the future adding that, “every day, children are born while some are going into or leaving school and others joining businesses. They depend on what government does”, he said.
“We cannot, for example address Education without schools, or address healthcare without hospitals. We cannot solve business problems without transportation – roads, rails and all of that”, the Governor said adding that although taxes remains government’s tool for fund raising, they do not come in the large amount in which they are needed to accomplish needed objectives.
He added: “This year, for instance, we have awarded about 180 inner roads. Now, we do not have all the money in one bulk. Things are getting more expensive. If we don’t borrow to start the projects now, by the next year, things would have gone up “The State is getting bigger. The people are asking for more roads, they are asking for more drainage; they are asking so many other things, community healthcare centers and so on.”