Enyinnaya Appolos, the Chief Press Secretary to the Abia State governor, Dr Okezie Ikpeazu, disputes claims by the All Progressives Grand Alliance’s gubernatorial candidate in the state, Alex Otti that the state is not being governed well
On Monday, February 16 2015, Mr. Alex Otti, as the governorship candidate of the All Progressives Grand Alliance (APGA), at one of his campaign meetings in Aba, told his audience, largely members of the Aba Chamber of Commerce, that he had attracted an International Finance Corporation’s (IFC) grant of $100 billion for an industrial park in Aba.
He told the gathering that the grant from IFC was structured in such a way that it would not suffer depreciation as a result of the fluctuations in the exchange rate.
He thereafter promised to tackle the infrastructure deficit in Aba, especially the deplorable road condition, blocked drainages and environmental challenges, if elected governor.
He also promised that a special ministry would be created to re-design and rebuild Aba, adding that he had the international connection and integrity to access grants and investment from multinational organisations for the overall development of the state.
He said: “There are multinational organisations with grants and aids tied to developmental needs, such as water, electricity, rural development and agriculture. But such monies will only go to people who have a track record of credibility and transparency.â€
The question then was whether it was possible for a private citizen to secure a $100b loan for a state?
On Wednesday 16, August 2017, the same Otti who had ‘secured’ a $100b loan to develop Aba, addressed the press in Lagos, where he said, among other things, that the National Assembly should withdraw or reverse approval for the $200 million loan to Abia State, because according to him, any money given to the Abia State government would disappear.
He also expressed worries that the capacity to repay the loan had not been demonstrated in any way.
Why should a man who said he had attracted a huge sum of $100b loan to develop an industrial park at Aba in 2015 kick against the grant of $200m loan to Abia State by the African Development Bank (AfDB) for infrastructure development?
Again, is it really possible for AfDB with all its expertise or any bank at all, to approve a loan facility without being satisfied with the repayment plan laid out before it?
Let me explain here that the negotiations for AfDB infrastructure development facility to Abia State preceded the current administration. The initial contacts and discussions involved Dr Ngozi Okonjo Iweala, World Bank President, AfDB officials and the then governor of Abia State.
As a result of the urgent need to renew upgrade infrastructure across the state to support the integrated development agenda of the current administration, the government decided to vigorously pursue the realization of the facility which has less than 1 per cent interest rate with 10 years moratorium and 20 years repayment period.
The facility proposal received the approval of the Federal Ministry of Finance as part of the national borrowing plan of the federal government and we are glad that regardless of the efforts of Otti and others who only think politics, the National Assembly approved the borrowing after reviewing the state’s presentation that included well stated repayment plans.
Contrary to Otti’s claims, AfDB will manage the allocation and disbursement of the funds through its accredited contractors that are expected to emerge via transparent international bidding processes. There is therefore zero chance of mismanagement of the fund by state officials as it will be fully devoted to road infrastructure, sanitation and erosion control projects across Abia State.
Such base less allegation by Otti, who is obviously suffering from the hangover of defeat in the 2015 governorship election, as evidenced in his press statement in Lagos, is a very poor way to start a campaign.
Ordinarily, such allegations do not deserve any response, but for the sake of members of the public, who may be misled, it is necessary to state the facts.
It is instructive to note that in 2016 Otti wrote an opinion piece on Debt Management Office’s proposal to borrow $30b for national infrastructure development that attracted a response from the Presidency titled “Dangerous Misinformation by Mr. Alex Otti: Re: $30billion Loan: Are You For Real?”
In his haste to attack the Ikpeazu administration and possibly stop new development projects in the state, he forgot his own words stated in his December 11 2016 rejoinder to the DMO where he stated as follows:
“On infrastructure, I had been an unrepentant apostle of government spending massively to provide infrastructure for industrial production and good quality of life for the populace. I had argued in my two part series ‘Chop Your Money 1&2’ published on April 25, and May 9, 2016 respectively and another write-up titled ‘When and How to Spend the Money You Do Not have’, published on May 23, 2016, that we must spend a lot of money to deal with the present infrastructural decay. I had contended that it was more useful to spend our money on building roads, railways, refineries, power, hospitals and schools than save money in foreign bank accounts for which we do not get so much as interest, but also lose the benefits of having the much required infrastructure in place. Even in the write-up in contention, if DMO had read through properly, it would have noticed that I had answered the ‘how big’ question thus ‘According to the IMF, Nigeria needs to spend no less than $140b in the next decade to bridge the infrastructure gap in the country†Given this position, no one can sustain the accusation that I did not say how big the required investment is.'”
If not for mischief why would Otti call a press conference to lampoon Ikpeazu for daring to borrow to develop infrastructure?
Ikpeazu is open to any probe of his administration’s management of the state’s financial resources by any constituted authority of the state or federal government. Otti is therefore enjoined to feel free to visit any relevant institution and offer information on the management of Abia resources.
At no point did the kpeazu’s administration publicly claim that it needed only N6b to clear salary, pensions and gratuities. Rather it is a matter of public record which can be verified at CBN and DMO that the documents submitted by Abia State Government in lieu of the request for bailout indicated a requirement of N38b to clear all the outstanding as at October 2015. Only N14.2b was approved for the state. It is also public knowledge that when the facility was received the state government transparently set up a committee dominated by labour leaders in the state to allocate all the resources to the payment of some of the outstanding salaries and pensions.
Unlike other states, ICPC and labour leaders reviewed the application of the 2015 bailout and commended the Abia State government for prudently managing the facility without diverting any portion to competing needs.
To date, Abia State under Ikpeazu has not borrowed a kobo from any commercial bank in Nigeria. Otti could easily verify this fact from the CBN and DMO. In any case, states have long been stopped from borrowing from commercial banks at the prevailing double digits interest rates, especially for the purpose of paying salaries.
With regard to the approval from the Abia State House of Assembly to borrow N30b, the Ikpeazu administration never accessed those funds to date. We challenge Otti to publish the name(s) of the local bank that availed the facility to the state government.
The effect of the current economic situation in the country is that revenue inflows to states from federal revenue receipts have fallen much below wage bill level for many states, including Abia State, for most of the past 22 months. At a particular period the state wage bill hovered around N2.7b with FAAC receipts at between N1.6b and N2b monthly.
When the state received the first tranche of Paris Club refunds totalling N10.6b, the governor approached the Abia State House of Assembly for approval to invest 50 per cent of the funds on outstanding salaries, as suggested by the Presidency while the remaining 50 per cent was allocated to infrastructure development projects. It was on that basis that the House approved the following expenditure in December 2016.
The details are as follows: N5.3 billion on salary arrears and pensions, N1.7 billion for road construction projects, N2.5 billion on bridges, N685 million on Hospital projects and N200 million for street lighting projects.
Labour leaders in the state later approached the governor to add N700m to the N5.3b to ensure that the available funds cover more units of the state’s civil service, and the governor graciously accepted. At no time did either Labour or the Commissioner for Finance claim that the N700m was what was needed to clear all outstanding.
When the state applied for the second tranche of Paris Club refunds, it was calculated that based on verifiable figures the state wwould receive a minimum of N15b. Given the available data that showed that outstanding salary and pensions stood at around N13b, the governor who was eager and committed to paying off all workers outstanding declared without prompting that once the inflows, expected before end of July 2017, is received his government will clear all the outstanding salaries and pensions.
Sadly, the Federal Government only released N5.715b to Abia State. Yet eager to do the greatest good to the greatest number of workers, Ikpeazu directed the labour-dominated committee to apply all the received money to payment of salary and pension arrears. Whereas the federal government recommended that states apply 70 per cent to salary/pension outstanding and 30 per cent to infrastructure development projects.
As at today, all the Ministries, Departments and Agencies (MDA) in Abia State, constituting more than 70 per cent of the state workforce, have received July salaries. Given that we are currently in August, it should be noted that more than 70 per cent of the state’s workforce have been paid.
Yet there are still challenges that were not met with the received funds. The already issued payment mandates were not enough to cover the following salary arrears within the state workforce: primary school teachers still have 2 months salary outstanding while secondary schools teachers have 3 months. Local Government workers have 2 months outstanding with 5 months for pensioners while state pensioners have 6 months outstanding.
While the governor is concerned about the yet to be cleared salary and pension backlogs, some of which originated from 1999-2002 period, he is also mindful of the need to avoid borrowing from commercial banks to clear the outstanding.
To date, Ikpeazu has commissioned 26 roads in the state within the last 24 months and is currently at 65 other road construction sites spread across the state. The government is speedily constructing the first interchange (flyover) at Osisioma Aba, while two bridges have been delivered with new hospitals, classroom blocks and buildings as well as other human capacity development projects.
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Is it really possible for AfDB with all its expertise or any bank at all, to approve a loan facility without being satisfied with the repayment plan laid out before it?
