N500bn Loan: Is Taraba’s Opposition Crying Wolf?

By Louis Achi

On or off the battle field soldiers are known for their single-minded focus, especially when it comes to mission execution. The executive governor of North-Eastern Taraba State, Lt. Col. Agbu Kefas, rtd., is a thoroughbred soldier with meritorious service.

It would appear that this ingrained martial trait is firing up his alleged determination to secure N500 billion loan to aid the developmental imperatives of his state – as he has told anyone who cares to hear him out. That he is apparently dragging his state constituents – screaming and scratching – to the lender’s corner in this project, has not caught his attention.

But apparently, the rough-hewn audacity of his military pedigree and his single-mindedness in seeking this particular financial facility (N500 billion bond) from the capital market have cut little ice with many of his Taraba constituents who are crying blue murder. Though impatient for genuine, accountable inclusive human and infrastructural development of the state, they are insisting on transparent stewardship.

Today in Taraba, the strident demand for accountability is the deafening battle cry by disenchanted folks and this has significantly morphed into a formidable opposition. The emerging scenario is suggestive that somebody in power is not being accountable. What are the key issues afoot?

Governor Kefas’ ‘decision’ to take the sum of N500 billion bond, especially against the backdrop of his alleged refusal to come clean on what he did with the N206,776,000.00 (Two hundred and six billion, seven hundred and seventy-six million) he earlier borrowed from four commercial banks to “execute projects,” is raising tension.

The mounting opposition in Taraba and strident critical stakeholders insist the governor is yet to show evidence of what he used the earlier borrowed N206.7 billion for.

They demand to know how their governor spent the over N206 billion that he borrowed from a consortium of banks including Zenith Bank, UBA, Fidelity Bank and Keystone bank for which he mortgaged income to the state from the Federation Account Allocation Committee (FAAC), Joint Account Allocation Committee (JAAC), Internally Generated Revenue (IGR) and Value Added Tax (VAT) as security.

The N206.7 billion in question was reportedly for the “execution of some capital projects and the payment of some outstanding gratuities in the state.” The request to source the loan was made on behalf of the governor by the State Commissioner for Finance, Sarah Enoch Adi, before the State Executive Council which also approved it without a detailed list of projects to which the loan is attached.

According to a memo from the State Executive Council, sighted by THISDAY, the N206.7b was borrowed from Zenith Bank N83.3 billion; UBA Plc N50 billion; Fidelity Bank N50 billion and Keystone bank N23.76 billion. All the amounts were released to the state government at 18 per cent interest rate by the commercial banks.

The Taraba State Executive Council document permitting the loan further stated that “the N50 billion offer by UBA is a contract for financial facility in all the 16 LGAs and will be handled by the Bureau for Local Government, Traditional and Chieftaincy Affairs.”

Some sources in the state said the loan which was fully drawn has not had any impact on the state as civil servants are owed several months in unpaid salaries while pensions and gratuities remain unpaid too.

They also claimed that expectations the loan would impactfully accelerate development projects in the state capital, became wishful thinking as despite promises by Governor Kefas to transform the capital city, Jalingo is still the ‘old rural village’ that it used to be.

Meanwhile, while Tarabans are still seeking specific information on how the N206.7 billion was spent, the State Executive Council approved another request by the State Commissioner of Finance to permit the sourcing of an additional N00 billion bond from the capital market.

A memo titled “Memo to Exco on the need for the state to access N500 billion bonds from financial institution,” stated the state government “needs funds for development projects as obtained in the approved budget for 2025.”

Though the specific projects for which the N500 billion bond is now sought were not listed in the memo as presented by the finance commissioner, the state executive council approved that the bond be sourced from the capital market.

According to the State EXCO Memo, issuing houses for the bond are United Capital and Investment House, Quantum Zenith Capital and Investment Ltd, United Bank for Africa (as receiving bank) Africa Prudential Plc as registrar to issuer and Lighthouse Capital Ltd. United Capital would be the lead issuing house.

In what appeared like an effort to bring some clarity to the mounting financial fog in the state, the Commissioner for Finance said the N500 billion “will be released to the state government in tranches of N20 billion for -7 years tenor,” while there will be an “Irrevocable Standing Payment Order (ISPO) issued by the Accountant General of the Federation, authorizing monthly deduction from the state FAAC Account to be transferred to the sinking fund account managed by the trustees.

But perhaps understandably, opposition to the N500b bond is rising. And it is based on the fact that it is not tied to any particular projects. It is being argued that the listing of “energy, health and bio technology, waste management, tourism, mining and infrastructural development’ as reasons the state is going for the bond, are rather employing general terms that do not refer to any particular projects that would help the people to benchmark the spending of the funds.

More, there are indications the state government abandoned a project financing negotiations with Afreximbank, African Development Bank and ECOWAS Bank for Investment and Development midway, because of the strict conditions attached to the finances which were to ensure transparency and accountability.

Significantly, THISDAY checks at the mentioned development finance institutions (DFI’s) indicate their funds are usually project-tied. This means that whatever funds they release to states, which are with single digits interest options, must be tied to specific projects unlike those of commercial banks.

Further, the DFI’s also graduate their financing for projects so as to track judicious use of allocated funds. Documents on the deal indicate that the Taraba State Government had through an investment bank, sought the assistance of Afreximbank, AFDB and ECOWAS bank for the funding of some critical developmental projects.

These include an integrated rice project which will comprise a 16-ton rice mill and 10,000 hectares of rice farm located in Governor Kefas’ home local government area, as well as a solar and hydro energy project which would guarantee the generation of 50mw of energy from solar and 30mw from hydro for consumption in the state, and the creation of an industrial park which was designed to have five clusters.

These are agro-processing clusters, mineral beneficiation cluster, logistics cluster, residential and commercial housing cluster and general industry cluster which targets Asian investors.

Checks indicate that one of the DFI’s had readied an investment package of about $82 million into the Integrated Rice Project which would create more than 1000 jobs with the rice farm designed to produce improved rice varieties on a three-yearly cycle with improved irrigation.

The opposition allege they were abandoned for fear that the strict transparency and accountability governance templates of the DFI’s would make misappropriation of the funds difficult.

According to sources in Governor Kefas’ government who have details of the abandoned negotiations with DFI’s, the bank loans and bond can be easily misappropriated and they do not have strict transparency compliance rules.

When THISDAY reached out to the Senior Special Assistant on Media to the Governor, Emmanuel Bello, he did not initially pick a call put through to him nor respond to text messages seeking clarification on the unfolding drama in the state.

When he responded much later, he dismissed the alleged N500billion loan being sought by his principal. According to him, “Thing is that there no such request for more borrowing being made.”

When reminded that THISDAY had copies of documents okayed by the Tara State parliament for the governor to proceed with sourcing the N500billion loan facility, he responded that he will check and revert – “Really. Let me check.” He didn’t revert by press time.

However, in a previous, response by Emmanuel Bello, to an online publication on the same subject matter tracked by THISDAY (but which veracity cannot be confirmed) he insisted the opposition claims were false.

Though he insisted that Taraba State is still liquid enough to fund its financial obligations, he said “Our IGR has improved considerably due to the hard work of the sagacious governor and his team. This is the year of infrastructural development in roads and bridges. Our 2025 budget reflect this commitment.”

The emerging consensus in Taraba State is that to effectively rest the mounting allegations or strong perceptions of light-fingeredness by the government, only a full disclosure of details of the borrowing spree and meticulous defogging of the state’s project expenditure and accounts will suffice.

Taraba State governor – a protégé of the venerable and iconic General TY Danjuma (rtd.) – has not been heard claiming candidacy for sainthood. But nevertheless, this has not helped his image as a servant-leader who is coy about talking up his stewardship.