THUMBS UP: Rejection of Kaduna’s $350m Loan Request

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The Senate last Thursday dismissed Kaduna State government’s request to secure a $350 million World Bank loan.

The loan request, which came at a time when there have been complaints about Nigeria’s rising debt level, calls for concern.

In rejecting the loan request, the Senate posited that the government already had an existing backlog of $231 million debt with a low Internally Generated Revenue (IGR) status.

The upper chamber argued that if the new loan request was granted, Kaduna would be the most indebted state across the country.

It therefore cautioned the presidency and other relevant agencies and ministries not to circumvent the provisions of the extant debt management act.

Chairman, Senate Committee on Local and Foreign Debts, Senator Shehu Sani, representing Kaduna central and two other senators from the state expressed their disapproval of the loan request.

Specifically, Sani, who read the report at plenary, noted that the state government has not convinced the Senate on how the loan would be judiciously utilised and how beneficial it would be to the people of the state. He therefore warned that if the request was granted, the state’s debt stock would rise to $582.1million

Similarly, Senator Suleiman Hunkuyi, representing Kaduna North, urged his colleagues to dismiss the loan request, insisting it would increase the financial burden of the state. He also pointed out that the reasons for the loan request to the World Bank were not in tandem with the purpose for which the loan was sought.

Also, Senator Danjuma La’ah, representing Kaduna South, said the loan request was not mandated by his constituents.

Commenting on the development, Deputy Senate Leader, Bala Na’Allah, said it would serve as a lesson governors who fail to consult with their people and representatives before seeking such massive loan approval.

On his part, Deputy Senate President, Ike Ekweremadu noted that a “loan application for infrastructural development is not bad in itself but the failure to consult with representatives of the people before application was clearly undemocratic.”

Meanwhile, the Kaduna State government has vowed to go ahead with the World Bank loan request, insisting it was for the development of the state.

The state Commissioner for Finance, Suleiman Abdu Kwari, claimed that the World Bank was convinced the state met the conditions before given its approval for the loan. He also stated that presentations were made to the relevant committees of the Senate and the House of Representatives, detailing the rationale and purposes of the loan.

He put the state average monthly FAAC allocation for the preceding 12 months at N3.295 billion, while its current monthly debt service was put at N467.12million.

“He declared: “No amount of blackmail, no amount of intimidation and no amount of misrepresentation will stop, there is no going back for us as long as moving the State forward is concerned.

From the foregoing, there is need for the Kaduna state government to be more innovative in revenue generation and more prudent in the management of its resources.

Although, the debt, if properly utilised would be beneficial to the state, not applying fiscal discipline can also have negative consequences on its citizens in the future.