The Senator representing APC, Kaduna Central, Senator Shehu Sani has said that if you borrow money that you can pay, you are a businessman; if you borrow money that you can’t pay you are a slave.
This came as the Kaduna state government on Friday said the decision of the Senate to reject its request for $350 Million Dollars World Bank loan for infrastructural development amounted to “elevating the ego of some of its members above the demands of public policy”.
Senator Shehu Sani reacting to the Senate’s rejection of President Muhammadu Buhari’s request for Governor El-Rufai to borrow from the World Bank a loan of $350Million Dollars for infrastructural development as contained in the 2016 – 2018 External Borrowing (Rolling) Plan said further that: ‘They will leave for their children mansions to inherit; they will leave for your children debt to inherit.
‘They want to auction the Children of the poor to Mr Breton Woods in order to secure a comfortable life for their children.’
Recall the Senate on Thursday rejected Kaduna State Development Policy Operation (DPO) in the sum of USD350 million as contained in the 2016 – 2018 External Borrowing (Rolling) Plan of President Muhammadu Buhari.
Three Senators, Shehu Sani, APC, Kaduna Central; Suleiman Hunkuyi, APC, Kaduna North and La’ah Danjuma, PDP, Kaduna South said that it became imperative for the credit facility to be rejected because critical stakeholders from the State were never consulted and for the fact that the State was already heavily indebted.
The rejection followed the presentation of the Report of Committee on Local and Foreign Debts Kaduna State Development Policy Operation (DPO) Credit Facility of USD 350 by its Chairman, Senator Shehu Sani (Kaduna Central)
According to Senator Sani, the Committee recommended that “the Senate do reject the request of USD350 million for Kaduna State as contained in the 2015 2018 External Borrowing (Rolling) Plan of Mr. President, Commander-in-Chief of the Armed Forces.
“That with the high total debt stock of Kaduna State at the moment, the new borrowing sought, will make the debt service to revenue ratio high, thereby worsening the State Government’s ability to meet its other basic obligations to the people and further erode the economic viability of the State.
“That the Senate do reject Kaduna State Development Policy Operation (DPO) in the sum of USD350 million only as contained in the 2016 – 2018 External Borrowing (Rolling) Plan of Mr. President Commander-in-Chief of the Armed Forces.”
Senator Sani further said that in its findings, the Committee discovered “That the Development Policy Operation, DPO (Budget Support) of USD 350 million for Kaduna State was approved by World Bank in 2016 and captured in 2016 – 2018 borrowing plan as approved by the National Assembly.
“That the credit facility has an attractive low financing data of 1.25% interest; moratorium of 5 years and a 25 year maturity tenor.
“That the facility is already captured in the 2016-2018 Medium Term Expenditure Framework (MTEF).
“That according to the latest Debt Management Office figures, Kaduna State has a total debt stock of USD232.1 million.
“That approving the current loan request of USD350 million for Kaduna State will bring its total debt stock to USD582.1 million.
“That if this loan request is approved, the new total debt stock of USD582.1 million for Kaduna State will be unsustainable and necessarily attract huge financial burden on the meager federal allocation to the State.
“With the new borrowing, the Debt Service to Revenue Ratio of Kaduna State will further be increased and thus impact negatively on the ability of the State to meet Other basic needs of its people.
“The new debt stock will likely, further erode the economic viability of the State.”
But on Friday the Kaduna state government said the decision of the Senate to reject its request for $350Million Dollars World Bank loan for infrastructural development amounted to “elevating the ego of some of its members above the demands of public policy”.
In its first reaction to decision of the senate to reject the loan request, the state government said all indices point to the fact that even with the loan, the state government would be in a good financial standing to finance its loans without any problem.
It would be recalled that the senate on Thursday rejected the request of the Kaduna state government to access a loan facility of $350milion from the world bank to facilitate its infrastructural development.
The three senators from the state, Shehu Sani, Suleiman Hunkuyi and Danjuma La’ah said that it became imperative for the credit facility to be rejected because critical stakeholders from the State were never consulted and for the fact that the State was already heavily indebted.
But addressing a press conference on Friday, the Kaduna state Commissioner for Finance, Suleiman Abdu Kwari said “the excuse given on the floor of the Senate as to the size of the loan is baseless.
The creditor and the ratings agency have adjudged that Kaduna State can sustainably manage the credit which has a 10-year moratorium and a 40-year repayment period. The State average monthly FAAC allocation for the preceding twelve months is N3.295bn, while our current monthly debt service is N467.12mn. Also, the monthly debt service forecast of the FGN Budget Support Facility of N14.169bn with a moratorium of 18months and World Bank Loan of $350mn with a moratorium of 10years are N191.767mn and N98.843mn respectively.
“If the State is to repay all loans today, the total debt service would be N757.735mn representing 23% of total deductions as a percentage of total allocations. This is less than the threshold for sub-national borrowing which is capped at 40%. In view of this, Kaduna State is within the sustainable debt level.
“What the Senate displayed was elevating the ego of some of its members above the demands of public policy. As the three senators from Kaduna State spoke, it was apparent that they have put their personal frustrations above the right of the people of Kaduna State to decent investment in human capital development through good schools and hospitals, and better quality of life and accelerated economic growth through the provision of infrastructure.
The Kaduna State Government is grateful to the House of Representatives for its kind endorsement of the request. We march on with the task of governing the state, and we shall continue to enjoy the support of our development partners” he said.
The Kaduna state government said it painstakingly followed the conditions laid down by the world bank before it was deemed qualified to access the loan.
“In 2014 and early 2015, we had campaigned about the poor state of Kaduna State public schools and hospitals. As soon as we took office, the problems we had campaigned about became our responsibility to resolve.
And we were shocked to learn in our first week in office that at least 50% of our pupils sat on floors because of a lack of classroom furniture. We also received briefings indicating that apart from lacking doors, windows, roofs, toilets and water, many of our schools also had unqualified teachers.
“In response, Governor El-Rufai declared a state of emergency in education and started to fix schools and buy furniture. After fixing almost 10% of our over 4200 primary schools, the government realised that it would need a minimum of N60bn just to fix primary schools. A lot more would be needed to actually build new schools that can have enough classrooms, staff rooms and other facilities. There was no doubt that we would need support to raise the required resources.
“The Governor took an album that out Budget and Planning ministry had compiled showing pictures of our schools, and shared it with the federal Minister of Finance, and subsequently, our development partners, including the World Bank.
“That is how the conversation that led to the World Bank loan started. The World Bank scrutinised Kaduna State and they are convinced we meet their standards. We have healthy Fitch ratings B” Credit Rating with Stable Outlook.In November 2016, Fitch Ratings assigned Kaduna State a long-term foreign and local currency Issuer Default Ratings (IDRs) of “B” and a National long-term rating of A+(nga) with stable outlooks).
“Having checked our laws, our accounts and our performance, the World Bank was convinced that Kaduna State merits their support. Therefore, on 20th June 2017, the World Bank announced that it has decided to provide a budget support facility of $350m to Kaduna State.
Our Commissioners have appeared before the relevant committees of the Senate and the House of Representatives, and presented detailed explanations for the rationale and the purposes of the loan. Our delegates were commended for the quality of their presentations.
Nobody in those committees of the National Assembly can honestly claim not to be aware of the justification and the purpose of the loan. In fact, the House of Representatives endorsed the loan. When our officials appeared before the Senate, no questions were asked” he said.