The Kaduna State government has vowed to go ahead with its request to the World Bank for a $350million loan, despite the decision on Thursday by the Senate that the Nigerian government should not guarantee the facility.
The Senate decided not to approve the loan request after a committee headed by Shehu Sani (APC-Kaduna) advised against it on the ground that the state is the second most indebted in the country.
Mr. Sani, who is the chairman, Senate Committee on Foreign and Domestic Loans, argued that the new loan if approved will erode economic viability of the State.
His position was supported by two other senators from the state, Suleiman Hunkuyi (Kaduna North) and Danjuma La’ah (Kaduna South).
Reacting to the federal lawmakers’ decision, the state government said nothing can stop it from obtaining the loan for the development of the state.
The state Commissioner of Finance, Suleiman Abdu Kwari, at a news briefing in Kaduna on Friday said the excuse given on the floor of the Senate as to the size of the state’s loan was baseless.
Mr. Kwari said with the way the three senators from the state spoke against the loan, it was apparent they had put their personal frustrations above the right of the people of the state
He said the World Bank was convinced the state has met the conditions before given its approval for the loan.
“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,” the commissioner stated.
“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 12 months is N3.295bn, while our current monthly debt service is N467.12million.
“Also, the monthly debt service forecast of the FGN Budget Support Facility of N14.169bn with a moratorium of 18 months and World Bank Loan of $350mn with a moratorium of 10 years are N191.767 mn 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.”
Asked the next step the state government would take after the Senate rejected the loan, Mr. Kwari said: “There is still hope of getting the loan from the World Bank. This was because there are processes to be concluded at the National Assembly over the loan, including voting for or against by each lawmaker before final rejection or acceptance of the loan.
“No amount of blackmail, no amount of intimidation, no amount of misrepresentation, there is no going back for us as long as moving the State forward is concerned.
“We know the processes of the World Bank we passed through, it was like passing through the eyes of the needle to get the approval for the loan. So World Bank processes are not like any other institutions.
“If we can pass through World Bank processes to get to this stage, then there is still hope to get the loan for the development of the State.
“The National Assembly which I know very well, committees will be set up to look at the loan issue, and at the end of the day, the decision will be subjected to voting either for or against. In this case, no Senator or House Reps member has more than one vote.”
On the fear expressed by the senators that the loan if approved may be diverted, the commissioner said: “There is no way you collect World Bank loan and divert it to another project because one of the conditions of the bank is that the loan must be used for the sole purpose it was collected.
“I think the rate at which the state is moving in terms of development, some people will be made politically irrelevant because there is a new dawn in Kaduna where the traditional way of compromising development in the state is dead and buried.
“The loan, if obtained, will be used to build community roads, primary schools, secondary schools, health centres, and the economy of such (benefitting) communities will improve as other social activities will take place there.”