The Senate yesterday rejected the approval of $350 million World Bank loan request by Kaduna State.
The rejection of the loan request followed the presentation and consideration of the recommendations of the report of the Committee on Local and Foreign Debts, which asked the Senate to turn down the request.
Chairman of the committee, Senator Shehu Sani (Kaduna Central), who presented the report, said: “The committee recommends 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.”
Apart from Sani, who heavily criticised the loan request, two other senators from Kaduan State, Suleiman Hunkuyi (Kaduan North) and Danjuma La’ah (Kaduna South) stoutly opposed the loan.
The committee, in its conclusion, noted 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 state’s economic viability.”
The committee, in its finding, noted that based on the submissions and interactions with invited government officials, the committee observed as follows:
“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.”
The committee, therefore, 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”.
The Senate warned that any attempt by government officials to circumvent the rejection of the loan request and the process will be contrary to law.
Hunkuyi, in his submission, said only two people, Commissioner for Women Affairs, whose ministry has nothing to do with the loan and an aide of the Kaduna State governor, sat and approved the loan.
The lawmaker noted that as a representative of the people, he has the mandate of his constituents to oppose the loan.
He wondered why $170 million out of the $350 was slated to be drawn within one year.
La’ah said his constituents did not give him the authority to support the approval of the loan.
He said: “They are busy sacking and retiring people in the state; what is the loan for? I am not in support of the loan. It should not be granted.”
Deputy Senate President Ike Ekweremadu, who presided put the matter to vote two times.
What followed was a deafening “nay” to each of the question.