THE DEBT CRISIS IN EKITI STATE

INTRODUCTION
Permit me to express my heartfelt appreciation and gratitude to your esteemed organization for inviting me to the 2003 Annual Business Meeting of Ekitikete International Forum.  However, due to some pressing domestic engagements, I regret my inability to be physically present in your midst on this auspicious occasion.  All the same you can continue to count on my unalloyed support in your determined bid to make immense contributions to the development of Ekiti State.

As you are no doubt aware I contested the last gubernatorial election on the platform of the National Conscience Party.  Even though I lost the election my participation in the farcical exercise afforded me the rare opportunity to appreciate the enormity of the crisis of underdevelopment in Ekiti State.  During the electioneering campaign I took particular interest in the crippling debt burden coupled with the large-scale corruption which have combined to stultify accelerated growth in Ekiti State.

As the eminent status of Nigeria as the second most corrupt country in the world has just been confirmed by Transparency International, I am not going to waste your precious time by discussing corruption.  Since we are all familiar with the debilitating effects of corruption in our society I have decided to address this distinguished gathering on the debt crisis in Ekiti State which has assumed a dangerous dimension.

HOW MUCH IS OWED?
Since his assumption of office as the governor of Ekiti State last May, Mr. Ayo Fayose has repeatedly maintained that he inherited a debts stock of N7 billion.  Not unexpectedly, his predecessor, Otunba Niyi Adebayo, has challenged such claim by insisting that he left a debt of barely N500 million.

Instead of politicizing what has become a serious crisis the government owes it a duty to inform the people on the actual level of indebtedness of the State.  However, contrary to the figures being bandied around I wish to say, without any fear of contradiction, that the Ekiti State government is indebted to the tune of N32.7 billion.

Out of the aforesaid sum the external debt is fixed at US$198 million (i.e. N24.4 billion) while the local debts stock is N8.3 billion at July 30, 2003.  Further details of both external and internal debts of N32.7 billion are as follows:

COMPONENT
NAIRA BALANCE
Sundry Debt

1,074,650,404

Local Supplier/Contractors

4,605,660,520

(a)  Commercial Banks’ Loan

   689,861,901

*(b) Revenue Bonds

1,659,445,690

Govt.-to-Govt. Debt

   228,349,776

External Debts ($195,825,099 x 125)

24,478,137,375

Total

32,736,105,666

·        Principal yet to be redeemed

For a state whose recurrent revenue oscillates between N8.5 billion and N10 billion per annum, a debt stock of almost N33 billion is definitely a clog in the wheel of meaningful development.  Apart from the monthly deduction of about N200 million from the meager statutory allocation of the State to service the external and internal components of the debt stock, there is no clear-cut debt management agenda or program designed to address a precarious economic crisis.

As a matter of fact there are no reliable data or information on the total indebtedness of Ekiti State.  According to a group which recently completed a study of the debts profile:

          “Analysis of trend and growth of the Ekiti State domestic debt is not possible

          because of limited level of information available at this point in time.  In fact

          information is available on historical evolution of the entire State debt stock.

          A preliminary visit to the Debt Management Office in Abuja has only

Succeeded in establishing the existence of information on the external debt of the State. “ (See Assessment of Ekiti State Debt Management, August 2003, by

          Patrick Okonji, DFID, Ado Ekiti.)

EXTERNAL DEBTS
It would be recalled that following the Supreme Court decision on the so-called “resource control suit” last year the Federal Government decided to hand over to the States the payment of external debts incurred by them.  In the course of sharing such liabilities the sum of $263 million was imposed on Ekiti State out of the unpaid consolidated external debts incurred by the old Ondo State.

Although the projects for which such debts were incurred by the Ondo State government cannot be located in Ekiti State the Adeniyi Adebayo regime accepted the responsibility to service and pay such colossal external debts.  As a matter of urgency the Ekiti State government should re-open negotiations with the Ondo State government and Federal Ministry of Finance with a view to verifying the genuineness of the external debts. On Nigeria’s foreign debt which is unarguably riddled with fraud the President of the Institute of Chartered Accountants of Nigeria, Chief. J.K. Randle has recently observed:

          “Quite frankly, it is a mess.  Those who are familiar with the origin of the debts

going back 25 years would no doubt recall that most of the debts actually started off as private-sector debts which through our own ineptitude (and blatant corruption) somehow crystallized into Nigerian government debts.

To make matters worse most of the goods never reached Nigeria and as for projects which were supposedly financed by the debts, we have in the archives of government a staggering catalogue of non-existent and abandoned projects.  To put it mildly, Nigeria was simply hoodwinked into accepting the debts….the so-called reconciliation was merely a comparison of papers submitted by the creditors with papers (sometimes forged or tampered with) at the Central Bank and bingo, the figures were reconciled” (THISDAY, Friday, October 3, 2003)

Whatever figures that may finally be agreed upon, Ekiti State should make a strong case for debt cancellation from the Federal Government which guaranteed the loans.   More so, that Ekiti State was not given a matching grant when it was created in October 1996.  Alternatively, the Federal Government should be approached to give Ekiti State a moratorium of not less than 10 years.  At the same time Ekiti State government should persuade the oil producing Ondo State to take over a substantial portion of the external debt in the interest of justice and fairplay.

INTERNAL DEBTS

(i) N4 Billion Revenue Bond

In a bid to fund some of its programs the Adebayo administration secured revenue bonds of N4 billion through the capital market.  Out of the said sum, N2.3 billion collected by the defunct regime was channeled towards road construction.  For reasons best known to the Fayose government those road projects have been suspended.  Meanwhile, in line with the terms of the Bond the sum of N137 million is deducted at source, on a monthly basis for repayment of the loan.  As at September 30, 2003, a total sum of N2.7 billion

Has been paid by the State Government.  In order to reduce the burden of further payment of the principal and the interests of 24.5% on the N4 billion loan the State Government should rush back to the capital market to renegotiate the terms of the bond.

(ii) N4.6 Billion Supplier/Contractors’ Debts

In view of conflicting claims between the Government and contractors over the latter’s debt of N4.6 billion there is the urgent need to embark on a comprehensive review and verification of all debts incurred since October 1996.  In similar circumstances the Adebayo regime set up the Justice Ojuolape Panel to investigate contracts awarded between 1996 and 1999.  The report and government white paper on the Panel’s recommendations will provide some useful guide in this regard.

With respect to the unpaid N228 million belonging to the 16 local governments this may be written off if the creditors are made aware of precarious nature of the debt crisis.  No doubt, this will be a major contribution of the local governments towards bailing out the State from the debt crisis.

CONCLUSION

Only last week the House of Assembly of Ekiti State publicly accused Governor Ayo Fayose of running the State like his private estate.  In particular, he was alleged to have engaged in extra-budgetary allocation of the scarce resources of the State.  Instead of attacking the PDP-controlled legislature of sabotage or treason the government should be made to appreciate that the Ekiti people have been taken for a rid for too long.  Any move to compound the precarious economic crisis of the State from any quarters whatsoever deserves to be resisted by all men and women of goodwill.

Apart from enforcing the principle of probity and transparency in governance though compliance with the Appropriation Law all patriotic indigenes of Ekiti State ought to join the campaign for the complete democratization of our society.  The masses that bear the brunt of the debt crisis must be informed and mobilized to free themselves from the shackle of grinding poverty in a land of opportunities.

FEMI FALANA