- Enugu State House of Assembly approves N170b loan for the state govt.
- The loan repayment will be for a period of four years
- Analyst, HURIWA kick against the loan approval
On October 9, 2023, the Enugu State House of Assembly approved the N170b loan requested by Gov. Peter Mbah of Enugu State to execute some major projects in the state.
In a letter read by the Speaker of the Assembly, Chief Uche Ugwu on Monday during an emergency plenary in Enugu revealed the loan will be used to execute capital projects in the state.
The Speaker said the loans, which would be sourced from the Fidelity and the Globus banks, would enable the state government to execute infrastructural projects in the state.
The breakdown of the loan as revealed by the Speaker showed that it includes N100b Bank Guarantee Line (BGL), N10b Term Loan (TL), N10b Over Draft Facility from the Fidelity Bank and N50b Credit Facility from the Globus Bank.
He, however, hinted that the BGL would serve as a guarantee payment for contracts issued to the contractors, China Civil Engineering Construction Company (CCECC) and others for the execution of projects to be undertaken by the state government.
In any case, on the Term loan, the Speaker revealed that the loan had an interest rate of 22 per cent per annum, which is subject to review in line with money market realities, adding that the repayment tenure is 48 months.
The Speaker pointed out that the Over Draft Facility loan would ensure prompt payment of workers’ salaries as well as sorting out other recurrent expenditures and had a repayment tenure of 12 months.
He further said the State Executive Council gave approval for the loans on October 6.
Contributing, the Minority leader of the House, Mr Iloabuchi Aniagu, commended the state governor for forwarding the loan request, which he said, was timely.
According to Aniagu, the loans will enable the state government to undertake developmental agenda for the good people of the state.
WITHIN NIGERIA findings revealed that the state government borrowed last in February 2018.
The Enugu State House of Assembly, on February 27, 2018 approved a request by the then Governor Ifeanyi Ugwuanyi, to borrow N801.04 million, from the Nigerian Infrastructure Bank.
According to the report, the money would enable the state government carry out more development projects, especially in the rural communities.
Debt profile of the state
According to the The National Bureau of Statistics (NBS) data released in February 2023 ranked Enugu State as the 7th most indebted state in the federation with a total of $123.02 million (N167 billion) of external debts.
Following this State Assembly loan approval, some stakeholders in Enugu State are worried about the rising debt profile of the state, especially as there are no signs of development projects on the ground to justify all the monies received by the government since it came into office on May 29, 2023.
However, apart from the N5 billion fuel subsidy palliative, which the government has yet to justify how it was spent, the state government has reportedly received more than N40 billion through federal allocations since June 2023.
Reactions to the N170b loan approval
However, reacting to the development, the Human Rights Writers Association of Nigeria , HURIWA, has vehemently denounced the approval of N170 billion loan request by Governor Peter Mbah of Enugu State while stating that the suspiciously swift passage of this request through the state House of Assembly has raised serious concerns.
HURIWA alleged that it depicted a clear violation of the rights of Enugu State’s citizens to transparent governance and fiscal responsibility.
In a statement on Wednesday, the Association expressed deep alarm over the Enugu State House of Assembly’s unanimous endorsement of Governor Mbah’s substantial loan request.
The statement which was signed by the National Coordinator of the Association, Comrade Emmanuel Onwubiko and made available to news men read thus; “This request encompasses a staggering N100 billion in bank guarantees, N10 billion in term loans, N10 billion in overdraft facilities, and N50 billion in credit facilities. These colossal figures demand rigorous scrutiny, and the absence of transparency surrounding this decision is deeply unsettling.
“It is apparent that the people of Enugu State have been left in the dark concerning the specifics of this loan and how it will serve the state’s betterment. The dearth of transparency surrounding this decision raises critical questions about who truly stands to benefit from these funds”.
As a result, the HURIWA called upon all Civil Society Organizations, CSOs, the honorable residents of Enugu State, and opposition political leaders, including Senators and House of Representatives members, to unite and establish a coalition dedicated to safeguarding the proper utilization of this substantial sum.
The rights group also stressed that it is imperative that the citizens of Enugu State are informed about how their hard-earned money will be employed and what safeguards are in place to prevent corruption and misappropriation of these funds.
HURIWA expressed deep concern regarding the hurried nature of the approval process within the state Assembly, stressing that it is imperative that significant financial decisions undergo thorough scrutiny, debate, and public discourse to guarantee they are in the best interest of the people.
“The approval process within the state Assembly was astonishingly rushed, devoid of the requisite due diligence and public discourse essential for decisions of such financial magnitude. This hastiness has left the people of Enugu State in the dark regarding the loan specifics and its intended benefits for the state. This lack of transparency and accountability undermines the principles of good governance.
“Responsible governance should prioritize the citizens’ welfare. Leaders must ensure that public funds are employed for the people’s benefit and that decisions of this magnitude are characterized by utmost transparency and accountability.
“Governor Peter Mbah and the Enugu State House of Assembly must be held accountable for their actions and decisions. The people of Enugu State deserve leaders who prioritize their welfare and are committed to responsibly managing public funds.
“Transparency, accountability, and the protection of the rights of citizens must be paramount in all government actions”.
Also reacting, Chief Chijioke Attah, Enugu-based journalist and public affairs analyst expressed his sadness over the development.
Speaking to WITHIN NIGERIA in an exclusive chat, Chief Attah expressed fear that the loan if procured will further stretch the economy of the state.
“My first and initial reaction to the N170b by the Enugu state House of Assembly as proposed to them by the state governor was dismay, surprise and disappointment.
“For House of Assembly where Labour Party holds the majority members of 14 to 10 of the PDP, it is really surprising that such a loan at this critical time of the state could just be rubber stamped without proper scrutiny.”
Explaining further, the Editor-in-Chief/Publisher of Nsukka News stressed that this will plunge the state into heavy debt crisis.
“Having said that, it is rather sad that Enugu state is being plunged further into heavy debt crisis knowing that the governorship election is still under judicial contention.
“For the state government to indulge in this rather borrowing spree will plunge the incoming government into heavy crisis, assuming after the judicial process, the present governor loses at the court.
“So, what he is doing is just to accumulate debt for the incoming government. This is so sad. The worrying part of this loan request is that it is not tied to any particular project.
“You see, you don’t get loans to pay staff salaries or pay retirees. Loans are supposed to be used to fund productive ventures so that the state will be able to pay.”
Chief Attah went further to say that “it is really sad and that is why people are speaking against it. For the state government to start by borrowing heavily is really sad.
On the issue of whether there is no other way to source the fund, remember Enugu state is largely Civil service state and not an oil producing state. Some business ventures are already going down because of heavy taxation. The state should thought of developing Agricultural sector rather than going into this kind of heavy borrowing.”