By Wale Junaid
OGUN YOUTH ALLIANCE
(105, Quarry Road, Abeouta Ogun State)
Tel: 234. 802.822.1563; 234.802.733.8058
e-mail: oyalliance@gmail.com
To: Rt. Hon. Suraj Adekunbi,
Speaker,
Ogun State House of Assembly,
Okemosan, Abeokuta
Ogun State of Nigeria.
Thro: Office of the Clerk,
Ogun State House of Assembly,
Oke- Mosan, Abeokuta,
Ogun State.
Attention:
Hon. Bankole Olusola – Sponsor
Hon. Obafemi John. – Co- Sponsors
Hon. Adeleye-Oladapo Tunrayo (Mrs)
Hon. Solaja O. Bowale
Hon. Fasanya Victor Oludotun (Barr)
Hon. Akintan Job Olufemi
Re: “A Bill For A Law To Provide For The Raising of Loans Through The Issuance of Bonds, Notes and Other Securities and For Connected Purposes.
Mr. Speaker,
It is with great sense of responsibility and in the spirit of patriotism that we write to you and the House members on this burning issue bothering on the financial health of our great state, Ogun.
We need to state here that, of particular concern to us is the bill sent to this Honourable House by the Executive arm of government on the above subject with a view to assessing the financial market to raise some financial instruments, ostensibly to drive developments of infrastructure.
We state unequivocally that apart from the fact that the motive behind the said bill could not be in the best interest of the people of Ogun State, it may not to represent nor capture the goodwill of a great number of our people.
Our fears on this bill are premise on:
1) The fact that the bill seems to be providing the governor, what we can call, a Blank Cheque on the finances of Ogun State
2) Appointment of Trustees: the bill seem to have vested too much power on the Executive arm of government; and in other words made the Governor the ‘sole’ decider on what amount to be accessed, where to access, what project(s) to be executed etc.
3) Sinking Fund. What percentage?: We are of the opinion that before going ahead to give a blanket approval to this bill, members of this hollowed chamber should be interested in knowing what is the current state of finance of the State. Granted that a 15 per cent is to be set aside from the State’s Internally Generated Revenue (IGR) into a Sinking Fund, what is the current IGR of the State? How did they arrive at the percentage? This would enable the House to take critical decision about whether such might even be adequate to defray whatever that is ‘borrowed’. It is also instructive to note that in view of the prevailing possible ‘reversals’ of preceding administration’s economic policies, that honourable members should emphasise the total repayment of any sums or financial instrument so accessed should be defrayed within the life of the administration which accessed them where possible.
4) What projects? What are the rates of return? Tenor of payment?
We are particularly bothered about the nature of this request to access financial instrument without being project-specific. I think if the people of Ogun State are going to be committed to any form of financial indebtedness, notwithstanding the nature and circumstance, it would have been fair for them to know what their money is going to be spent on; what is the rate of returns on such projects (i.e. Do they have the capacity to pay back on such financial commitments) and over what length (or period) of time?
Honourable members of the House of Assembly, we feel you owe several generations of Ogun State citizens a sacred duty to serve as the custodian of their trust in good conscience by raising fundamental questions which would protect the citizens from abuse by the executive arm of government.
Distinguished honourables, Ladies and Gentlemen, with specific reference to the bill in question, we will like to call the attention of the House to:
Sections: 2, 3(4), 4 (1) (2) (3), 5(1), 10, 11(1)
of the ‘Bill’
Schedule to Section (1) (2) (3) (5), and (7).
On Appointment of Trustee (sec 5 (1) ) states:
“The Commissioner subject to the approval of the Execuitve Council may appoint a registered trustee company, or any reputable bank or reputable insurance company for the purpose of acting on behalf of instrument holders with regard to every loan raised under the Law provided that a Trustee appointed under this Rule shall not have any fiduciary relationship with the Government”.
Meanwhile, the same ‘Bill’ defines ‘Commissioner’ (line 35-37) as:
“Commissioner” means the Commissioner for the time being charged with the responsibilty for matters relating to Finance in Ogun State.
And
“Executive Council” to mean “the Executive Council of the Ogun State Government, comprising the Governor and such other officials as are invited into the Council by the Governor”.
However, the executive has proposed in section 10 on;
Power to raise loans:
“The GOVERNMENT is authorised through the Office with the approval of the EXECUTIVE COUNCIL (kindly note the emphasis in capital letters) and subject to the provisions of this Law to raised loans for both economic and social development purposes”
Section 11, Issuance of Bonds, etc reads:
“The Office with the approval of the Executive Council and subject to the provisions of this Law is authorized to do the following:
(a)Issue instrument or any other forms of debt securities …”
From the bill, the Governor is to decide which project to be executed, decides who the contractor should be, negotiate how much the project will cost, establish Sinking Fund and singularly decide what goes into it, appoints the ‘Commissioner’ who is to appoint the trustees (meaning that the governor appoints the Trustee). We should therefore be worried that if this were to be so, why then is the need for House of assembly in Ogun State? Or what should be the oversight functions of the law makers, as it relates to the finances of the state?
If this bill is passed without amendment, it may promote Executive recklessness. Too much power vested in a single individual has the potential of being abused. Simply put, “power corrupts, absolute power corrupts absolutely”.
OUR POSITION:
On section 3 (4) , The House of Assembly may at the request of the Executive Council upwardly revise the proportion of revenue to be set aside for the government’s debt repayment purpose.
Our question, why should the review only be upward? We think honourable members of the House should be allowed to use their discretion in this regard. Else, we may simply then ask: why do we need the House?
On appointment of Trustee: Section 5(1).
We are of an opinion that the power to appoint, punish and terminate the appointment of Trustee should not be vested on the commissioner or the EXECUTIVE only. For continuity, transparency and in line with the doctrine of checks and balances, we propose the following in addition to some other steps in the bill:
1)The establishment of Board to oversee the Sinking Fund as well as the management of Consolidated Debt Service Account (section 3(1). The bill seems silent on the management of this special Account.
II)That the power to appoint, review and terminate should be vested in a legally constituted Board.
We propose that a ‘Board’ for this purpose should be constituted, which would comprise the following:
1) The Commissioner for finance – As the Chairman
2) Permanent Secretary or a Director , Ministry of Finance
3) Permanent secretary or a Director, Bureau of Budget and Planning.
3) Permanent Secretary or a Director, Ministry of Justice
4) Permanent Secretary or head of Debt Management Office (DMO)
5) Permanent Secretary or a representative of the Head of Service, and
6) Chairman, House Committee on Finance.(As the house may deem fit)
III) This must be allowed to pass through due process ( the position must be advertised in 2 Nigerian national news papers)
III) House of Assembly must approve the appointment and termination of appointment
On section 10, Power to raise loans:
With this bill, the governor seems to be requesting for what we call an open cheque from the State House of Assembly. We need to be careful here. Is there any law like this in Nigeria? We need to ask ourselves this all-important question: is there any law like this in Nigeria? We are of a view that the State must revert to the House for specific approval whenever there is need to access any financial instrument. The specific amount to be accessed, must be clearly stated and on what such fund is to be expended.
With the hope that Section 10 (power to raise loans) will get the blessing of the House, the bill went further to now states in Section 11 that “Office” ( or the Governor, at least from the context of the bill) IS AUTHORISED!!! Authorised to issue loan/bond/ any instrument without revert to the HOUSE? Honourable members of Ogun State House of Assembly, we appeal to you not to look at this bill from a party point of view, let us play down who the governor is, let the interest of our state override our political or party loyalty. This section must be amended. This section can easily be abused and will make the oversight function of this House difficult.
Finally, on Section 10 and 11, we would like to refer the House to the submission by Micheal Orimobi titled “The issuance of state government bonds in Nigeria –an overview”. This cover the legal basis, the regulators’ Roles & Impact, Structuring a state Government bond etc
We quote:
‘There is a cap on the amount of debt a Sub-national can raise via bonds or any other means; the total loan portfolio of a State at any particular time must not exceed 50% of the revenue generated in the previous year – proviso to Section 223(1) of the ISA. Loans in this context include bank loans, external debts arrangements, bonds, etc. By way of example, if a Sub-national’s current outstanding loan portfolio is N20 billion and the preceding year’s income was N100 billion. The amount that can be raised via bonds cannot exceed N30 billion, as a N30 billion bond issuance exercise will bring the total loan portfolio to N50 billion, which is 50% of the previous year’s revenue.”’
We hope this system of Consolidated Account and or Sinking fund, 15% etc were not copied from a particular State in Nigeria. The government did not tell us what their projection is, what they want to commit the state to etc. Anyway, we believe that the House will look into this area before passing the law.
We urge our State Assembly to take very much care. You are the ambassador of your people; it will be ridiculous for us as a State that our esteemed and noble House of Assembly is caught in the web of passing a law that runs contrary to Nigerian Law. We urge you both individually and collectively to remember your name and our tomorrow.
Thank you.
God bless Ogun State!
God bless Federal Republic of Nigeria!!.
CC:
Members of Ogun State House of Assembly
Head of Service, Ogun State
Media
State Director, Department of State Security
Commissioner of Police, Ogun State
