Lagos State Governor, Mr. Babatunde Fashola (SAN), has said that his administration borrowed wisely and made judicious use of money borrowed for the development of the state.
Fashola, who had variously come under fire for the huge debt profile of his administration, challenged the critics of his administration to evaluate the gains of the infrastructure development brought about by the loans of his administration and stop emphasising the figures.
He spoke to journalists at the weekend during an interview session with select journalists at the State House, Alausa, Ikeja.
According to Fashola, the state borrowed with a distinct with clear-cut repayment schedule for the bonds and that it has adequately provided for the repayment.
He said, “The borrowing you are talking about, when you measure it against the asset, today, we took N275 billion bond over about eight years. The first thing we had to do was to repay the old bond of N15 billion because Lagos State drew N15 billion out of the N25 billion bond. We had to repay so that we can take full benefit of what we were trying to do, which was going to be issued in series and we did all these things in public.
“What did we use that money to finance? We used that money to finance infrastructure. So as the monthly Internally Generated Reveue (IGR) is coming, we are refunding 15 per cent of that IGR and don’t forget that the N20 billion you are talking about, 15 per cent goes straight into a consolidated debt service account. We can’t touch it. So, take 15 per cent of N20 billion out. We have close to about N100 billion in that account to pay the debts. So, those who are saying we owe; the system to pay the bond is secured.
“We just paid the second bond, which was the first that I took. We paid it; I think it was last year. The next bond will be due in 2017 and it’s about N60 or 70 billion, but we have N100 billion in the account.”
On borrowings from the banks, he said: “As far as the local short term loans from banks are concerned, we are able to pay and if you don’t want a life of debt, it means first that Lagosian must agree that let us reduce our budget to only what we earn. We have a budget of about N489 billion, let’s use the IGR example, 30 x 12 is 360, and so, we are already in a hole of about N119 billion.”
The governor reeled out facts, figures and achievements as he tried to respond to his traducers whom he accused of criticising the administratio are doing so without paying attention to the advantages that the bonds have brought to the people of the state, particularly in the area of improved living standard of the populace.
His words, “People simply just dwell on debt but I think in the context of debt, let us look at the asset too. I am leaving behind hundreds of kilometres of roads, bridges, schools, hospitals, court rooms, social services, skill centres, street lights and traffic lights. I’m leaving behind people who don’t have a job seven years ago who now have jobs; I’m leaving behind a stronger security force, stronger LASTMA, stronger KAI. That is where the money went.
“I’m leaving behind a rail system; I’m leaving behind so many assets for the continuity of life. I’m also leaving behind a bigger work force. I’m leaving behind a better equipped work force. So, I think we should talk less about debt and talk about development. The state government would continue to raise more money. All these take me to the IGR that you are talking about. The IGR standing on its own is averagely N20 billion. Let’s do the math.
“Some months, it goes more than that, some months it drops. So let’s use N20 billion as an example. The monthly allocation from FAC is averagely N10 billion. Sometimes it goes up to N11 billion; sometimes it comes down to N9 billion. So let’s use an average of N10 billion, even though it dropped last month to N6.5 billion. So, we didn’t even have enough to pay salaries. So, let’s take an average of N30 billion a month, do the calculation 21 million peoples, divide it, you will come to roughly N1,400 per person in Lagos.
“So, it’s easy then to say let’s collect that through IGR that you are saying is big. You are seeing the IGR in isolation; you are not seeing the big responsibilities. Our population has also grown by forced migration – Internally Displaced Persons (IDPs) resettlement. I just sent a team to a place in Apapa, where there are people displaced from the North-east of Nigeria in camps, so we have to go and intervene. You can’t leave them there without help. The sanitary conditions are horrendous.
“So, N1,400, if we wanted a government that just does what is available every month, I just tell everybody take your N1400 go and build your roads, go and build your schools, go and build your hospitals and manage your security.
“But we have to be futuristic, we have to think ahead. The IGR you talked about doesn’t come as IGR to us, it comes as somebody paying N1 million for land, someone registering vehicles, somebody paying his ground rent N3 million, but it is because we are accountable that we always announce at the end of the month that this is what we got.
“If we wait for the 30 days for the money to accrue, it means we won’t do any work. So people must understand that it means we won’t do any work because the money hasn’t accrued. So, what do we do? We borrow against it. The banks which collect it know that we will pay because the money comes through them. So we take a loan, but we don’t borrow to pay salaries, we don’t borrow for recurrent expenditure, we borrow for capital investment.
“The person who is waiting to deliver a child and there is no hospital space, I can’t go and tell that person to wait, that I am waiting to collect money. If I give you contract to build hospital, I can’t tell you “take N1 million, I’m waiting for N2 million tomorrow.” It’s not a way to plan construction. You must gather your building materials; you must move men to site and so we borrow from the bank. When the money comes, the banks deduct theirs,” he explained.
Fashola said he would be leaving behind a sound economy for his successor Mr. Akinwumni Ambode, and that the efforts of his administration would make governance easier for the incoming government.
According to him, “I didn’t govern to leave problem for my successor. And let me say first of all that government loses relevance when there are no more challenges. The only reason government exists is to solve problems. I inherited my own challenges; my successor will inherit his own challenges. But I can say what we expect to see is that the job gets easier as we move on. All of what we have done here is to improve the quality of what we met in order to make it easier for the next person.
“We have built stronger institutions, we have strengthened ministries, we have increased revenue in order to meet increasing demands, we strengthened governance and have given governance capacity to respond to service needs. We just set up a citizen relation management platform on the net to be more efficiently able to respond to people using current communication methods – the internet and the telephone – but every problem that we solve creates a new problem. That is life,” he said.
