CSO Interrogates Alleged N150b Akwa Ibom ‘Loan’, Wants Participating Banks Questioned

Policy Alert, a Civil Society Organisation, CSO has interrogated the N150 billion financial instrument it claims was recently obtained by the Akwa Ibom State Government affirming it was a loan obtained in violation of the Fiscal Responsibility Act.

The CSO has thus called on the Fiscal Responsibility Commission (FRC) to investigate the series of loans acquired by the Akwa Ibom State government which it says “were obtained without due process and in breach of the Fiscal Responsibility Act 2007 and the Akwa Ibom State Fiscal Responsibility Law 2020.”

The call was made in a statement issued by Policy Alert’s Programme Officer, Fiscal Reforms and Anti-Corruption, Faith Paulinus.

The statement read: “Contrary to what the State Governor, the Finance Commissioner, and the legislature would have us believe by their strange denials, Policy Alert insists that the facility, by whatever name called, amounts to a loan. In the last 12 months, several loan requests have been approved by the state legislature in a hasty, irregular, and illegal manner, without due process, and in contravention of extant laws. The collusion of both arms of government to impose an unsustainable debt burden on the state is highly deplorable.

“Data from the Debt Management Office, Abuja shows that as of September 30, 2021, Akwa Ibom State’s domestic debt stock stood at N234.85 billion. That makes it the most indebted state in Nigeria in per capita terms. This portends disaster for fiscal space and development prospects of the state in the years to come.”

The statement continued: “Both the federal and state fiscal responsibility laws have provisions that mandate state governments intending to borrow to present through the legislature to the public a cost-benefit analysis, detailing the economic and social benefits of the intended borrowing, and clearly demonstrating that the loan will not push the government into an unsustainable debt situation and will be spent on self-liquidating capital projects. What we are seeing playing out in Akwa Ibom State is the reverse of this legal requirement”

“The recent loan request has validated our position that the state government may have been secretly and illegally obtaining commercial bank facilities on the basis of that court judgment,” Policy Alert said in its statement today. The organisation also decried the state government’s spending on interest payments for these loans, noting that the sudden spike in interest payments for 2021 indicates an irregularity in the state’s debt servicing regime.

“The public debt servicing pattern of the State in the last seven years gives reason for serious suspicion and concern. The average spending for debt servicing in the six years preceding 2021 was N24.4 billion. This suddenly shot up to N67.77 billion in 2021 as published by the Akwa Ibom State Government in itsfull-year budget implementation report for 2021, which indicates that there may have been unusual transaction costs to these recent loan acquisitions.”

The organization asked the Fiscal Responsibility Commission to launch an investigation into the loan approval processes of the financial institutions involved as they may have failed to request and obtain proof of compliance with the laid down conditions for borrowing in accordance with extant laws.

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