The N20billion Loan

 

The news that the Acting Delta State Governor, Prince Sam Obi has requested for and received approval for a N20b (Twenty Billion Naira) loan from the Delta State House of Assembly, has raised some important issues amongst Deltans.

According to the report, the acting Governor, Prince Sam Obi, had in a letter dated December 7, 2010, to the State Assembly, personally signed by him said, “I wish to hereby request the approval of the House to borrow the sum of N20b only to enable the state government meet some of its very pressing contractual obligations for which the state government had taken benefit.

“The loan facility, shall be sourced from reputable financial institutions in Nigeria and shall attract not more than 13 percent interest rate per annum subject to mutually agreeable adjustments in line with CBN monetary policy rates and two percent upfront fees. It shall be repaid within a 24 months period with revenue from the state’s monthly Federal Statutory Allocations, FAAC, with a three months moratorium on the principal sum”.  The letter said.

The approval was granted with no objection after the letter was read on the floor of the House and this indeed marked the first and perhaps only major financial activity the Acting Governor may undertake within his short term.

It is important to put this matter in some kind of perspective. Loans are usually expected to be used to service projects and key critical initiatives of an administration’s desire to provide better facilities in welfare and infrastructure for its citizens. To that extent therefore, the explanation that the N20b facility requested is to be deployed to service some pressing contractual obligations which the state has taken benefit for them, according to the letter, is quite in order.

Again, the fact remains that Rt. Hon. Sam Obi is only operating in an interim capacity and thus may not be eligible both morally and administratively to raise a supplementary budget with which to service operational and sundry activitities of his government. So the more expedient and immediate alternative will be to seek for a loan, which he has done.

There is no doubt that Ag. Governor Obi took over the reigns of authority at a sensitive period in the political and social existence of Delta State. Activities in the state had almost been non existence as there was a terrible absence of judicious and equitable sectoral cashflow which is the sustenance of any economy. Infact,  the bleak season was set to continue with the analysis of former Governor Dr. Emmanuel Uduaghan that the global financial indices were not favorable and as such Deltans should not expect any change in their fortunes as they approach the yuletide.

It was therefore somewhat surprising to hear the Ag. Governor say that the N20b loan is to honour contractual agreements for which the state has already taken credit. What contracts? Deltans are bound to ask, and what benefits too, if such have not obviously reflected on the lives and welfare of the majority of the people?

The second disturbing issue is that the loan repayment schedule has been spread over a 24 month period, which automatically means that any new administration after Ag. Gov Obi’s tenure will be inheriting a N20billion Naira debt in addition to the 13% interest or whatever interest rates exist over the period, as the letter clearly states. What this means is that since government is a continum, a huge debt will be owed by Deltans to whatever finacial institutions the loan is sourced from by 2011. This is surely an echo of a former administration in the state not too long ago.

However, the N20b loan may also have been a brave move on the part of the Ag. Governor Obi administration to boldly address the plight of Deltans and tackle the cashflow problem frontally by initiating some new contracts and paying for them immediately as a way of ensuring some financial liquidity in the system in this yuletide season. If this is the case, then kudos for the Ag. Governor for the simple reason that he has the interest of the people at heart, a thing which many thought Dr. Emmanuel Uduaghan lacked in his three years as governor.

Deltans are thus hoping that this N20b loan will impact positively on their lives especially in this yuletide season and lay to rest the very loud voices of suspicion and anger with which some Deltans have been responding to the decision to take the N20b loan. There is no doubt that Delta State has been owing many people and interests across the public and private sectors in the last three years. Deltans can only pray now that the Ag. Governor will do a judicious appropriation of the money and not the selective distributuion which had been so associated with the Uduaghan administration. After all, as some have noted, the money belongs to all  Deltans

 

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