Senate throws out El-Rufai’s $350m loan request

The Senate on Thursday rejected the request of Governor Nasiru El-Rufa’i to secure a $350 million World Bank loan for Kaduna State.
The senators rejected the request on the premise that obtaining the loan may put so much pressure on the management of the state which presently has a debt burden of $232.1 million.
The the stand after accepting the recommendations of its Committee on Local and Foreign Debt and contributions by all the three Senators from the state, who declined support to the loan request.
Senator Shehu Sani, who presented the report on Kaduna State Development Policy Operation (DPO) Credit Facility from the World Bank, said although it was approved by the bank in 2016, accepting the loan would compound the financial situation of the state.
He said that if approved, the state total debt stock would rise to $582.1 million
Sani explained that the world bank facility was captured in the 2016 – 2018 borrowing plan as approved by the National Assembly and has attractive low financing data of 1.25 percent interest; moratorium of 5 years and a 25 year maturity tenor.
He added that the facility was also captured in the 2016-2018 Medium Term Expenditure Framework (MTEF).
“According to the latest Debt Management Office figures, Kaduna State has a total debt stock of $232.1 million,” he said, adding that approving the $350 million loan request would bring the state’s total debt stock to $582.1 million.
It would be unsustainable and a huge burden on the state’s finances, the senator, who represents Kaduna central said.
“With the new borrowing, the Debt Service to Revenue Ratio of Kaduna State will further be increased and thus impact negatively on the ability of the state to meet other basic needs of its people.
“The new debt stock will likely, further erode the economic viability of the State,” he said.
Also, Senator Suleiman Hunkuyi (APC-Kaduna North) said the loan was a misplaced priority and should be rejected.
“One is amazed to find out what the governor has gone ahead to indicate to the public is completely different from what we found in the application of those facilities.
“I am a representative of my people; for whatever reason the Nigerian law stipulates, this chamber shall moderate to approve for such facility.
“I crave the indulgence of our colleagues that the application of that loan among other things is indeed a misplaced priority as we have clearly seen and hence strongly stand behind the prayer that this chamber do reject the request for the loan.’’
Similarly, Sen. Danjuma La’ah (PDP-Kaduna South) said “I feel the loan is not important and I am a messenger of my people, my constituency.
“My constituency did not give me the authority for a loan to be approved for whatever reason.
“The money received by Kaduna state is much; I cannot understand how there is nothing happening in Kaduna.
“The government is busy retiring people, sacking people, they are asking for money to do what with the loan. This loan should not be granted,” he said.
In his contribution, Deputy Senate Leader, Bala Na’Allah urged the senate to reject the loan request.
“We live in a democratic society; you do not look at the representative of the people, you look at the people they are representing.
“Three senators have so far spoken on this matter and it happens they are from Kaduna.
“It appears that apart from the resolution of the main committee, the senators appear to be in agreement that the recommendation of the committee should be upheld by the senate,” he said.
In his remarks, the Deputy President of the Senate, Sen. Ike Ekweremadu, who presided over plenary said although loan application was acceptable means of financing governance, it should be done with caution.
“The law in its wisdom had decided to make provisions for the parliament both in the states and at the national level to interrogate such request to be sure there is need for that loan.
“Secondly is to ensure that due process are followed,  but most importantly to ensure that existing loan portfolio of a particular state or Federal Government will be able to accommodate such further request so as not to put so much pressure on the management of that state in that country.”
Meanwhile, the Senate has adjourned to April 10, for the Easter celebration.