Daily Independent (Lagos)
30 June 2009
opinion
Lagos — The recent decision of Governor Gbenga Daniel to issue a N60 billion bond offer at the Nigerian Stock Exchange (NSE) has generated considerable controversy in Ogun State.The Ogun State House of Assembly, in its Resolution 167 on June 9, 2009, warned banks, the Security and Exchange Commission, the Nigerian Stock Exchange and all financial institutions not to honour the N60bn loan bid, except the legislature first ratifies such a request.
The House accused the executive of refusing to disclose satisfactorily the state's detailed finances. While the opposition All Nigeria Peoples Party (ANPP) condemned the insistence of the executive on going ahead to obtain the loan despite the resolution of the House and accused the governor of planning to put "generations of the state's indigenes unborn in perpetual indebtedness," the Elders' Forum of the ruling Peoples Democratic Party in Ogun State called on the executive to "quickly toe the line of House Resolution 167" by fully disclosing "the extent of Ogun State's indebtedness, to enable the OGHA, the sole appropriating arm of government, to consider its request for a N60 billion bond."
In the midst of this controversy, Governor Daniel led the state executive members to the floor of the Nigerian Stock Exchange, vowing to resist any plot to stop the bid, which, according to him, is meant for development projects in the state. He was warmly received by the President of the Nigerian Stock Exchange, Mr. Oba Otudeko, and Director-General of NSE, Mrs Ndidi Okereke-Onyiuke. They both lauded the efforts of the governor. Said Otukedo, "The Ogun bond will be successful because of the ability of Governor Daniel to turn around the economic fortunes of the state."
The executive arm of the state government has consistently explained that it is covered by the Ogun State Development and Savings Development Law, enacted in the Second Republic, in its decision to raise the bond. Section 3 of the law, which was amended in 2006, states that the state government may, subject to the provisions of the law, raise loans for both economic and socio-economic purposes. According to section 4 (1) of the law, "any loan raised under Section 3 shall be by the issue of stocks, through the Nigerian Stock Exchange; the aggregate sum of the loan shall be as determined by the Executive Council."
While we do not wish to be drawn into the lingering face-off between the executive and legislature of state government, our view is that the House of Assembly, being the appropriating authority for the state's finances, as laid down in Section 121 of the 1999 Constitution, cannot be ignored in a matter of obtaining a loan or any other such issue. As a matter of fact, approval for incurring such public debts is traditionally the role of the legislature while the application of such funds is the duty of the executive. It would however be necessary for the state legislature to respond to the specific claim by the executive that 'in the 2009 Appropriation bill, which has been passed into law by the House of Assembly and assented to by the governor, the funding gap and issuance of the first series of the bond were expressly stated.' What is the monetary value of the alleged 'first series of the bond'? Is the N60bn part of the 'first series'? Be that as it may, the power over public finances conferred on the House by the Constitution is incontestable. We therefore urge the two arms of government to resolve their differences in the interest of the state's citizens.
We deplore the alleged inability of the Auditor General of the state to explain the detailed financial position of the state, and also the reported discrepancies in the figures of the Auditor General and those of the Accountant General. Tax payers in the state deserve to know all the facts concerning the state's finances. We are equally shocked by the role of the Nigerian Stock Exchange in the whole drama, which is capable of misleading some quoted companies into a 'bad transaction', as it cannot claim to be unaware of the implications of the caveat emptor issued by the House of Assembly on the proposed bond.
Finally, we find it difficult to support, in principle, the Daniel administration's N60bn bond bid, coming from a government in the seventh year of an eight-year tenure. Given Nigeria's peculiar environment, it would be better for governments to raise loans, the substantial part of which they can pay back during their own tenure. We cannot, therefore, support a huge debt capable of tying the hands of an incoming government which may have its own priorities.
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