Recently, Kogi State Government, through the Commissioner for Finance, Budget and Economic Planning, Alh Asiru Idris announced, shortly after the State Executive Council Meeting the decision to borrow One Hundred Million Dollars ($100,000,000) for Social Economic Development of the State.
As a Financial and Economic Analyst, I have personally appraised this decision to know if it a Curse or Blessing to the State. In Financial Management, borrowing is not a problem but the Purpose and Repayment Capacity determines, to a large extent, whether it is worth it or not. Let’s look at the following parameters;
The State’s Debt Portfolio
Let’s first look at the debt portfolio of the State. According to the Commissioner, he said ”
‘‘The fiscal sustainability of the State gives room for borrowing. If the State debt has not gone beyond 250 percent of her income then, it can still borrow. Kogi is presently on 147 percent”. This shows that the state still has the needed financial stamina to borrow more.
Reasons For Borrowing
He also stated further that the bowworing, when accessed, “Will be channelled towards developing the Staple Crop Processing Zone, SCPZ in Alape, Kabba Bunnu area of the state. Building of roads, construction of electricity and other social amenities within the Alape Crop Processing Zone”. You will agree with me that Kogi State has the largest production of Cashew Nuts in Nigeria. Processing of this and other staple crop will in turn generate employment opportunities to the willing and able unemployed youths in the State and by extension generate income to the State Government.
Repayment Capacity / Fiscal Sustainability
In his speech, the Commissioner further said that “A State who is not using more than 40 percent of his Internally Generated Revenue, IGR, to service loan, can still borrow. Kogi is presently using only 28 percent of its IGR to service loan. We still have a difference of 12 per cent to borrow”. Honestly and with all sense of modesty, the State isn’t in danger to borrow more but what calls for concern is prudency, transperancy and accountability.
In order to hedge against mismanagement, we were made to understand that the State Executive Council has approved the creation of a new Department of International Cooperation to coordinate funds from World Bank, and other donor agencies. This, to me, is in the right direction.
Conclusively, borrowing of additional $100 Million by the State Government is a blessing PROVIDED the WORDS of the Commissioner for Finance, Budget and Economic Planning above are TRUE, not LIP SERVICE and are HONESTLY allowed to translate to ACTIONS.
May Kogi State Survives
Hon. Musa Olumayowa Yakubu
(MOY) FCIB, ACE