Senate Rejects Kaduna's $350m Foreign Loan Request

The Senate on Thursday rejected the request for a $350 million World Bank facility for Kaduna State on grounds that the state is already highly indebted to the tune of $232 million.

The Senate also said the state government did not follow the pre-conditions listed for such loans, and was not clear on the purposes for which the loan was being sought.

The position of the Senate was based on the recommendations of its Committee on Local and Foreign Debts, which said to approve the loan, would constitute a huge debt profile on the state, which would burden the finances.

The loan request captured in the 2016 – 2018 federal government external borrowing plan, has a low financing rate of 1.25% interest, moratorium of 5 years and a 25 year maturity tenor.

The Chairman of the Committee, Senator Shehu Sani ,said the $232 million was accrued from loans obtained by the state from 1960.

Sani, who incidentally is from Kaduna state, is engaged in a running battle with the State Governor, Mallam Nasir El-Rufai.

He however dispelled any political colouration to the rejection of the loan, explaining that Kaduna is the second most indebted state in Nigeria, after Lagos State.

Approving the loan, would put Kaduna's total debt profile at $582.1 million, which would be unsustainable and attract unnecessary huge financial burden on the meagre federal allocation to the state, Sani cautioned.

"With the high total debt stock of Kaduna State at the moment, the new borrowing sought, will make the debt service to revenue ratio high, thereby worsening the State Government’s ability to meet its other basic obligations to the people and further erode the economic viability of the state," Sani said.

He also wondered why the state government wants to obtain a facility that is almost twice the volume of the existing debt portfolio.

Senator Suleiman Hunkuyi also from Kaduna expressed opposition to the loan request, noting that the state government was not clear as to what the loan is required for.

He explained that the application of the loan as indicated in the details obtained from the World Bank, is completely different from what the Governor said the loan would be deployed to.

Hunyuki, whose building was recently demolished in Kaduna allegedly on orders of El-Rufai, said the $350 million facility is supposed to drawn over a period of four to five years.

The state government however indicated it wishes to access $170 million from the funds in 2018 alone, Hunkuyi said adding that the loan is to be utilised by three agencies affliated to the Governor's office.

One of the agencies is the Office of the Special Adviser to the Governor on Special Projects. Why the rush, why the hurry?" he added.

“As a representative of my people, I’ll like to say that the application of that loan is a misplaced priority. I strongly stand behind the prayers of the chairman of the committee, that this very important chamber do reject that request for the loan,” he said.

Senator Danjuma Lar also from Kaduna joined his colleagues to oppose the request.

“I met with the representatives of Kaduna state and asked what the loan was all about? What project is this loan meant for? I should know from zone one, two and three, who are the contractors responsible for the project? Where will the projects be sited? But these questions were not answered,"

“I realised that the money received in Kaduna state is much and there is nothing happening in state lately. They are busy retiring and sacking people and asking for a loan. To do what with the loan? I don’t understand. If you are collecting a loan without