FEC approves $200m loan for Lagos

The Federal Executive Council (FEC), on Wednesday, approved a 200 million dollar loan for Lagos State Government to complete some of the infrastructural development projects.

The loan, which will be sourced from the World Bank, is the second major approval of such facility for any state government by the President Muhammadu Buhari-led administration.

Edo State was the first to benefit from a similar gesture.

Addressing State House correspondents after a FEC meeting, presided over by Buhari, Minister of Power, Works and Housing, Babatunde Fasola, explained that the loan in question was not entirely a new one as part of it had been collected during the past administration.

He said that the delay in approving the balance of the loan was due to partisan political differences as Lagos State was being controlled by a different political party other than that of the government at the centre.

According to him, the loan was approved in 2010, by the Federal Government, with an initial moratorium of 10 years and a repayment period of 40 years.

He regretted that due to the branding of Nigeria as the largest economy in Africa at the moment, the terms and conditions of the loan had changed with a reduction of moratorium period to only five years, repayment period to 25 years and an imposition of 2.5 percent interest rate.

He said: “The point to make is that this is not a new loan; it’s a segment of a programme of developmental initiatives and it was approved in 2010 with a total sum of $600 million for Lagos State to be disbursed in tranches of 200 million each year starting from 2011 to 2013. But it suffered delays as a result of partisan political differences in the last dispensation. After the first tranche was disbursed, there was a freeze on the second.

“The initial agreements we had with the World Bank was a 40-year loan, a 10-year moratorium, 0.5 percent interest. But because of the delays that subsequently characterised the partisan interference that took place, our profile as a nation also changed; we had become a bigger economy, so money was being lent to us not now as a highly indebted nation anymore.

“But what is still heart-warning about it is that it helps to finance infrastructure. When we look at road construction and the value chain that people benefit from it, labourers, those shops that sell iron rods, artisans, craftsmen, that means, really globally, economies are being reflated and infrastructure defines how big a nation can grow. It is the defining line between poor and rich nations.”

Fasola in whose era as Lagos State governor the first tranche of the loan was received, however, expressed gratitude that the government of the day at the centre had given approval for the loan to complete the numerous roads and other projects.

He also noted that the resolve by the World Bank to provide the money was a testament that the foremost financial institution had confidence in the Federal Government and its current fiscal measures.

“It’s is heart-warming that this administration has taken it on, and again fast-track it so that the Lagos State Government can continue its developmental programmes of infrastructure renewal; taking people out of poverty, reducing inequality, because that’s the way to really distribute wealth in a society.

“And that the World Bank has had the confidence now to lend to sub-national government is a testament of financial discipline, strong governmental structures and the establishment of institutions, rather than the World Bank writing programmes for those states,” Fashola said.

He told newsmen that the Finance Minister and Co-ordinating Minister in the past administration, Dr Ngozi Okonjo-Iweala, had confided in him that the second tranche of the loan was frustrated because some PDP governors were complaining that only the then opposition states were benefiting.

Asked whether partisanship interpretation would not equally be given to the current approval, the Minister replied that as at the time the first approval was given, Lagos State was duly qualified for the loan.

He said: “I mentioned partisan differences because I remember when the delays came up, I was told by the then Minister of Finance that she was getting complaints from PDP Governors that it was only APC states that were benefiting at the time from the World Bank loans. So we got access when we were in opposition, because we were qualified and we met the competitive conditions and one of the resolutions we have taken is that we must encourage other states that meet these kinds of conditions across the party lines to be able to access them, because it is competition that really brings productivity.”

Meanwhile, a mild drama preceded the commencement of Wednesday’s FEC meeting:

President Buhari shocked Vice- President Yemi Osinbajo and other cabinet members by arriving at the Council Chambers of the State House at 9.51a.m for the Federal Executive Council meeting scheduled for 10.00 a.m.

Osinbajo, Chief of Staff, Alhaji Abba Kyari, National Security Adviser Babagana Monguno and 19 minister were yet to turn up when Buhari arrived for the meeting.

After a quick glance at the few ministers who had taken their seats, Buhari remarked: “I came too early”.

Buhari then asked for the recitation of the national anthem and the meeting began immediately.

Osinbajo and others however arrived about five minutes into the meeting and were said to be admitted through the tea room as the main door had been shut soon after the President’s arrival in consonance with protocol.