Fashola seeks alternative financing for capital projects
As Aregbesola defends salary arrears in Osun
Immediate past Minister of Works, Power and Housing, Babatunde Raji Fashola has identified paucity of funds as a big encumbrance to delivery of capital projects by the Federal Government.
He made the disclosure on Monday while taking questions from senators in the ongoing screening of ministerial nominees.
Senators Francis Alimikhena (Edo state) and Adami Aliero (Kebbi) had expressed reservations over Fashola’s performance in his first stewardship as Minister of Works, Power and Housing.
Most senators who spoke in the same vein reeled out uncompleted federal roads in their individual states. They also declared that performance in the power sector fell short of public expectations.
The duo of senators Francis Alimikhena and Adami Aliero noted that there were so many uncompleted federal roads projects during Fashola’s tenure and asked what difference he would make in his fresh tenure.
Fashola said there was limited funds to execute the litany of projects in road, power and housing.
He said: “The common problem was funding but there hasn’t been enough resources. Our resources aren’t enough to fund our stated expenditures and we have to borrow and there is a school of thought that have been saying we are over-borrowing.”
The former Lagos State governor, however, suggested alternative financing to mitigate the funding challenge.
He suggested alternatives such as SUKUK which he said could provide over N100bn to fund road projects across the six geopolitical zones. He also sought for the establishment of Sovereign Infrastructure Development Fund.
“I think there is some opportunity and I made this presentation during the last 2019 budget presentation that one of the ways I think is to expand instruments like SUKUK.
“Maybe it won’t be SUKUK this time but I think Nigeria can seek to leverage from the large pool of fund with the ordinary people looking for secured investment.
“And some of them are not even in the banking sector keeping their cash. And I propose that we should consider something like a N10 trillion infrastructure bond backed by parliamentary support and secured by the Federal Government with a reasonable coupon issued in tranches each year, as we need to fund infrastructure.
“In my view, if we don’t try this, we wouldn’t know whether it has worked. But I am convinced that we can do something along this line based on the interest that I saw in the Sukuk in the 100bn Sukuk, for example, there were about 286 investors and the instrument was oversubscribed, which meant that there was an appetite for it.”
The nominee equally suggested that Nigerians should seek a consensus on project holiday, which would allow the government to concentrate on completion of outstanding projects rather than embarking on fresh ones.
He said: “We need to have a consensus on break on projects, let us prioritise projects. Let us pick projects and deliver. We can’t do all the work in four years. The time of a nation is more than four years. Nigeria isn’t yet a rich nation that I think it should be. There is a gap between our needs and financing.”
On power, Honourable Fashola told the senators that there was no institutional encumbrance on state governors from embarking on independent power projects, submitting that the Nigerian Constitution offered them the window to embark on such ventures.
“The Constitution allows states to generate their own power, transmit and distribute to places not reached by the national grid. The Constitution makes that clear.”
Senator representing Lagos Central, Oluremi Tinubu offered a mild drama to the proceeding as she appealed to the ministerial nominee to secure letters of appointments for senators to distribute to qualified but unemployed graduates from their individual constituents.
“I want you to put that in your agenda for the second term that we all need slots for employment for our constituents.”
Former Osun State governor and a ministerial nominee from the state, Rauf Aregbesola dismissed as mischievous, the narrative that civil servants from Osun State were owed arrears of salary during his stewardship.
He said personnel cost for civil servants was over 60% of monthly allocation from the Federal Government.
He said: “I will say the narrative of salary in the state of Osun is mischievous. We paid huge attention to capital projects. Personnel cost alone on my revenue was 60%! The state of Osun civil service was huge and top-heavy. The fat cats were in level 8 and above less than 30% of the entire service took over N2 Billion monthly.
“Instead of sacking workers, I had to constitute a committee with Comrade Hassan Sunmonu as chairman to trace revenue flow. I never owe level 1-7 any salary.”