Governor Amosun and the rest of us

THE Senate on November 9, 2017, approved the external borrowing plan for the sum of $350 million for the Ogun State development policy operation, from the World Bank. The approval for the foreign loan followed the adoption of the recommendations of its Committee on Local and Foreign Debts chaired by Senator Shehu Sani. The recommendation has it that Ogun State has a low and acceptable debt sustainability level and is therefore eligible to borrow. It also noted that the state has shown a high degree of prudence in implementing her annual budget. President Muhammadu Buhari, had in July 2017, written the Senate, seeking approval for credit facility of various sums for 10 states.

Ogun State started processing the loan in 2016, given the phenomenal infrastructural development in the state which made it an attractive bride to the World Bank. The World Bank considers states that have demonstrated ability to perform and partners such states in development. Ogun State, under the leadership of Senator Ibikunle Amosun, has gradually emerged as the industrial capital of Nigeria. Its peaceful ambience, rich human and natural resources and location around major markets within and outside Nigeria make it the first choice for local and foreign investors. It is not surprising that the report of the World Bank, Doing Business in Nigeria 2014, rates Ogun, out of 35 states and FCT, as one of the five states “that made the biggest strides towards the national frontier of good practices.”

The state has grown significantly in the areas of agriculture, manufacturing, mining and services, a successful and sustainable development outcome would in turn make it an excellent model of the emergent, economically diversified Nigeria. The state government has undertaken significant investment in transport infrastructure in recent years, particularly in roads in and between the main urban centres, as it has sought to plug this infrastructure deficit. It is interesting to note that the World Bank facility is a long term, concessionary loan facility that comes along with technical support from the World Bank to help the state to fund its budget and achieve pre-agreed development outcomes. Part of the appeal for Ogun State is that the partnership gives it the opportunity to embrace best practice in its institution development in areas such as land management, vocational skills development, agricultural value chain development, data and statistics, procurement, budgeting, and planning.

The World Bank is one of the foremost development institutions in the world. It has been in effect since 1944, supporting countries and governments to realise their development objectives with countries as diverse as France, Germany, Brazil and Japan. These are developed countries that we admire today. Long experience means that Nigeria and Ogun State can learn from the development experiences of others over the years. The figure of $350 million was determined by the World Bank as an appropriate figure for the support of Ogun State government’s development objectives. The loan tenor is 25 years and the interest rate is concessionary, which is usually well below five percent, which is very attractive for development purposes. The people of Ogun State should appreciate that this loan is a programme for results. This means that the World Bank is interested in funding outcomes that improve the lives of the citizens of the State, rather than simply funding government projects.

The Internally Generated Revenue (IGR) growth is an area of strength for Ogun State. For the period 2011 to 2015, the IGR accounted for the larger share of the State financing portfolio for about 55% of the total revenue of the State, while the remaining 45% were transfers from the Federation Account. In the face of dwindling Federal Account Allocation Committee (FAAC) allocations, Ogun State foresees that the majority of its finances will be from IGR receipts over the immediate to longer term. Any serious government desirous of development should take advantage of the World Bank facility, a concessionary loan offered at two per cent interest rate as against the 22 per cent obtainable in the normal financial market. It will be foolhardy for any government to reject such an attractive offer which is different from conventional loan where the full amount being sought would be disbursed at once.

In this case, disbursement would be made in tranches, based on performance. This is a loan mainly for the future, as the subsequent administrations in Ogun State stand to benefit more as more tranches are disbursed in the course of time. It will therefore be misleading to claim that the $350 million loan is meant just for the present administration.Governor Amosun has redefined the concept of governance and brought to bear his education, experience and style of leadership in pursuing his Change agenda for the Gateway State and its people.

• Durojaiye is the Special Adviser (Information & Strategy) to Governor Amosun.