A N21 billion Sukuk loan plan by the Niger State government has pitted the residents against one another, reports JUSTINA ASISHANA
The controversy is not really about Sukuk itself, an alternative financing package popular in Muslim countries for their interest-free benefits. In Niger State the plan to take a N21.5 Sukuk bond is generating enormous heat because many question its necessity in addition to the concern that the loan will further increase the debt burden on the state. The fear is that the state will be in perpetual debt, a situation that will mortgage its future. Some say there is nothing wrong with the planned bond.
Ever since the Governor, Alhaji Abubakar Sani Bello indicated interest in taking the bond by seeking approval from the House of Assembly, the state has not been the same. Reactions and counter-reactions have trailed the bond plan.
The House played safe by setting up a special committee to look into the component of the bond and get explanations from relevant ministries where necessary.
Maybe, if the projects of the Sukuk bond were people-oriented and evenly distributed, it would have gained unflinching acceptance. The people are not comfortable with the projects being said would be executed by the bond which would be paid with direct deductions from the federal allocations to the state and all the local government areas.
With N8.2 billion of bond debt inherited by the administration still hanging on the state government, one would think the government would be careful to avoid bringing more debt burden on the state.
The proposed Sukuk bond which would be released in two phases is expected to fund the construction of Minna township roads, trailer park in Suleja, reconstruction of Kontagora General Hospital, Kontagora water works, Marita modem market and Mining city development.
Although the Sukuk bond comes with no interest, however, the state Commissioner of Finance, Honorable Zakari Abubakar has said that the loan is expected to attract interest rate of 17 per cent which would be repayable in seven years explaining that although the loan comes with no interest but every investor is expected to make gain while investing, this is what gave rise to the 17 per cent interest.
This development has not only been a matter of discourse for the elites, it has also split the youths in the state as they no more speak as one, this is because one group is praising the government for wanting to take the loan while the other group is accusing the governor of being biased
The state House of Assembly seems suspicious of this loan. When the special committee met with the commissioners from various ministries that would benefit from the bond, the chairman of the committee, Honorable Abdul-Malik Muhammad Kabir asked the commissioners if they thought the projects to be undertaken were people-oriented, there was no answer to that.
The Commissioners who defended themselves during the special committee explained that most of the projects have been in the budget which is why it was put into the Sukuk bond.
One of the main concerns is the Minna township road, one wonders how many loans would be used to fix the road because even the past administration had collected bond to fix the road but nothing came of the the projects. This is probably why the people wonder why the Minna township road is among projects to be done under the Sukuk loan.
But the Commissioner of Finance said that since it is the the city capital, the government has the right to fix all the roads.
He said, “No amount is too much to spend in ensuring the city capital is of world class standard.”
But the legislators have a different thought, according to the Chairman of the Special Committee on Sukuk, Abdul-Malik Muhammad Kabir.
“Minna has benefitted from these township roads in the past. We have not seen any balance in the sharing of the projects. The projects are expected to be paid by public funds, so it is natural for the people to raise eyebrows if it is not evenly distributed, five road projects in Minna alone is a serious concern.”
The members of the House of Assembly are not the only ones having doubts about the bond. The Senator representing Niger East Senatorial District, Senator David Umaru is also not comfortable with the loan in any way as he feels the loan would mortgage the future of the state.
Umaru, who was very outspoken about this, said the intention of the state government to collect the N21.5 billion Sukuk loan is an exhibition of the financial recklessness of the administration as the administration of Governor Sani Bello is determined to plunge Niger state into outrageous indebtedness and possible bankruptcy.
He questioned the ability of the government to manage the loan especially when it has not given adequate account of the billions accruing from statutory allocation to the state. He said that the loans, including $226 million bond from the Islamic Development Bank and $330 million from Kuwait Fund for Arab Development is meant to further impoverish the state which is yet to recover from the comatose condition imposed by the huge debt bonds borrowed from the capital market by the previous administration.
“It is sad and unfortunate that while the people of the state are still groaning under the heavy debt burden incurred by the past administration, the APC-led administration of Governor Sani Bello has chosen to add to their pains, hardship and trauma with another huge debt from Sukuk, Islamic Development Bank and Kuwait Funds for Arab Development. “
The Senator said he is unimpressed and disturbed by reasons canvassed by the government for taking such loans while frowning at the way and manner the projects were distributed just as he called on the members of the State House of Assembly to withhold approval on the loan request saying that this would save the state from further impoverishment, “history will not be kind to our House members if they do otherwise. Future generations of Nigerlites and indeed the present generation will hold our lawmakers responsible for mortgaging their future.”
The Niger state youths, not left out of this Sukuk saga have been split into two factions over how the state government intends to utilise the N21.5 billion Sukuk loan it applied for.
One of the youth groups accused the state government of skewing the utilisation of the fund in favour of one of the senatorial districts in the state, the other group rose in defence of the administration, saying “it has been fair to all the zones”.
The Niger State Coalition in Defence of Transformation led by Muhammed Muhammed said Governor Abubakar Sani Bello shared the projects equally among the three senatorial zones, “a careful look at these shows an even spreading of projects across the 3 geo-political zones of the state”.
Apart from the Sukuk, Muhammed praised the state government for seeking alternative source of funding of infrastructural projects in the entire state, “when these projects are completed it will increase the state IGR by 70% which is in line with the vision of the Abubakar Sani Bello administration of creating alternative source of revenue for the state to reduce over dependence on Federal Allocation”.
However, another youth group led by Dr Ndagi Abdullahi Muhammed accused the governor of marginalising the Nupe speaking areas of the state in the distribution of projects to be executed with the Sukuk loan. Ndagi advised the government to redistribute the projects in the interest of fairness, equity and fair play.
Some elders are also not taking this lightly in any way, as a group of elders in the state under the Ena-Eyelo Foundation submitted the their stand against the government taking the sukuk loan to the Speaker of the House of Assembly.
The Chairman of the Foundation, Professor Muhammad Daniya questioned the necessity of the loan and the specific projects the loans are meant for while stating that this does not tally with the immediate needs of the people especially as the current debt burden of the state do not warrant taking more loans or bonds.
“How can any government take loan on behalf of the entire state and distribute the intended projects in just two out of three senatorial zones in the state. Projects to be initiated under the sukuk bond are glaringly skewed in favor of Zone B and C and virtually mine for A. This Sukuk bond is expected to be paid for with funds for all the people and LGAs in Niger State, so why a particular zone should be meant to share the brunt of loan burden without benefiting from the loan in the first place? “
Daniyan urged the state House of Assembly members to look into the request of the governor without bias and make decisions that would be in the overall interest of Nigerlites and Niger State.
“History and your democratic mandate impose upon you the solemn responsibility to do the needful on this matter,” he said.
With the House Committee on Sukuk which have sat and delineates upon this bond, the state waits with abated breathe to hear their resolutions regarding the bond. The onus on this bond now falls on the legislators who may or may not give their consent for the governor to take this bond that have caused tension in the state for the past two weeks.