Ebonyi State And A Ring Road Of Debts
Prince NwaezeOnu
It is no longer news that the Ebonyi state government proposes to borrow the total sum of $150 million from the African Development Bank (ADB) and Islamic Development Bank (IsDB) for the reconstruction of the 198 kmAbakaliki Ring Road. This proposal has since received the blessings of both the Debt Management Office (DMO) and the Senate.
As is to be expected, many voices have been raised for and against this proposal. Separate rallies have also been held on the streets of Abakaliki by opponents and supporters of the loan proposal. While all stakeholders are passionate in their views, it is important that we do not lose sight of the salient points and necessary considerations before the state commits to yet another loan agreement.
Infrastructural development is, no doubt, a veritable means of revamping an ailing economy and providing employment. It played a significant role in Nigeria exiting from recession earlier this year. Moreover, the government of President Muhammadu Buhari supports the use of more external finance for funding capital projects, by substituting the relatively expensive local borrowing in favour of cheaper external loans. With an 8 year moratorium on interest payment and low interest rates, the ADB and IsDB facilities are ideal.
The elephant in the room however is the growing debt burden on the state and the relative relevance or otherwise of the stated purpose of the loan. Where does the intended project rank in the overall economic development of the state? Will the state be in a position to service the loans and repay same when the time comes?
It is gratifying to note that the intended loan is for the development of infrastructure. However, whether the proposed Ring Road should be top priority for an impoverished agrarian state with little vehicular traffic is debatable. The government argues that the road is essential to economic development of the state as it will aid the evacuation of farm produce from the hinterlands to the cities and transporting processed food back to the villages. Government claims also that it envisages an agricultural revolution in the state in the next 5-7 years especially in the area of rice and cassava production and processing and, the road will be needed when this happens. The simple answer to this is to state that the government’s argument is akin to placing the cart before the horse. Since after the Nigerian civil war, “Abakaliki rice” was a popular alternative to imported rice. Abakaliki, the state capital had a bustling rice milling industry that processed virtually all rice produced in the southeast and fed populations beyond the borders of Nigeria. Unfortunately, successive administrations since the creation of the state have failed to develop that potential cash cow for the benefit of the state. It is the considered opinion of many that the $150 million loan or at least, part thereof would be better utilized if applied towards redeveloping, revitalizing and expanding the existing rice milling industry. Properly managed, Ebonyi state has potential to overtake Lagos and Kebbi states in rice production.
It is indisputable also that Ebonyi has the least literacy rate among the states in the southeast zone of Nigeria. If there is any sector that needs urgent and substantial funding, it is the education sector. It is regrettable that most of the laudable educational policies initiated by the Dr Sam Egwu administration have been abandoned. As a result, school enrollment has fallen drastically across the state especially following the reintroduction of fees in public schools. The ranks of street hawkers and truck pushers have since swelled and spilled over to Onitsha, Lagos and other major cities of Nigeria. Will this be David Umahi’s legacy?
The greatest concern of those opposed to any further loan undertaking by the state is the parlous and abysmal status of the state’s finances. Doubts, serious doubts exist as to the state’s ability to shoulder its growing debt burden.Ebonyi state is agrarian and sparsely populated boasting very little in the way of Internally Generated Revenue, IGR. It receives the least average monthly allocation from the federation account among the 36 states in Nigeria. The National Bureau of Statistics, (NBS) put the IGR of the state from January to December 2016 at #2.34 billion, the lowest in the federation.Ebonyi state’s external debt stock as at 30th June, 2017 was $62,496,481.36 while its domestic debt as at December 31, 2016 stood at a little above #28 billion according to information released by the Debt Management Office. The domestic debt is currently estimated at well over #50 billion. As recent as 2013, the DMO listed Ebonyi state as one of the states that failed the domestic debt sustainability test. That the same Debt management office turned round to okay a hefty external loan of $150 million is puzzling especially as the proposed Ring Road can hardly qualify as a productive venture in the state’s circumstances.
The government argues that the proposed reconstruction of the Abakaliki Ring Road is “the most important development plan of Ebonyi state” and very necessary as it foresees a revolution in farming activities in the near future. The envisaged agricultural revolution will create additional one million jobs according to the government. Yet government’s contribution to the agricultural sector in the past two years is less than #20 billion. How can we build such a road to aid an agricultural revolution that exists in words only?
The government of Dave Umahi puts the total accruing earning from various assets of the state at #29.78 billion. This amount will be deployed annually towards repayment of the proposed loan from the ADB and IsDB according to documents released by the government in support of this loan. In other words, government proposes that when the moratorium ends in eight years time, all state resources will now be deployed towards the repayment of this loan with a freeze on capital expenditure in the state. This truly will not augur well for the state or its citizens and inhabitants. Surely, we deserve a better deal, such as will not tie the destiny of the state to some foreign entities.We call upon the state government to reconsider this loan proposal unless, as is being speculated, obtaining this particular loan has become an ego trip for the governor. The worst calamity for Ebonyians will be when this much advertised Abakaliki Ring Road turns into a white elephant project, a ring road of debts.
Prince NwaezeOnu
E-mail: [email protected]
