Rating Kwara Highly

Efforts by the Bukola Saraki administration to reposition Kwara State and place it on a sound socio-economic footing appear to have received a boost following the recent credit rating of the state by the Fitch Ratings Company. Kwara State may have taken a cue from Nigeria which, in 2002, subjected herself to the international credit rating. The rating was perceived as having opened up the country to the whole world.

Kwara State blazed the trail among states in Nigeria by voluntarily submitting herself to the international credit rating scrutiny. The exercise, which lasted four months, from November 2007 to March 2008, earned the state the rating of B+ in foreign and local currency and AA- (minus) in national long-term rating. Analysts reckon that with this rating, the coast appears to be clear for the state to storm the capital market to source for funds to finance its agro-allied industries, aviation and several other money-spinning ventures. In an interview with TheNEWS, the state Commissioner for Finance and Economic Development, Alhaji Abdulfatah Ahmed, said the credit rating exercise was meant to showcase the state government’s activities since inception and the level of success it has recorded in budgetary discipline, administrative procedures, civil service structures and the level of social welfare packages for its citizens among others. “The standard that is applicable globally today is to bring yourself to the level that will be globally accepted and practised all over the world. To get to that level, you must have been subjected to a thorough review, by credible international agencies like Fitch whose mandate it is to go round, on request, to those institutions, governments and corporate organisations that are interested in being rated within a common platform that will show their performance as having conformed with the best practices in the world,” Ahmed said. According to him, people need to showcase whatever they are doing globally, because the world is becoming a global village. The commissioner noted that Kwara State is moving to a level whereby its shops are wide open not only to foreign investors but foreign lenders. He pointed out that the state government decided to subject itself to the credit rating exercise because of the enormous benefits derivable from it. While noting that the rating would put the state on the world map, showcasing its potentials and agro-based economy, he was also of the view that it is also capable of attracting potential investors to the state to take advantage of resources available there. Ahmed opined that since lending is a function of risk and the state government currently has a quantifiable risk profile, the rating would enable it to lower the cost of doing business and particularly, funding of the agricultural activities in the state with respect to borrowed fund from both money and capital markets.By and large, the commissioner said, the rating has opened the gate of the state to potential lenders that would come and discover that the state has the capacity to take money and pay back as and when due. It was his contention that the rating would give room for the state to appropriate fund to develop agriculture, its area of core interest. “The concept of the rating is to make us available to lenders, which means resources will be made available to the state to support its developmental processes which, we also expect, will have ripple effects on the common man on the street. “It opens our gate to economic development, opens our gate to employment creation, opens our gate to investors but most importantly, it lowers our cost of doing business. And it also gives us alternative options to employ surplus funds that we have been saving that hitherto, would have gone into capital development projects that are capital intensive,” he summed it up. Fitch, however, admonished the state to put more effort into its internally generated revenue in order to be less dependent on the allocation from the centre. The agency stressed the need to create activities within the state that will support internally generated revenue so that the state will not be wholly reliant on the centrally allocated funds. Ahmed said the Saraki administration had from inception seen the need to overhaul the state’s revenue generation machinery. The measures put in place, he noted, paid off as the state has increased its internally generated revenue from N64 million in 2003 to about N230 million currently. He noted with joy that the state is gradually moving to a private sector-driven environment, which has brought about the establishment of more banks and also small and medium scale industries. The International Fitch Ratings Company operates in many advanced countries of the world, including USA, Europe, Japan, China, South Africa and Tunisia. Major areas covered during the course of the rating exercise include administrative and legal information framework, economic information requirements, budgetary and financial information requirements, debt information requirements, budgetary framework and debt, contingent liabilities and liquidity position. Meanwhile, the Presidency has, through the Debt Management Office, DMO, congratulated the state government for being the first in Nigeria to be reviewed by an international credit rating agency such as Fitch. It noted that the rating was a reflection of the steady progress in the economic reform of Kwara State as exemplified by the rapidly growing economic wealth indicators, modest debt and strong budgetary performance.