The Kwara State Government turns to the capital market to raise funds to develop the state
By Gbenga Ggbede
The Kwara State government is seeking a N30 billion bond from the capital market to help finance different developmental projects in the state. The bond, which will come in two trenches of N18bn and N12bn, according to the state’s Commissioner for Finance, Alhaji Abdulfatah Ahmed, will be used to finance eight key projects in the state. The projects include the building of a truck plaza, a rice processing mill, a new secretariat, a state university, and an international aviation college; and provision of potable water supply and irrigation for its vast agricultural projects.
The Bukola Saraki administration opted for bond due to its lower interest rate at 12 per cent as against between 19 and 25 per cent interest on bank loans. Ahmed added that it was natural for the state to save money from interest payment and reapply such savings to other competing projects. “Government will naturally want to borrow to execute projects and pay back. If you look at the nature of funding in every state in Nigeria apart from Lagos State, I don’t think there is any that is not relying heavily on Federation allocation,” he said.
Apart from the secretariat, all other projects would be executed through public-private participation with a window for government to exit in the future. The truck plaza project seeks to exploit Kwara State’s strategic location as a gateway between the north and the south, to provide services for the numerous truck operators that ply the route. The state targets an annual yield of N2bn from the project, part of which would be used to repay the bond.
With the recent accreditation of Ilorin airport as a full cargo airport and the dearth of pilots in the world, the commissioner said it became expedient for Kwara State to establish an international aviation college in the state capital in partnership with Horizon, a United Arab Emirate-based organisation to train pilots that would service the nation, West Africa, Africa and the world at large.
The state is poised to take its initiative that settled 13 Zimbabwean farmers to the next level with the establishment of a rice processing mill and an irrigation project that would ensure all-year round farming. It has also initiated moves to venture into cement manufacturing in partnership with LaFarge, the world’s largest cement manufacturers and owners of the West African Portland Cement Company.
Sourcing from the fund, the administration would embark on massive overhauling of water works in the state to ensure wide generation and distribution of water to every nook and cranny of the state. The project would be supported with sinking of borehole in some areas. Ahmed listed education as a key area where part of the fund raised would also be utilised. He stressed that as part of efforts to meet the educational requirements of the state in the area of student’s enrolment, the government has concluded plans to establish a state-owned university.
He expressed optimism that the state’s Fitch rating of (AA- and BB+) would attract investors to the bond. He added that the projects tied to the bond would generate revenue to repay the instrument. This is in addition to the state’s internally generated revenue and value added tax which also offer themselves as guarantees. The two are estimated at half-a-billion naira a year.
To ensure that the proceed of the bond is judiciously disbursed and utilised as planned, Ahmed said the government has put an effective check and balance system in place with price intelligence and budget monitoring and evaluation units in place.
The commissioner boasted that the state was the first in the country to pass a fiscal responsibility bill into law.
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