THE World Bank has commended the transformation agenda, people- oriented programme under the administration of Adams Oshiomhole of Edo State in the past six years. The commendation came through its International Development Agency (IDA). Edo State external debt attracts less than 0.001 percent interest because it is borrowed from multilateral corporations like World Bank which charges less than one percent interest to finance critical sector of Edo State economy.
The Debt Management Office (DMO) in Abuja has said that Edo’s debt profile is a sustainable one which is healthy for its economic development. DMO has said that Edo State is one of the best states in the federation with public debt management, describing the claims that Edo was heavily indebted as mere propaganda and hoax. Edo state debt was categorized by DMO as relatively large external debt and the sum was put at $123 million.
World Bank assisted gully erosion control in devastated areas like Auchi in Etsako West local government council, Queen Ede in Ogbeson quarters Benin City and parts of Ekheuan Road are part of the multilateral external debt published recently by DMO which attract less than one percent interest. Oshiomhole’s critics are aware that the Queen Ede erosion project was purportedly awarded by the past PDP led state government before Oshiomhole came to power and was also reportedly awarded by the PDP federal government when his administration approached the federal government for intervention.
Edo State is benefiting from Multilateral Debt Relief Initiative (MDRI) provided for 100 percent relief on eligible debt from three multilateral institutions to a group of low-income countries. The initiative aimed to help Edo State to advance toward the United Nations’ Millennium Development Goals (MDGs) focused on halving poverty by 2018.
Oshiomhole’s critics are ignorant that Federal Government has proposed to spend N943 billion on debt servicing in 2015. At 21.67 per cent of the total expenditure plan and with lower revenues already buffeting the economy, debt may once more hobble development and drain scarce resources. Adams Oshiomhole is facing double jeopardy because his critics are ignorant of Federal Government external indebtedness and they are ignorant of Edo multilateral debt.
Edo State receives the lowest federal revenue allocation and is the least indebted state when compared with other states in the South-South. When Edo State Government under Adams Oshiomhole went to the capital market to obtain N25 billion bond for Benin City Water Storm Project, the opposition PDP opposed it. The N25 billion naira has been paid by Edo State Government. Edo PDP did everything possible to frustrate it even though all our neighbouring states had done so. As at that time Oshiomhole was the only All Progressives Congress, APC, governor in the South-South. All the other states in the South South went to the same market and raised between N75-N200 billion.
Oshiomhole’s critics are mischievous because Edo has been able to pay workers and pensioners salaries and meeting other financial obligations without depending on federal allocation. With a meagre monthly allocation of less than one billion naira from the federation account and an internally generated revenue of little above one billion naira a month, the governor has maintained a motivated workforce paid as and when due; built, renovated and reconstructed primary and secondary schools across the state; rehabilitated and constructed health facilities; built and reconstructed roads and streets designed and completed with covered drains, walk ways and street lights; provided communities across the 18 local government areas in the state with portable water and electricity as well as flood control, environmental sanitation and beautification.
The external debt profile of states has shown that Lagos State has the highest with a profile of $1.087 billion, followed by Kaduna State with a total of $234 million. Cross River State followed closely with an external debt profile of $131.469 million. Other states with relatively large external debt are Edo $123 million.
Oshiomhole’s critics should talk more of federal government debts rather than talk of low Edo debt that attracts less than one percent interest. Let Oshiomhole’s critics focus on figures published by the Debt Management Office in Abuja, the total debt stock of the Federal Government and the 36 states of the federation including the Federal Capital Territory amounted to N11.243 trillion or $67.726 billion. States and the Federal Capital Territory as at 31st December 2014, had a domestic debt profile of N1.707 trillion or $10.967 billion. But as at June last year, states in the federation had a domestic debt stock of N1.551 trillion or $9.963 billion. The Federal Government’s share of the rising external debt then stood at $6.363 billion.
Edo State is benefiting from the Group of 8 (G8) major industrial countries proposal that three multilateral institutions—the IMF, the International Development Association (IDA) of the World Bank, and the African Development Fund (AfDF)—cancel 100 percent of their debt claims on countries that had reached, or would eventually reach, the completion point—the stage at which a country becomes eligible for full and irrevocable debt relief—under the joint IMF-World Bank enhanced Initiative for Heavily Indebted Poor Countries (HIPC Initiative).
The HIPC Initiative entailed coordinated action by multilateral organizations and governments to reduce to sustainable levels the external debt burdens of the most heavily indebted poor countries. The MDRI went further by providing full debt relief to free up additional resources to help these countries reach the MDGs. Unlike the HIPC Initiative, the MDRI did not propose any parallel debt relief on the part of official bilateral or private creditors, or of multilateral institutions beyond the IMF, IDA, and the AfDF.
Edo State remained the least indebted state in the south-south and that all it has borrowed, it has been servicing regularly, adding that facility from multilateral corporations was with less than one per cent interest rate and repayment spread across 30 years.
Mr. Inwalomhe Donald, a public affairs analyst, writes from Benin City, Edo State, [email protected]
Gov. Adams Oshiomhole
