Date Published: 05/24/10
Bayelsa: Now The Bond To The Rescue! By Kenneth Perekeme
The Bayelsa State Bond Committee Report prepared by a group of selected technocrats. The Report indicates that the Timipre Sylva administration has the political will to complete some of the projects initiated by his predecessor along with some new ones initiated by his administration. Some of these projects involve colossal capital outlay and their implementation would require extra-budgetary sources. Such projects include: the Judiciary Complex, the Kolo Creek Gas Turbine at Imiringi, the proposed International Passenger /Cargo Airport, Tower Hotel and International Conference Centre, Okaka- all in the Yenagoa metropolis..
The report went further to pledge that the bond would be used to complete the Glory Drive, East-West Igbogene Road, the Peace Park, Isaac Boro Square, Melford Okilo Memorial General Hospital and the Cottage Hospital, Opolo. Among the menu of projects earmarked for implementation, the only ones I find very odd to accept are the Gloryland Castle and Government House because I do believe that presently, Bayelsa State has one of the best, sophisticated State Houses in Nigeria. In place of the Castle, I should rather suggest that Government should a Cottage industry to absorb some of the unemployed youths, who may pose a threat to the security of the region in the foreseeable future.
These are certainly not the best of times for the State in terms of finances. Bayelsa State relies solely on revenues accruing from the Federation Account. But since 2009, the oil production quota has been very low mainly because of the wanton vandalization of pipelines by repentant militants. This is one of the reasons that prompted the State to resort to bond financing. The desire of the State Government to resort to bond financing is not new. The desire of the Bayelsa State Government to take a Bond first came to limelight during the Alamieyeseigha administration. That administration made efforts to take a N15 Billion bond but most people likened the bond to a bondage or a dead weight loan. No matter how warped the logic may be, the general feeling at that time was that the bond was uncalled for because it was not project-specific. Under the present administration, the situation has changed.
Now, our knowledge of the bond market and its workings in the economic development can better be appreciated. Bonds include all fixed or floating rate debt securities, including debentures, bills, notes, certificates of deposits, and asset backed securities and debt securities collateralized by pools of mortgage receivables. All tiers of Government: federal, state and Local Governments take bonds to provide either industrialization or infrastructure needed for development. In fact, after the Asian Financial Crisis in 1997, most nations even among the Asia Tigers use bond as a veritable instrument for development engineering. There is indeed nothing mysterious about a State Government taking a bond for the development of the State. Bond issuance is a world-wide phenomenon – a practice that has been capitalized upon by many State governments in Nigeria, including the Federal Government for the purpose of developing the real sectors of the economy.
Because of the proximal relationship between bond and bondage, and my phobia for the latter, I found time to interact with some members of the Committee to get details for the purpose of objective analysis. My interaction shows that the bond will never place the confine the State in bondage after all. On the contrary, if properly utilized, the bond will ensure rapid socio- economic development and reduce the stagnation index in the State. In fact, research in South East Asia and Western Europe revealed that resorting to the Bond Market is one of the most viable options for financing the development of heavy infrastructure.
In the case of Bayelsa State, the projects selected will open the entire State to economic activities thus enhancing quality of life of our people. Another robust advantage is that part of the Bond will be used to clean out current exposures in the commercial banks with high interest rates and this will save the State about N11 Billion. In my opinion, liberating the State from the stranglehold of its current debt service burden is one huge leap to open-up boundless opportunities for economic growth. Again, the seven years repayment period would give government ample opportunity to recoup. Certainly, this Bond with a moratorium of seven years cannot enslave any generation as earlier perceived by some analysts. Rather, if prudentially used, the Bond has the potential of emancipating the youths by creating a united, secure and prosperous Bayelsa State where investment would thrive. The Bond will be used for the provision of economically viable projects especially in the area of infrastructure, which is barometer to measure the success of any administration in a fragile ecology such as that of Bayelsa State.
The Timipre Sylva administration has expressed its sincere intentions of completing some of the projects initiated by his predecessor as well as the ones initiated by his administration. Among some of the massive infrastructure to be completed projects include: the Judiciary Complex, the Kolo Creek Gas Turbine at Imiringi, the International Passenger /Cargo Airport, Tower Hotel and International Conference Centre, Okaka- all in the Yenagoa metropolis.
Through the instrumentality of the bond, government has pledged its unswerving commitment to the completion of the Glory Drive, East – West Igbogene Road, the Peace Park, Isaac Boro Square, Melford Okilo Memorial General Hospital and the Cottage Hospital, Opolo. Other projects that would require a huge capital outlay include the Ekoli Bridge, the Three Star Hotel, Five Star Hotel all at Swali. Also to be included in this arrangement is the Galleria, the Gloryland Castle and Government House. The completion of these projects would open-up windows of investment in tourism and the non-oil sector.
Arguably, If government can muster up the goodwill it may be asserted that the completion of the aforementioned projects will not only accelerate the pace of development but also attract Foreign Direct Investment (FDI) to the State. Besides, employment generation would be given a boost while capacity building would be accorded prime attention. Bayelsa State is in dire need of FDI to diversify the economy and break the jinx of a mono-product economy.
Already, the House of Assembly has put in place an enabling legislative framework for the judicious use of public funds. The Fiscal Responsibility bill has been passed into law. In the same vein, the Public Procurement Law has been passed. The overarching aim of these laws is to control expenditure within the purview of conventional budgetary discipline. With this law in place, monies can only be expended realistically in line with stipulated accounting conventions and due process. It is one of the major pillars of good governance when its nexus with transparency is appreciated.
While this writer sincerely enjoins all patriots and progressive-minded Bayelsa people to support the sourcing and procurement of the N50 billion Bond, It is also imperative on the part of government to adequately fund the Local Government Areas now that elections have been conducted. Democracy shall be stripped bare of its import if the grassroots is dislocated from the State. Democracy only makes sense when there are elected representatives at all tiers of government. Again, Government should give a serious thought to the reinvigoration of the Agricultural sector to create job opportunities.
There are people whose fundamental moral belief is that we all live in the same empirical and rationally comprehensible world and that morality is the adoption of universal and openly defensible rules of conduct. But experience has shown that those who rush around ladling out moral judgements soon arrogate to themselves an alarming and repellent sense of their own moral infallibility. This is the situation in Bayelsa State where even people with very grubby records mount the podium of morality to dish out incomprehensible tutorials on good governance.
Good governance can only thrive when there is transparent and accountable leadership with the support of the people. At this historic moment, Bayelsa people need to emphasize those factors that would forge unity among all segments of the people rather than those factors centrifugal bearing. However, the administration should see the entrenchment of fiscal discipline as an article of faith so that Bayelsans would be convinced by their conscience to support any initiative capable of accelerating the development of the State. The development of Bayelsa State is a burden on the shoulders of all, and no effort should be spared in this direction.
In 2005 only two states obtained from the benchmarking process including a Niger Delta State, Bayelsa State. In 2006, Bayelsa State participated in the benchmarking exercise for the first time and performed not too well, the critical areas of complaint for Rivers and Bayelsa were in the area of budget and fiscal management where both states scored abysmally. Recalling these facts has become imperative in the light of fiscal discipline in the Niger Delta States.
The N50 billion bond should not be abandoned, and the wisdom of those who packaged the Report should not be thrown out. The bond will help diversify the States revenue base through the attraction of Foreign Direct Investments to the State. We live in a conservative society where people resist change, especially when such changes are geared towards systemic transformation. In the arduous process of strengthening budgetary transparency as a tool for accountability, the Ministry of Finance and other agencies related to financial management are bound to be misunderstood. This is expected, but to a great extent, people have started to rebuild confidence in Bayelsa State. But while efforts are being made to diversify the State’s economy, it has become imperative now for stakeholders to speak with one accord and facilitate the implementation of bond financing. The N50 billion bond is not out of order.
Kenneth Perekeme wrote from Kaiama, Bayelsa State