There can be no doubt that the Nigerian Stock Exchange which facilitates the issuance of bonds for corporate bodies and state governments must consider the viability and profitability of every such issue since it is a private concern. In addition, going by the fact that it is a profit making organisation, it ought to make business logic rather than moral or political concern its major consideration. But these assumptions can only be sustainable when the circumstances are normal. When they are not, as is the case in Nigeria, the overall interest of the economy and national interest should play leading roles in determining what is done eventually. Indeed, as an emerging market, there is a great need for the regulatory bodies to consider the peculiar nature of our country and the socio-political background of our economy while handling sensitive issues.
The circumstances surrounding the scandalous acrimony between the executive and legislature in Ogun State over the N500 billion bond, which the state government is seeking, have raised pertinent questions on whether the regulatory bodies in the stock market should just sit by and approve all bonds whether they have been proven to be harmful to society or not.
A close look at the Ogun controversy reveals the unsavoury motives and politics surrounding the sourcing, control and use of government funds. Ordinarily, there is nothing wrong if a government seeks to raise a loan through bonds from the capital market. But in the case of Ogun, there was a weighty allegation, not only from the opposition parties but from the legislature controlled by the governor’s party that the executive plans to use the proceeds of the bond for personal aggrandisement and funding of political campaigns in the forthcoming general elections. Rather than seek to convince the electorate that the funds are urgent and need to be sourced immediately, notwithstanding the fact that he has less than nine months in office, the executive and the faction of the State House of Assembly loyal to it staged a coup, purporting to have sacked the Speaker and fourteen Assembly members opposed to the governor and his bond.
After the sack, the nine members gave the governor the approval he has desperately sought to go ahead and access the loan from the bond market. The nine loyalists of the governor descended to the level of obtaining a mace belonging to a local government, met as early as 7 a.m, and claimed to have formed a quorum. This happened two days before the governor and the legislators were billed to engage in a televised debate with the electorate as the umpire. The governor and his supporters shunned this civilised approach and opted for the crude method they adopted. Why must the governor have that amount in such a short time before his departure from office? It became instantly clear that the objective of all the illegalities perpetrated by the governor and legislators was a desperate bid to get the money by every means possible and not any altruistic motives as the governor has claimed.
For some years now, it has become fashionable for governors to approach the stock market to obtain loans through bonds for what the states’ chief executives have called developmental purposes. Lagos, Delta, Imo, Kwara and Niger are some of the states that have approached the bond market to raise billions of naira, ostensibly to develop their states. For the stock market authorities and operators, bonds issued by states are very attractive because they are dependable, since repayment is deducted from source. But in the light of current realities, should the regulatory authorities not exercise some form of check? Ogun State’s bond provides a very interesting plank for this discussion.
First, the regulatory authorities should not be seen as a party to the looting of state treasuries. Therefore, they must screen every application for the issuance of bonds to ensure that they are meant for the good of society. If this needs to be built into the statute books then it should be done. It may appear very difficult to determine which bonds are being sourced for corrupt purposes as the facts and figures presented to the stock exchange may be difficult to fault. But when there is a revealing controversy as is currently unveiling in Ogun State, the Securities and Exchange Commission (SEC) and NSE should disregard whatever pecuniary gains such transactions are likely to bring investors, operators and the regulators but decline to approve of them.
Nigerians are becoming more inquisitive and daring politically and are most likely going to be questioning such suspect government borrowing in the future with protests. The authorities would be doing a world of good to sift the wheat from the chaff.
The regulators need to go all that length, because failure to do so will encourage governments in the country to continue in their lazy attitude of waiting monthly for revenue allocation from the central government, without any serious attempt at generating internal revenue despite being abundantly endowed with natural resources. Borrowing is a blighted side of this lazy syndrome that has kept our dear country in the cesspool of underdevelopment for fifty years and still counting. State governments should be reminded at every available opportunity that they need to generate great ideas for effectiveness in governance.
What is currently going on is a process that will prolong poverty among Nigerians. When a state governor and his cabinet are so bereft of ideas that all they do is receive allocations from Abuja, tax the people and borrow money, the result will be the entrenchment of poverty in the system. Virtually all the governments are shying away from the real sector and have pushed manufacturing aside because they can still get by through subventions from the Federal Government, taxes and loans gotten from bonds or the World Bank and other creditor institutions.
Even in Lagos State which is the pacesetter in the delivery of democracy dividends in today’s Nigeria, there is too much dependence on taxation, although it is doing this because of its large population of both people and industries. Nigeria will remain backward if we do not begin to do something serious about our awful dependence on importation of the goods we need and develop our real sector. We cannot change this shameful trend if everybody, including the capital market authorities, does not discourage the unjustified recourse to borrowing by our governments.
In this regard, the Lagos State House of Assembly must be commended for returning a request by the state government for raising a loan. Upon a careful study of the state’s budget, the Assembly discovered that the executive had not accessed a N50 billion loan it earlier approved. It, therefore, urged the executive to access the earlier loan and if it needed more, it could return for necessary approval by the Assembly. The Assembly’s spokesman, Mr Omisore stressed that the legislators were well aware that the governor was performing and delivering dividends of democracy but that they had to do their duty of maintaining a check and balance in governance. If this happens in Lagos, then other states should be made to undergo tougher screening before they are allowed to borrow any amount of money.
We owe it a duty to future generations to ensure that our governments, whether at he federal, state or local government level are not mortgaging the future of our children yet unborn by indiscriminate borrowing without commensurate developmental efforts, since this state of affairs will make us all the more dependent, thereby ruining our economy. The onus actually lies with the legislators and civil rights societies to check profligate executives who care less about the nation’s future.
Unfortunately, our legislators at the federal level, who ought to show more restraint in appropriating huge sums of money in a period when national income is shr
inking, have proved to be the more eager than the executive to appropriate unrealistic sums of money. It is a shame that it was the executive which protested the massive additions to the budget and the unrealistic assumptions on which the National Assembly based its unwieldy appropriation.
