There have been discordant voices on the N250 billion Bond the Rivers State Government said recently that it sought from the capital market before October, 2011. In this report, Odimegwu Onwumere, the Coordinator, Concerned Non-Indigenes In Rivers State (CONIRIV), reports on the general attendants and un-attendant voices to the meat of the Bond:
A press statement, Sunday 31st July, 2011, through the Chief Press Secretary to Governor Chibuike Amaechi of Rivers State, David Iyofor, said that the state needed N250 billion Bond; this was being sought from the capital market before October, 2011. The money would be coupled to supporting definite developmental projects in the state. Reportedly, the developmental projects included the Greater Port Harcourt City, the Port Harcourt Monorail project, the new Rivers State University of Science and Technology Phase 1, Monte@Rivers (an entertainment complex), the Port Harcourt Ring Road that would connect the old city and Greater Port Harcourt city, and a new M-10 Highway; a beltway that would link the Port Harcourt International Airport to the Onne Sea port.
The governor raised hope in the unsuspecting residents, saying that “Rivers State is buoyant enough to handle projects that would impact positively on its people….The proposed size of the first tranche of the bond will be about 100 billion naira with five years tenures, whereas the total bond programme of 250 billion naira is envisaged over the next several months.”
Some dissonant voices joined to explicate the direful need for the money. The Rivers State Commissioner for Finance, Chamberlain Peterside said: “These long term capital projects that are capable of catalyzing the industrialization and transformation of Rivers State require massive financial investment that can only be obtained from the capital market.”
The state governor, it was learnt, was given the approval by the State House of Assembly to obtain the bond, in what was described as “such projects cannot be accomplished by sheer reliance on Federal Allocation and Internally Generated Revenue that comes in trickles.”
The State House of Assembly approved of the bond even when the “State remained very buoyant financially with sizeable revenue accruing from both the Federation Account and IGR and has set a target of earning at least half of its total revenue from IGR over the next one to two years.”
Whilst energy prices was said to remain relationally high on the world market in an impression of rather low to modest interest rate, Rivers State was said to benefit from a bond issue. This, it was learnt, through leveraging its high income potential and favourable credit rating, tied with a debt portfolio that was currently low at less than 30 billion naira.
Peterside further said that the economic indicators of the State, including annual Gross Domestic Product of about 30 trillion naira compared to its debt stock, were positive attributes that Rivers State could ride on to raise additional funds to finance its long term development agenda and fast track social and economic growth.
To ensure that proceeds of bond were efficiently and prudently deployed for the benefit of generations yet unborn, it was learnt that the Government, through the Ministry of Finance and other agencies, was making conscious and relentless effort to modernize and automate Public Accounting System, strengthen the Debt Management Office and establish relevant institutions that could transparently monitor projects, while acting as checks and balances of fund utilization in the public sector…With all this in place it was inconceivable that Rivers State would default on the bonds or allow any future administration to violate loan covenants of bonds, thereby laying the groundwork for predictability and continuity in the economic and financial planning process of the State.
Many concerned citizens were worried of what Rivers State was turning to with regards to the N1 billion per month savings by the state government if it could go the way of ‘bonding’. Some attributed some of the projects on the menu being the reason the state government said it needed the N250 billion bond thus: “Unfortunately, these are not new projects; the University is an existing entity, the mono rail is under construction from previous allocated budget which now looks like it’s been pocketed or mismanaged… You cannot borrow to build something that will not generate revenue to pay back the money. Let Amaechi look in the direction of job creation by setting up something. Later, he can build amusement park with the profit. But borrowing is killing.”
They wondered why the state was getting into the entertainment business with an entertainment center with the following question: “Is the state government trying to compete with the already functioning Silverbird entertainment that’s well managed and established?” They also said that they were not even sure if these were valid reasons for the alleged 1.6 billion dollar debt, by the government, despite the government’s monthly largesse from the 13% derivation.
However, some saw the intimation of the bond by the government as a “good move” but buttressed their only fear as, “if the money will be spent well.” To these set of individuals, they believed that there was a cartel running the sate and making things difficult for Governor Amaechi; and these “vultures have sworn to make the state unprogressive” adding that “it is not all about borrowing, but can the money be in the hands of good economizers.”
Many people were angry saying that what does the government need the bond money for because of all the money on record available to Rivers State. Questions were asked: Do you think it is a wise move to get a bond to embark on those projects? Was it wise to “waste” money on a sports festival and purchase of a jet when the governor knew he had those projects to be done?
“Kindly justify why a bond has to be taken instead of resorting to clowning on a public sensibilities.”
There was a belief that apart from the spending in the aforementioned, what government had was enough but if only the governor and his agents could ‘think’. The suggestion for the governor to be thoughtful was hinged on that collecting the bond money was a bad move, but rather, Amaechi should go and ask his Akwa Ibom State counterpart, Governor Godswill Akpabio, the secret of his developmental success.
“I just hope the state government will put the huge capital into good use which will be of great benefit to the people and not start embarking on some white elephant projects across the state just to get something to eat,” said a statement.
Some persons raised hope that those worrying that the money would go down the drain, not to worry, because “every Bond has a corporate trustee who keeps a stern eye on the money in the interest of the public. The trustee is in turn watched sternly by SEC (a FG commission).” But ountering the voice that regarded the Bond as a “bad move” some persons said that it was not a bad move at all.
“When I first started work after leaving school, a couple of my colleagues and I used to do ‘isusu'(cooperative), maybe 70k/month from everyone for one person, and it helped with major projects each of us wanted to do. I believe this bond will help turn the white elephant projects into realities, only if the funds are used well (hopefully). The Port Harcourt ring road was initially valued at 1billion dollars before the cash crunch pushed it up to 2billion. Let’s say it’s currently valued at $1billion (150billion naira), that leaves N100billion out of the 250 for the other projects…
“Yes, he’s suppose
dly saving a billion a month. From the inception of this administration, he should have saved about 50billion naira which is the exact cost of the monorail and apparently the state will end up funding the whole thing since the private part of this arrangement is foot dragging. These are major projects that will help move development from Port Harcourt (PH), as it is; everybody wants to be in PH city. Why won’t our roads breakdown and infrastructure overstretch. It is high time PH changed from its city-state status and these projects IMO will go a long way in achieving that,” said a statement.
Some people saw most of the projects listed as unnecessary. For example, the monorail and entertainment centre. “The ring road just maybe makes more sense.” Amaechi was advised to get the basics right before going all ostentatious.
“The roads in Port Harcourt (other than the ones he just dualised or is currently dualising) are pretty bad and the traffic issues are mostly caused by ineffective management of junctions and commercial operators,” said a critic. Adding, he said: “Besides, even the roads that were recently dualised (Trans-Amadi, Oginigba and Old Aba road have developed a few small potholes that are not a problem, but if they are not quickly addressed, would become a problem within the next year.”
They hinged the dilapidation of the state on what they ascribed as “the government has no structure or process to quickly identify such small potholes and quickly repair them before they become gaping pot holes, but we expect to manage a monorail?”
“We have not proactively done all that can possibly be done to surmount the small issues. Instead, our solution to our traffic issues is monorail?” Besides, someone raised a point that the monorail was supposed to be a Public Private Partnership (PPP), and asked “why is government putting so much money in it?”
They condemned the idea by the government in trying to build a new university from scratch, describing it as “nonsense”.
“There is nothing wrong with the current Rivers State University of Science and Technology (RUST). It still has quite a lot of space within it that could be used to build some quality new buildings. All you need to do is to get a very good architect to remodel the existing plan for the university.
“If government spends 10% of what it intends to spend on the new university to upgrade the existing one, the students there will be happy and pray for him and then the remaining 90% could go to other things. Besides, what matters is not so much buildings et al, but the quality within its walls – lecturers, equipment, structure etc,” said somebody.
In a swift reaction to the above comment somebody said condemned those scandlizing Amaechi but added that “Amaechi has good intentions” but reiterated, “I think the amount of money available to him is getting into his head and his good intentions are not properly thought through.”
Bringing their point home, they added: “The solution to most of our problems is not to throw multi-billion naira projects at them, but rather to sit down, analyze the issues, identify the bottlenecks, proffer solutions that are most effective, efficient and create the best value for money as well as impact the largest number of the society at once and then implement….I think the governors priorities are wrong. He needs to do something to uplift the people, go look at the way the people in the Rivers State are, it is a disgrace. Why he doesn’t care, I don’t know.”
The non-challant attitude known of government was decried. A question was raised about who sold the cinema idea to Amaechi since the existing ones, they said, were underutilized and here was the thought of building more.
“Who is interested in bowling and rock climbing?” they asked. “Our leaders lack the ability to reason or think logically. Because we see these things abroad doesn’t mean we necessarily need them or can support them.” They however suggested that cinemas make sense abroad because of the large class of middle persons who could afford them.
“Therefore, they stimulate economic activity…. But in Port Harcourt, majority of the people are in the lower class other than Shell, Agip and Total staff and the other handful of bankers and oil servicing company staff who earn a good living. Even abroad where the middle class is huge, if you site a project like this in the wrong place, it will go up in smoke, yet we are siting this in Omagwa (a village), how many of the middle class we have in the city will bother to go there?”
To them, what the government should be interested in was programs/schemes that would help take the majority of the working population into the middle class.
“Once the middle class becomes more robust, things of this nature will even be done by the private sector. After all, Lagos State Government did not need to build Silverbird or the Palms in Lagos. The market was there and the private sector moved in.”
They regretted that the state government had not finished its mall at GRA junction (which they even wonder if it can be a success, now that a cinema and Genesis centre have opened before it – maybe ShopRite, KFC or Game can help to make it a success if they take up occupancy there) and yet, it’s getting involved in another project in the middle of nowhere. “I tire o!” was the response of somebody. “More like misplaced priority… Songhai farms, Rivers State, google it, you deserve exactly the kind of leaders you get.”
They believed that Amaechi wanted to spoil the small goodwill that he had now that the dollar was crashing and the naira was worse off. They advise that the N250 billion, if committed to one project might make sense, but putting it into many small projects was another way of wasting the money.
“It’s becoming obvious that even the so called performing governors have nothing to offer as far as 2nd term is concerned,” said an observer. “President Goodluck Jonathan might be right about the six year single term issue he propagates, after-all.”
Amaechi’s 1st term, however, was seen by them as really a beehive of misplaced priorities; he was admonished to focus on creating opportunities for the people of River State that would lift them from the untold poverty they were suffering and make them middle class Nigerians.
They advised that the government should be about catering to the needs of the people and helping them to achieve their potentials.
They asked: How many Libraries in Rivers State are well stocked and equipped? Are the roads in the State good enough? How many roads in Rivers State are tarred? Why can’t Governor Amaechi spend some time to figure out the real problems of the State? Has he taken the time to visit the nooks and crannies of his domain?
“I believe Amaechi should start thinking of (and he needs to think quickly) of setting up cottage industries in Rivers State. Rivers State has some raw materials and cash crops that can be processed into edible food and sold to other States or other African Countries. There are companies all over the world that will pay for plastic bags, plastic bottles, Aluminum cans, used paper, cardboard etc. that have been recycled. Rivers State residents will be the ones to work in these Cottage Factories. Production and Manufacturing makes a State great. Amaechi should invest in his people and see if structures will not spring up all over the place. Schemes should be put in place that will create jobs and income for people of Rivers State.”
While that sounded nice, somebody refuted it, asking: “What is the point doing cottage industries when there are no roads to evacuate the products? P
ort Harcourt by the way is not the only town in Rivers State.”
It was noted that Amaechi, while presenting the 2011 Appropriation Bill to the legislative house, envisioned ill-fated revenue outlook this year due to the ceding of the state’s oil wells to neighbouring Akwa-Ibom and Bayelsa States.
“The Budget will be funded from a revenue projection of N205 billion allocation from the Federation Account and N77.1billion internally generated revenue. Unspent fund of N32 billion carried over from 2010 will be used to finance part of the budget in addition to the N100 billion that will be sourced through issuance of bonds,” said Amaechi.
The budgetary goals were brightened with the Supreme Court judgment that ordered 86 Rivers’ oil wells given to Akwa-Ibom State be returned along with the revenue accruable with eight per cent interest. What was termed “near financial crisis of the state” was said triggered by a petition written by Akwa-Ibom State Government to late President Umaru Musa Yar’Adua over the oil well allocations.
It was noted that in 2007, the state’s allocation from the Federation was above N20 billion, making the state walked in the jubilation of the huge large piece of oil money that was flowing into the state’s purse, the administration was moved to address the conflicting issue of critical infrastructural deficit walking against it.
Before November 2010, the state government had about 125 of schools out of 350 started by the government which were completed. Twenty-four model secondary schools were also started.
Long queue of developmental projects would never seize in the state. It was said that Amaechi was reconstructing and dualising Azikiwe- OB Lulu Briggs Road, Elekahia-Rumuomasi Road, Port Harcourt – Owerri Road, Rumuokwuta –Choba Road, construction of flyover and construction of Ogoni-Andoni-Opobo Unity Road as well as recouping work in the hinterlands in the state. 160 new health centres was embarked upon by the state government, out of which 65 was said to have been completed, as at December 2010.
“In a bid to improve the standard of higher education in the state, construction of a new campus of the Rivers State University of Science and Technology was initiated while local and overseas scholarship programme was sustained,” contained in a report. “The governor had also created a state reserve fund backed by law. The state currently is mandated to statutorily save N1 billion monthly. The entire state saving thus far is well over N100 billion.”
Investigations revealed that the New Port Harcourt Greater city covers approximately 1,900 square kilometres (190,000 hectares of land) with a mission population of two million. This was initiated due to “the challenge of congestion in Port Harcourt”, so the governor had a thought to create a new city christened Greater Port Harcourt.
“The Master Plan was for a period of (50) years, with periodic reviews, which will be implemented in phases.”
Some people called for peace to reign on the governor, saying that by mid 2009, due to a sharp drop in Nigeria’s crude oil export, caused by the activities of militants in the Niger Delta, there were prices of oil falling in the international market; the ceding of the state’s oil wells to Akwa-Ibom and Bayelsa States, was said, led the state revenue to dwindle to as low as N10 billion monthly.
Further investigations thumbed up for the state government for what was described as “to avoid the plague of abandoned projects”, it strategised on how to increase the internally generated revenue. It was also learnt that it was at this point that it decided to borrow to complete on-going projects.
“It passed a contentious law tagged Social Services Contributory Levy; the proceeds are expected to be used to sustain the social projects on ground,” said the report. But the bill did not receive a nod from Labour unions, like the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN ) and the Nigerian Union of Petroleum and Natural Gas Workers (NUPENG); these organisations vigorously refused to go along with the passage of the bill with threat to embark on a on strike at.
But just like the governor was urging all to see reason to the bond today, he did the same on the passage of the law, and urged the people to pay the levy. He said that the payment was to support the government for the guarantee of good education for the young ones, with the provision of free three different school uniforms for the three senatorial districts. This was said would be at the state’s expense. While people were shouting hoax for the N250B, it was noted that the government late last year was borrowed N30billion to enable it complete some ongoing road projects because dry season was favourable to the projects, while N100billion from bond was heralded to take place.
