$350M World Bank Loan: Why Ogun State Remains a Bride to International Financial Institutions, by Commissioner
The massive economic and infrastructure development recorded by the Senator Ibikunle Amosun’s administration in Ogun State in the last six years and the opening up of the state to both international and local investors through the provision of the necessary infrastructure and introduction of investors' friendly policies have been identified as some of the reasons why it has become the bride of international financial institutions who are willing to collaborate with it for economic transformation.
Speaking with newsmen in Abeokuta over the weekend against backdrop of comments against the government’s decision to obtain the $350 million facility from the World Bank, the Commissioner for Forestry in the state, Chief Kolawole Lawal (KLM), described the concessionary loan as a grant mainly targeted at supporting the government's budget adding that foreign financial institution in the class of World Bank would not grant loan request from a state that is not economically viable.
Besides, he explained that the loan dynamics are too good to be turned down by any reasonable government committed to the economic development of its state.
His words: ''ln all honesty, Ogun State has become the attractive bride to international financial institutions, especially the World Bank, due to the massive infrastructural development that it had undergone in the last six years. An institution like World Bank considers states that have demonstrated ability to transform its economic landscape, attract reasonable foreign and local investment and put in place other economic development initiatives for the growth of such state for such loan request to be approved".
It would be recalled that in the last six years, the Senator Ibikunle Amosun led government has sustained the bi annual Economic Summit which attracts players both in the public and private sectors as well as members of the international community where issues bothering on the economic transformation of the state are articulated with consensus reached at the summit implemented for the growth of the state.
The summit alone has generated an inflow of over 200 industries into the state while 75% of the Foreign Direct Investment (FDI) that came to Nigeria in the last one year came to Ogun State .
Chief Lawal said “It is quite unfortunate that people who don't understand the dynamic economic proposition of this government are challenging the decision of the state government to approach the World Bank for the loan. The state government was able to approach the World Bank in the first instance because of its massive accomplishment in the area of infrastructural development; without this, you cannot request for any financial support from the World Bank. To sustain the momentum and ensure that other parts of the state also enjoy the dividend of democracy which we promised our people, we need to attract additional fund.
" Let me also emphssise thst the concessionary loan can easily be described as a grant mainly targeted at supporting the government's budget and in the first instance attracts just two per cent interest as against the 20 to 30 percent obtainable in the normal financial market. The loan is also payable over a period of 25 years with a five -year moratorium. The implication of this is that the state government will pay for a period of 30 years. Besides, the loan is unlike the conventional loan where the full amount being sought will be disbursed at once, rather disbursement would be made in tranches based on performance.
""So this is a loan mainly for the future as the subsequent administrations in theb state will benefit more as more tranches are disbursed in the course of time. So the loan is not mainly for the present administration"