Lagos State government under the immediate past administration of Mr. Babatunde Fashola had raised N87.5 billion bond under its fixed rate bond. The bond was issued to execute the on-going construction of the blue line light rail project from Okokomaiko to Marina and expansion of the Lagos Badagry Expressway into 10 lanes.
Retrospectively, the state government commenced the debt issuance programme of N275 billion in 2009 with the issuance of N50 billion bonds which was expected to mature for payment in February, 2014. The then governor, while speaking at the issuance ceremony, stated that the event marked the completion of the N275 billion debt issuance programme.
”This is part of the state process of looking inwards rather than outwards for solutions to challenges. “We cannot seriously ask people to invest in the country if we do not show commitment, by making investment in the country. This we have done with the bonds which would be financed locally.”
According to Fashola the bond which was expected to mature in 2020, would be used to fund implementation of other projects like: Apapa Central Business District, CBD, road networks, construction of the Adiyan Phase 11 Water works with 70 million gallons of water per day, Mushin Isolo Road, Isolo/Isheri Ijegun link Bridge, completion of the Ayinke House Maternity Hospital, protection of the Atlantic shoreline from Goshen Estate to Alpha Beach.
The bond issuance did not go without knocks from critics which Fashola described as “Voodoo economists who do not have knowledge of bonds issuance.” The governor recalled that in 2002 his administration raised N25 billion and drew N15 billion of the bonds. “Voodoo economists in the country complained that government had mortgaged the country for 50 years. But the projects we committed the bonds to are still functioning even after we had repaid the bonds.”
He listed some of the projects to include: Kudirat Abiola Way, Oregun, Akin Adesola Way, Awolowo Road and Lawanson Itire Road.
Ambode returns to capital market
Meantime, Lagos State government on Tuesday signified her intention to return to the Nigerian bond market next year. Lagos State being one of the biggest clients is said to be returning to the finance market to fund her various capital intensive infrastructural projects which are either in its formative stage and those nearing completion as well as new initiatives.
The state governor, Mr. Akinwunmi Ambode, represented by Mr. Mustapha Akinkunmi, Commissioner for Finance who disclosed government’s plan while addressing participants at the Annual General Meetings, AGM, of the different series of the bond programme, held in Victoria Island, was silent on the details.
The AGM was designed to acquaint bond investors of the judicious use of proceeds from the bond to positively impact the lives of residents. Akinkunmi said the measure is necessary to seek bond issuance from reputable stakeholders in order to facilitate as well as adequately address areas of needs within the shortest time.
He said: “We are surely going to the market next year to continue to finance infrastructural projects.” It is instructive to note that the state’s capacity to secure the bond is not in doubt, going by a strong financial rating of a disciplined debt sustainability and prudent financial management organisations such as, The Fitch Ratings.
The state is currently retiring its fixed rate bond issuance in series. It had issued the bond in series of N50 billion, N57.5 billion, N80 billion and N87 billion of which were oversubscribed by investors in what the government said was a show of confidence in the sound financial footing and its ability to repay.
He maintained that all the funds raised from the past series of bond have been optimally utilised for critical infrastructural projects some of which had already been completed while others are at different stages of completion.
Akinkunmi enumerated such projects to include; Maternal and Child Centres at Epe and Badagry, jetty and terminal building at Badore and Osborne, construction of Lagos HOMS, schools renovation, rehabilitation and construction of various arterial and inner roads and several others.
Source: Vanguard Nigeria