Abia loans: What we expect from Governor Alex Otti — ex-finance commissioner Obinna Oriaku

Chief Obinna Oriaku used to be the finance commissioner for Abia state. Here is what he just said about Governor Alex Otti and the Abia state government.

Most times, the urge to express my views on the situation of Abia state is so powerful that I find it hard to refrain from commenting, even when I want to.

We should be moderate in all we do, as the Bible says, but we also have to face the reality of our actions, no matter how noble our intentions are.

The chance for more borrowing would have been lost if the previous governments had taken on too much debt because a state needs to show its ability to pay back before borrowing. This is crucial. Osun state had such a large debt burden in 2016 that no bank wanted to give them any new loan. There was a month when they went negative after the Federal Ministry of Finance took out their loan payments.

I am sure that during the campaign for the 2023 election season, no state government foresaw the naira devaluation and subsidy removal that happened within a month after elected officials were sworn in. The developments boosted the allocations of different states by four times, in our case from around N6 billion to N13 billion.

Some states have been able to run their affairs without taking loans from commercial banks, thanks to these fundamental changes. Anambra state has not borrowed any money, neither has Ebonyi state. Enugu state’s loan application was rejected by DMO, who made Enugu state the debtor instead of using the contractor finance scheme that makes the contractor the debtor. (DMO does not give loans directly to states). Different governments have different approaches.

The administration in Abia inherited a ready-made AFDB loan of $115, which was about N158 billion at an exchange rate of N1,380 per dollar. This loan had a lot of consequences because of exchange risks.

As soon as Abia state receives the loan, which is expected next month, it has to start repaying it after the grace period based on the current dollar rate at that time. If the exchange rate rises to N3,000 per dollar, that’s what Abia will have to repay. This is beyond what the state can control.

Unfortunately, the government has yet to formally acknowledge that they met a loan which is the basis they provided for external loan borrowing in the 2024 budget. What they want to achieve is what we are yet to know but they should know you don’t hide to eat prawns. They lost me when I found out that they were hiding the details of this deal, knowing how hard the previous administration worked to get Abia in touch with ADFB.

There is a tendency for government officials to be reckless if not properly checked. Today, we as a country are in a big financial mess, due to the recklessness of the last administration as what gets measured gets done.

I can also confirm that with these humongous receipts from FAAC and other ancillary sources, the Abia state government still went ahead and borrowed billions from a commercial bank.  This is crazy and unconscionable. I deliberately did not mention the figure in billions and the commercial bank involved until it was denied.

We have not talked about the local government funds and what is going on in that tier of government.

How much has been released to the billionaire TC chairman?

Two months after, can we see the capital projects embarked on by these billionaires except (retrofitting) their offices? They love that word.

Again. If local government salaries average N2.6 billion out of the average of about N5 billion being received monthly in the last couple of months, we expected the huge credit balance for the new chairmen to kick off capital projects in their various local government areas. Can we know where these funds are and what they were used for within these months that we had no mayors in charge of the local government areas?

Unfortunately, the lack of openness will keep us imagining all kinds of scenarios and we can’t be faulted for that. The government needs to do more to explain to us for proper understanding. We recognize that Abia has made some changes, but we are not satisfied with what we see so far, especially regarding transparency, honesty and accountability.