Open Letter to the Nigerian Senate: Please do not Approve the $75 million World Bank Loan to Edo State
Dear Senator Saraki,
I write in respect of the $75 million loan approved by the World Bank for Edo State, the second installment of a loan totaling $225 million. Despite some positive developments that have been recorded under the administration of Governor Adams Oshiomhole, this is a wrong time to approve an additional loan of $75 million when the governor has less than a year left in office and has already amassed a considerable amount of debt for the state. The cost to service the state’s debt in 2014 was N20 billion, a sizeable proportion of the annual budget. Due to a lack of transparency and fiscal accountability, speculations abound regarding the exact debt profile of Edo State, all that is known is that it is at a record high.
In less than four months, campaign will commence ahead of the state’s 2016 gubernatorial election. Consequently, there is a strong concern based on past actions that a significant proportion of this loan, if approved, will be used for campaigning, to the detriment of the citizens of Edo State, who will be further indebted with no corresponding improvement in their standard of living.
A review of the implementation status and results documents (links to documents enclosed) prepared by Mr. Joseph Raji and Ms. Gloria Aitalohi for the World Bank, reveals that the total loan amount of $225 million to be disbursed in three tranches of $75 million are “to support Edo state's critical reforms for improving the management of public resources and creating a better environment for growth and employment creation in a socially-accountable way” (see document 1). The loan covers reforms in Sub-national government administration (78%); Secondary education (11%) and Vocational training (11%). Successful implementation of the World Bank loan is based on an increase in Internally Generated Revenue (IGR) primarily through taxation and land registration fees. The World Bank rates the state government’s overall implementation progress as “moderately unsatisfactory” and “satisfactory” for progress towards achievement of program development objectives (see documents 1, 2 and 3).
As you may be aware, Edo is a civil service state and government is the foremost employer of labor with no thriving private sector outside of the service industry (hotels, eateries, private schools and Western Union). Majority of foreign direct investment that go to the state, are in the form of remittances by Edo indigenes abroad. With very limited employment and career prospects in the state, a generation of Edo girls have been lost to human trafficking. On June 5, 2015, the State government abruptly ended its Youth Employment Scheme which had hitherto employed several thousand youths across the State. Over 12,000 youths are reported to have been adversely affected by the cancellation of the program.
To survive, many residents of the state engage in petty trading and small business endeavors, it is this same low income people who are most affected by the high tax regime vigorously implemented by the Oshiomhole administration with no corresponding improvement in the provision of infrastructure like water, sanitation or security of life and property. Many public schools in Edo state remain in various stages of dilapidation while homes and businesses continue to be threatened by the menace of erosion and flooding. Since the government announced the renovation of 25 schools across the State with much fanfare more than four years ago, there has been no measurable progress in the renovation or building of additional schools.
The benefits of the previous World Bank loan have not trickled down to the poor in terms of improved infrastructure or service delivery. Rather, policy formulation and implementation have led to over 250% increase in the cost of acquiring C of O which average more than N380,000 and can be as high as N1 million in Benin City and environs. In some cases, it has been alleged that the cost of land registration can be higher than the actual cost of the land. In contrast, in Ogun state for example, the cost of C of O is N95,000 which can be paid in installment over a period of nine months.
Regrettably, the exponential increase in land registration revenue has not led to improvement in the protection of land and property. Land poaching remains a major problem in the state, in addition to the fraudulent practice of selling the same land to multiple buyers. A portion of the first tranche of the loan was supposed to facilitate the “…creation of an Edo Geographic Information System (EGIS) and publication of land maps. Following the execution of an agreement with a concessionaire - Agama Geoservices Consortium - for the setup and running of the Edo State Geographic Information System (EGIS) and the introduction of transparency in the land information system by publishing the maps of four communities (Okhoro, Useh, Ogbe and Uzebu) from the pilot project on the Edo State website and the open data portal,” however, according to the report, “there was a contract failure with the concessionaire,” which meant “[t]he failure of the PPP contract has contributed to delays in completing a first phase of EGIS, but the new Ministry has now put in place a mechanism to use Land Information System (LIS) to renew and upgrade all urban centres in Edo State via creation of Operative Development plans and maps (see document 3). Whether the EGIS/LIS have been launched remains to be seen.
The level of success in the implementation of the first tranche is debatable and what is left to accomplish with the second tranche is certainly not achievable in the less than six months before the end of the Oshiomhole administration. Even the World Bank acknowledges that the “State clearly requires additional technical assistance to strengthen reform efforts and reverse the trend in some of the policy areas being addressed by the DPO” (see document 2).
The $75 million is a loan. It is not a grant. This loan comes with serious long term implications for accrual of interest and other fees on the initial principal. On August 2013, a total loan of $73,301.800 was disbursed. Between November 2013 and May 2015, the following amounts have been accessed as fees: $131,400.04; $282,295.90; $269,275.57 and $255,419.50 for a total of $938,391.01 almost $1 million (see financials). It is clear that neither Edo State nor Nigeria can afford this level of indebtedness to the World Bank at a time of economic uncertainly, with the falling exchange rate of the Naira and a dwindling revenue base due to the fall in the price of crude oil projected for as low as $40/barrel.
In conclusion, I join other concerned citizens of Edo State to respectfully appeal to you and other members of the National Assembly not to authorize the approval of the $75 million loan to the state. Anyone who has carefully reviewed the terms of this loan and has also observed the negligible impact of the first tranche on poverty alleviation would conclude that except in punitive taxation measures and absurdly high land registration fees which further pauperize the masses, the loan from the World Bank is ill advised at this time because any positive outcomes will be minimal at best and likely not sustainable in the long run with a new administration taking over governance in a few months.
joan.Osa Oviawe, PhD
Encl: Links to World Bank Implementation Status and Results documents (sequence 1 to 4)
Doc 1 - http://tinyurl.com/Edo-state-WB1
Doc 2 - http://tinyurl.com/Edo-state-WB2
Doc 3 - http://tinyurl.com/Edo-state-WB3
Doc 4 - http://tinyurl.com/Edo-state-WB4
Loan Financials - http://tinyurl.com/Edo-state-WB-Financials
Cc: Rt. Hon. Yakubu Dogara, Speaker, House of Assembly
Senator Kabiru Gaya, Ad Hoc Committee on Local and Foreign Debt
Senator Bukka Abba, Ad Hoc Committee on Local and Foreign Debt
Senator David Umoru, Ad Hoc Committee on Local and Foreign Debt
Senator Durofashe, Ad Hoc Committee on Local and Foreign Debt
Senator Emmanuel Polka, Ad Hoc Committee on Local and Foreign Debt
Senator Samuel Anyanwu, Ad Hoc Committee on Local and Foreign Debt
Senator Ibrahim Abdullahi, Ad Hoc Committee on Local and Foreign Debt
Senator Francis Alimikhena, Edo North Senatorial District, Senate Deputy Chief Whip
Senator Mathew Urhoghide, Edo South Senatorial District
Senator Clifford Ordia, Edo Central Senatorial District
All Members of the Senate
All Members of the House of Representatives
H.E. President Muhammadu Buhari GCFR, President, Federal Republic of Nigeria
H.E. Governor Adams Oshiomhole, Governor of Edo State
All Members of the Edo State House of Assembly
Mr. Joseph Raji, World Bank
Ms. Gloria Aitolohi, World Bank