Northern Governors To obtain Loan From Saudi Arabia; Senate Cautions, Says its an illegal Move

The Senate has warned the Chairman, Northern State Governors’ Forum, NSGF, and Governor of Borno State, Kassim Shettima, against plan by governors of the region to obtain loan from Saudi Arabia.

Shettima had led four northern governors two weeks ago to Saudi Arabia to negotiate for loan with the Islamic Development Bank, IDB. He said the visit was just an exploratory one and not necessarily to ask for loan.

Contacted, Senior Special Assistant, Media and Publicity to the President, Mr Garba Shehu, said the Presidency had no comment on the issue.

According to the Senate, no state borrows such money without the approval of the National Assembly. It said that the move to get the loan by the governors was not only contrary to the constitution of the Federal Republic of Nigeria, but also illegal, stressing that the governors should urgently jettison their plan.

The Senate noted that whoever must have led the northern governors to Saudi Arabia for such a loan was ignorant of the relevant provisions of the law or had chosen to circumvent the law.

While urging the governors to read the relevant acts, the Senate stressed that the Islamic Development Bank must not release any of their funds until due process was followed or else they will be “on their own.”

The Senate in a statement, entitled: “Northern Governors' Saudi loan illegality” and signed, yesterday, by the Chairman, Senate Committee on Foreign and Domestic Debts as well as Vice Chairman, Senate Committee on Foreign Affairs, Senator Shehu Sani, APC, Kaduna Central, said: “The recent solo moves by governors of the northern states to obtain loan from the Saudi-based Islamic Development Bank is in direct conflict with the laws of the Federal Republic of Nigeria.

“The action of the governors runs contrary to the relevant provisions of the Act that clearly and unambiguously vest the exclusive right to borrow externally on the Federal Government.

"The Debt Management Office Act, 2003, Section 21 and external borrowing guidelines, 2008-2012, paragraph 2.1 clearly states that: 'Any Government or its agencies can only obtain external loan through the Federal Government and such loans must be supported by Federal Government guarantee' and the act is explicitly clear that no state, local government or federal agency shall on its own borrow externally.

What the law says “Governors of the northern states cannot just jet out to Saudi Arabia to solicit or collect loans without following the due process of the law and the law further states that 'state governments and their agencies wishing to obtain external loans shall obtain Federal Government approval in principle from the Federal Ministry of Finance.' This is the provision of paragraph 2:2(II)of the external borrowing guidelines. 

The statement noted that: “In addition to the above, paragraph 2.2(v) of the same guideline succinctly declares that 'All external borrowing proposals of governments and their agencies for the next fiscal year must be submitted not later than 90 days preceding the year to the Minister of Finance for incorporation into the public sector external borrowing programme for the coming year.'

“Paragraph 2:2(vii) demands that borrowing proposal must be submitted to the Federal Ministry of Finance and the Debt Management Office for consideration.

"The proposal should include the purpose for which the borrowing is intended and its link to the developmental agenda of the government; cost benefit analysis showing the economic and social benefits to which the intended borrowing is to be applied; cash flow statements of the MDAs to ascertain their viability and sustainability.

“To borrow from external sources, the Debt Management Office has to ascertain if the borrower has not over-borrowed and the borrowing proposal must be incorporated into the annual budget for Federal Executive Council approval.

“No state or group of states can borrow from any external source without approval from the National Assembly and clearance from the Federal Ministry of Justice.

“Whoever led the Northern governors to Saudi for loan is ignorant of the relevant provisions of the law or he has chosen to circumvent the law.

"I wish to advise the northern governors to go back and read the relevant Acts. And I call on the Islamic Development Bank not to release any of their funds until the due process is followed or else they will be on their

own.”

Why we went to Saudi Arabia —Northern Govs.

But reacting on behalf of the governors, Borno State Commissioner for Information, Home Affairs and Culture, Mohammed Bulama, said the trip to Saudi Arabia by the governors was just an exploratory one, stressing that things had not got to the stage of seeking Federal Government’s approval for any loan.

"We are conscious that there are institutions of the Federal Government that would give approval but things have not got to that stage," he said.

He told Vanguard on phone, last night, that an official of the Federal Ministry of Finance was on the trip to Saudi Arabia. According to him, the governors embarked on the trip because of the developmental challenges facing the north, especially the North-East dogged by Boko Haram insurgency.

VANGUARD.