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Why We Are Borrowing For Infrastructure Project– Lagos Govt

Ololade Omosan-Agie

The Lagos State Government has said that most of its ongoing projects are funded with monies raised through bonds and loans.

The State Commissioner for Finance, Rabiu Olowo, made this known during the 2021 Ministerial Briefing held in the State.

The state according to the National Bureau of Statistics received N115.932bn in the full year 2020.

Lagos also raised the largest Internally Generated Revenue of N418.99bn leading other states including the Federal Capital Territory.

The Lagos Finance boss said, “We talk about debt management, like I used to say, debt is good. The most important thing is how you manage debt. In the last two years… We have raised the largest bond ever by any subnational in this country, the N100bn bond and that is why when other states are taking a break, we are not taking a break.

“That is why you see road projects going on, you see intervention in agriculture, you see intervention in education, You see intervention in energy.”

Lagos accounts for 12.15 per cent of the N4.19trn debt stock of states and the FCT.

Olowo said the state achieved a debt servicing obligation of N8.5bn in terms of saving.

He disclosed that the state renegotiated interest rates charged by the banks for state loans which was around 18 per cent and 20 per cent to 14 per cent in the first instance.

“After that, that wasn’t enough for us, we renegotiated again and we brought it down to 12 per cent,” he said.

The finance boss revealed that the state was planning to recall N47bn at N16.5, N46.37bn bond at  the rate of 16.75 per cent interest, because it was too high in view of market realities.

The N6.91bn bond at the rate of 15.60 per cent interest all issued under the N500bn Bond Issuance Series Programme will all be fully paid by the end of June 2021.

He said the state is planning to issue a fresh bond of at most 10 per cent to per cent interest rate.

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