Policy Alert raises alarm over Akwa Ibom’s ‘unsustainable’ debt profile

Akwa Ibom state governor, Mr Udom Emmanuel, and Speaker, Akwa Ibom State House of Assembly, Mr Aniekan Bassey.

Abasifreke Effiong – Uyo

Policy Alert, has raised alarm over what it calls “unsustainable debt profile of Akwa Ibom State”.

Policy Alert is a non-governmental organisation working to promote social, economic and ecological justice in the Niger Delta.

Speaking during the 2020 edition of its annual Open Budget Forum (OBF), Iniobong Usen, the organisation’s Programme Lead on Extractives and Open Data, disclosed that Akwa Ibom state acquired N48 billion loan in 2019 and was planning to get another N38.1 billion in 2020.

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The organisation said the N48 billion loan acquired in 2019 which was an election year, made the borrowing rather suspicious.

“The state acquired fresh loans to the tune of N48billion in 2019 as against N6.7billion in loans acquired in 2018, a mind-boggling 623% year-on-year increase. Quite significantly, 2019 was an election year, which makes the sharp rise rather suspicious. In 2020, the state plans to acquire another N38.1billion in loans.

“It is particularly disturbing that a significant part of this new debt will be spent on the Coconut Refinery Project and the 21 Storey Building Project which both received a loan injection of N10 billion last year. In 2019 the state spent N13.9billion on loan repayments alone. When we consider that these are commercial bank loans with high interest rates, the situation becomes all the more worrisome, as it translates to a huge debt burden for future generations.”

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The organisation cautioned the state government against taking out loans for projects that are not self-liquidating.

Policy Alert however lauded the state House of Assembly for passing the Fiscal Responsibility Bill, calling on the state governor to give assent to the Bill, saying that when the Bill becomes law it will an offence for the executive to get a loan without proper cost-benefit analysis.

“When this bill finally becomes law in the state, it would become an offence for the executive to acquire loans without a proper cost-benefit analysis, as is currently the case in Akwa Ibom State. We have to stem this seeming appetite for debt accumulation, especially at a time like now when investments should be tailored towards addressing the impacts of Covid19 on the state’s economy”, Usen said.

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The organisation also commended the State Executive Council for approving the establishment of an Audit Service Commission for the state, noting that “an independent audit cadre for the state was long overdue as it would entrench principles of transparency, accountability, value for money and integrity in public financial management in the state, and eventually lead to improved service delivery.”

Now in its sixth year, Akwa Ibom State Open Budget Forum (OBF) is an annual event organized by Policy Alert where government representatives, civil society organisations, community representatives, media practitioners, representatives of labour and professional groups and other stakeholders meet to deliberate on the state budget in an open manner, to ensure that the budget process meets the required standards of transparency, responsiveness, accountability and citizens’ engagement.