Central senatorial zone, has condemned a
recent unilateral move by governors of
states in the northern part of Nigeria to
obtain a loan from the Saudi Arabia-
based Islamic Development Bank.
Mr. Sani, who chairs the Senate committee on
foreign and domestic debt, said the governors’
effort violated the laws of Nigeria. According to
the outspoken senator, who also serves as vice-
chairman of the Senate committee on Foreign
Affairs, the governors’ application for the loan is
a breach of Nigerian laws “that clearly and
unambiguously rest the exclusive right to borrow
externally on the Federal Government.” He
invoked Nigeria’s Debt Management Office Act
of 2003 that stipulates that any government or
agency could only obtain external loans through
the federal government, adding that the federal
government must guarantee such a loan. “The
Act is explicitly clear that no state, local
government or federal agency shall on its own
borrow externally,” Senator Sani argued.
He rebuked the governors of the Northern states
for flying to Saudi Arabia to solicit or collect
loans without following the due process of the
law. He added that Nigerian law provides that
“State governments and their agencies wishing
to obtain external loans shall obtain Federal
Government approval in principle from the
Federal Ministry of Finance.”
Drawing attention to another aspect of the law,
Mr. Sani noted that the guideline on external
borrowing provides that “All external borrowing
proposals of the 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
program for the coming year.”
The senator remarked that any borrowing
proposal must be submitted to the Federal
Ministry of Finance and the Debt Management
Office for consideration. He stated that each
proposal must specify the intended purpose of
the loan and its link to the government’s
developmental agenda. In addition, each
proposal must disclose the cost-benefit analysis
showing the economic and social benefits to be
derived from the loan, and a cash flow
statement for the project to ascertain its
viability and sustainability.
Senator Sani also disclosed that the Debt
Management Office had a duty to ascertain
whether the borrower had over-borrowed. He
added that the borrowing proposal must be
incorporated into the annual budget for federal
executive council approval.
He stated, “No state or group of states can
borrow from [an] external source without
approval from the National Assembly and
clearance from the Federal Ministry of Justice.”
The senator declared, “Whoever led the
Northern Governors to Saudi for [a] loan is
ignorant of the relevant provisions of the law or
he has chosen to circumvent the law.”
Mr. Sani advised the Northern governors to go
and read the relevant legal provisions. He also
urged the Islamic Development Bank not to
release any funds to the governors until the
governors followed due process.
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