Ultimately,
there is no alternative to absolute transparency in the procurement and
implementation of loans, as a means of preventing abuse and corruption
regarding the subject.
Speaking at
a meeting with the DMO which had appeared before the Committee to defend the
federal government’s borrowing plan under the 2016-2018 Medium Term Expenditure
Frame work and Fiscal Policy Strategy (MTEF/FPS), Senator Sani reportedly
decried a situation where government officials applied for local or foreign
loans under the guise that the money would be used for viable projects, only to
divert it to other uses without anything to show for it. Sadly, the scenario
painted by Sani is all too common in the public sector; and accounts for the
huge debt profile of government without visible commensurate benefits for the
populace.
The Senate
Committee was probably right to observe that the sore of financial impunity on
public loans has festered in the face of failure to sanction erring officials;
nevertheless, it is important that the Senate looks inward as its first step to
addressing the malice, by curtailing its own excess of injudicious use of
public fund, as manifested, for instance, in its decision to spend N4.7 billion
to buy cars for its committees. Therefore, in exercising its oversight
functions, the Senate should be appropriately concerned that pronouncements by
the Legislature are translatable into policies that will be effectively
implemented.
It is
befitting for the Upper Chamber to seek proper utilisation of foreign loans,
which are guaranteed by the Federal Government. In any event, prior Senate
clearance is required for such loans. This role, however, is at present limited
to the Senate review of existing foreign debt profile of the state.3
The
international donor agencies have prescribed procedures for loan drawdown, at stated
stages of contractual obligations. Understandably, the donor countries tie
procurements to their own countries. The leading development finance
institution in the world is the International
Bank for Reconstruction and Development (The World Bank). Based on
experience worldwide, the World Bank is meticulous. In cases where loan
proceeds are for procurement of equipment (to be imported into Nigeria,
exclusively from member nations), the steps are clearly defined. The contractor
must submit shipping documents before a payment of the percentage stated in the
contract. On the delivery of the goods, the beneficiary agency will confirm
receiving the items. In each payment, the World Bank would release funds only
after the Withdrawal Application Request had been duly signed by the
signatories selected and approved by the Agency of the Federal or State
Government.
But public
officials appeared to have perfected ways of circumventing these procedures,
often for selfish gains. This is especially so in contracts involving local
construction (roads, waterworks, pipelines, housing) which present greater
challenges. Over the years, International Donor Agencies have evolved a
continuous performance contract for payments directly to contractors, using
internationally reputed consultants.
The Senate
committee has rightly identified government officials because they have clear
roles to play in the preparation and implementation of the projects financed by
foreign loans. As political appointees are birds of passage, the civil servants
are the “permanent” sustainers of each project. Therefore, an in-coming state
governor must request information on the foreign and domestic loan profile of
the state, as well as the loans being processed. A governor must also make
public disclosure of loans inherited from a preceding administration, including
the schedule of repayment and the duration of the loan obligation. The projects
must be clearly explained to the public who need to have concrete evidence of
work done in stages.
At present,
foreign-financed projects are shrouded in mystery thereby eschewing public
awareness. In all cases, there is a long time span between project
conceptualisation and implementation caused by bureaucratic delays, changes in
political leadership and the insistence of the Donor Agency in due process.
After all the steps are fulfilled, there must be a public tender which has a
standard template.
It is
noteworthy that contributing nations to the International Monetary Fund (IMF) have special drawing rights for
long-term loans at concessionary interest rate (as low as one per cent) to
develop infrastructure. It is a statutory benefit of membership. As a member,
Nigeria has not benefitted sufficiently (commensurate to its contributions)
because of bureaucratic delays, changes in political leadership and the
insistence of the donor agency in due process which had not always been
fulfilled due to lack of discipline.
The
Senator’s call for sanctions harped on punishment; the proverbial “medicine
after death.”
Clearly,
this will serve to deter potential culprits. But, as there are laid down
procedures for the drawing and application of foreign loans, the emphasis
should be directed at preventing misapplication of public funds, including
loans both foreign and domestic. (Source: Guardian)
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