The governor said the state has the ability to pay back
The Lagos State Government has said that it has finalized plans to issue an N80 billion bond, described as the largest ever issued by any state in Nigeria, to fund its ongoing projects across the state.
The money is expected to complement the state government’s aggressive tax drive as it struggles to provide infrastructure for its rapidly growing population.
“We cannot address education without schools or healthcare without hospitals. We cannot solve business problems without transportation,” said Babatunde Fashola, the Lagos State Governor.
“This year, for instance, we have awarded about 180 inner roads. We do not have all the money in one bulk and things are getting more expensive.
“If we don’t borrow to start the projects now, by the next year, things would have gone up,” he added.
In justifying the need for the borrowing, Mr. Fashola stated that it became necessary due to the need for an “urgent renewal” of the decades old infrastructure across the state.
In addition, the money would also take care of the Lagos-Badagry expressway expansion, an ambitious road project that aims to ease movement between the state and the neighbouring Republic of Benin.
Also, the under-construction Ayinke House Maternity Centre, the popular ‘baby factory’ at the Lagos State University Teaching Hospital, would benefit from the bond, according to the state governor.
“The State is getting bigger. The people are asking for more roads, they are asking for more drainage; they are asking so many other things, community healthcare centers and so on,” Mr. Fashola said.
“If you do not borrow today, the cost of cement would not go down and this is the only way we can beat the prices,” he added.
‘Lagos will pay back’
The bond is the first part of a N167.5 billion debt issuance programme expected to terminate in 2019.
It has elicited questions from stakeholders about the ability of the state to repay the debt, given its increased borrowings.
Mr. Fashola said that a risk is involved every time a debt is raised.
“In banking and financing, there is always risk. In this case, the risk is, can we pay back and the answer is yes,” the governor said.
He said this was the first time a debt issuance of this size is being undertaken by any state and it also represents the fourth time Lagos State is approaching the market.
“These are long term assets and infrastructures that will give the State the ability to support the many people who choose to live here,” Mr. Fashola said.