Lagos is not broke – Fashola

Lagos State Governor Babatunde Raji Fashola has debunked insinuations that the state is bankrupt or experiencing cash flow problem.
In an exclusive interview with BusinessDay in his office, Fashola added that Lagos was meeting its obligations to all its creditors.
"We are paying our debt, we remain creditworthy, we still borrowed money from the banks recently because we have in this year's budget borrowing provision to finance the deficit. We're solvent, clearly. Who would even lend money to an insolvent institution?"
Fashola added that the state government bond which was floated in the former Governor (Tinubu's) time has been repaid by the current administration before its maturity.
The Fashola administration has, however, floated two bonds (the N50 billion, 5-year, 13 percent series 1 and the N57 billion, 7-year, 10 percent series II) with a provision, that a sinking fund be set up where 15 percent of the state's internally generated revenue (IGR) is paid into the fund, to secure the debt.
"So, categorically, we are solvent and we are paying our debt," he said.
According to him, Lagos currently has two levels of debt, the local debt and the foreign debt.
With regards the local debt, Fashola said the state is discharging its obligations to its contractors.
There are also loans owed to banks by the state, which Fashola said amounts to about 11 or 12 loans.
"I think about 8 of them will be fully amortised by the end of this year, so that will leave about 4. Of course, we will take a few more before I leave but we won't leave the next government with a burden beyond what is reasonable," he said.
For the foreign debt, Fashola said that there are about 16 different components and about 9 or 10 of them are debts taken by the Federal Government on behalf of all the states, for projects like FADAMA, water resources, HIV, prevention.
These are debts contracted by the nation and disaggregated as a responsibility to all states and constitute close to 60 percent to 70 percent of the state's foreign debt, he said.
Other components of the foreign debt were used to fund the Bus Rapid Transit BRT/Lamata, LMDGP/slum clearance, LAWMA/waste management, and Eko education fund.
Fashola noted that the concessionary nature of the foreign debt makes them an attractive option for the state to utilise in its quest for infrastructure development.
"We've built roads in Agege, schools in Badiya, schools in Bariga, in Shomolu and in Gbagada with part of the concessionary foreign loans. We've used the same loan to finance the BRT corridor. We're using it now to extend from Mile 12 to Ikorodu. Ikorodu road was built 40 years ago, it's still there.
So if we do this you can be sure this asset will stay for another 30 to 40 years. Now the money is deducted at source, from our monthly FAAC meeting. So we don't even miss it, we don't know we're paying."