Chamberlain S. Peterside, Ph.DThursday, August 4, 2011
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Rivers State Commissioner For Finance



s the Rivers State Commissioner for Finance I totally disagree and take serious exception to the story making rounds that the proposed N250 billion is tearing Rivers State apart.


To the contrary and to be sure, it ought to be raising pertinent issues and creating a vibrant and substantive policy debate that should be buttressed with valid facts by all concerned citizens and critics alike. Such is the "political economy of development".

In civilized societies during such discourse it is hoped that superior arguments and ideas could be tabled to reach more informed decision and/or arrive at policy compromises. Case in point will be the recent heated debate on raising the US debt-ceiling.

Recent visitors to Rivers State and even perennial critics would attest to the developmental strides of His Excellency Governor Amaechi. The projects and initiatives are everywhere, numerous and multifaceted all geared toward improving the well-being of average citizens. Some might argue fairly though that the immediate impact is yet to be felt in the pockets of majority of the folks. But the long term merit of a bond offering must never be lost in such sentiments.

As the saying goes in broken english - "good soup na money killam". You would all agree that to achieve long-term transformative change and reverse the trend of rot visited on our dear citizens over the last two decades or so, you need money. Am not talking about chicken change, I mean real capital that can enable you massively invest for the future. Trying to manage is "like building Naigara Falls on your meager trickles of Federal Allocation and IGR.

The alternative is to postpone the dooms day of when our teeming population is no longer able to bear the weight of historical mismanagement and under-development, reflected in widespread abject poverty, rampant joblessness, declining standard of living, poor health care delivery amidst rising social tension.

As a very committed and passionate leader with political will, the Governor recognizes this imperatives and have demonstrated repeatedly the deep desire of at least building the infrastructure base to bequeath a legacy on which the industrialization and diversification of Rivers State's economy will ultimately ride.

This is an extremely daunting task you must agree, given our historical low economic level, such that even the most successful leaders in history like Lee Kwan Hew of Singapore or President Franklin Roosevelt of United States will find as an uphill task.

The Governor after very long period of due consideration choose to walk the hard but progressive road, which is that either he goes the "whole nine yards" of sourcing requisite long-term funding to embark on major infrastructure projects or move at a tepid pace of reform that may be short-lived after his tenure, thereby negating any progress achieved today.

It is against this background that the Governor assembled his economic team and decided to approach the Bond market for N250 billion in tranches. The projects outlined are a mix of social and commercially viable projects that will provide the right balance to the bond program. Some of the projects have been announced while others are still at planning stages but not surprisingly the news is eliciting mixed reactions.

The feedback thus far has been quite positive for the most part but criticisms are all in order and expected on a decision like this. This however doesn't minimize the underlying philosophy guiding this major decision and neither does it negate the emergent need to build a robust infrastructure in Rivers State, fast and to world standard.

Already private investors are lining up to provide counterpart funding for most of the commercially viable projects. Even the social projects are designed to ultimately attract incremental investments thereby catalyzing long term growth - this time am not talking about jobless growth, but meaningful qualitative growth that will engender social progress and truly felt in the lives of our long-suffering citizens.

The chosen development model has been proven resoundingly successful around the world so as some privileged Nigerians and their families embark on summer vacation trips to places like Dubai, US and Western Europe they easily forget that despite current cyclical economic downturns or so-called financial tremors those countries where built with long-term capital by leaders who were visionary, audacious and committed.

Our N250 billion proposed bond size wasn't plucked from the air but was arrived at after thorough analysis premised on sound reasoning and backed by our macro-economic indicators. With a per capita income of about $4000 or triple the national average according to Central Bank statistics, or an aggregate GDP of over N3,0 trillion Naira, Rivers State remains the second largest economy in Nigeria. It easily ranks as an emerging middle income society.

Based on World Bank internationally accepted standard of 20 percent debt-to-GDP ratio as reasonable benchmark, Rivers State could technically borrow up to N600 billion today to finance its long-term need, especially in a deepening sub-soveriegn debt market where pension fund assets alone in Nigeria currently exceed N2 trillion. But as we speak thanks to the prudent fiscal disposition of the Governor our debt profile remains less than N30 billion or 1 percent of GDP.

With over N27 billion (and growing) built in our reserve fund for the rainy day. To say that we should tap that money now is absurd and myopic at best. Overall, Rivers State is currently quite buoyant and the long term financial outlook remains "Positive" as adjudged by global rating agency - Standard and Poors. With such financial status, the Governor might have easily decided to coast along during this second tenure and do nothing much except go to work, come back home, inspect his schools and health care projects then just sleep. But that is not in his character hence he made a conscious decision to complete his projects and lay a strong and lasting foundation for the future. Only someone not the right understanding or against the future wellbeing of Rivers people based on parochial interests and out of mere sentiments will root against that.

But then, after recent heated debate between the Republican and Democratic parties on the debt-ceiling a common ground was reached that enabled the US maintain its AAA credit rating in the long-term interest of the economy and American people.

The timing couldn't be better for Rivers State bond offering and my experience in the global financial markets indicates that you can attract money and capital cheaper mainly when you already have money and are credit worthy.

Rivers State is in such position right now and not taking advantage of market timing will be foolhardy. Of course the Governor is quite mindful of the "quality of spend" on projects that can have demonstrable multiplier effect, while building the institutions that can ensure predictable financial planning, continuity, transparency in fund utilization and accountability for whatever financial resources is raised.

All this constitute the main thrust of the Governor's financial policy, economic/ infrastructure investment drive and job-creation vision that will enable us achieve equity and social justice for our people. Let he or she who has a better idea put it forth.

Chamberlain is Rivers State Commissioner For Finance