Date: 2019-02-18

The Kwara State government has explained why it obtained N1 billionloan from a bank last week.

A group known as Kwara Coalition for Good Governance and Accountability (Kwara-CGGA) had asked the Economic and Financial Crimes Commission (EFCC) to probe the N1 billion loan obtained by the state government .

In a statement by its secretary general, Hassan Omoiya, the group said it has intelligence that the state government obtained the loan on 13th February from a first generation bank using the remittance of Kwara State VAT allocation due in February and March 2019 as collateral.

But, the state government in a statement by the state commissioner for Finance, Alhaji Demola Banu said, (Owing to the consistently low and unstable federal allocation, the state government often secures short term loans from banks to augment inflows to meet monthly obligations.

"These obligations include salaries, pensions and overheads as well as liabilities such as payments to contractors and gratuity arrears.

States affected by the consistent drop in monthly allocation often augment the shortfall with bank loans. Kwara State is no exception.

(Additionally, banks only grant loans following due diligence which examines the capacity to repay and what the facility will be used for.

Any facility obtained by the state government, therefore, goes only towards budgeted expenditure.

"It is through this prudent management of funds that we are able to pay salaries, pensions and subventions as well as fund major infrastructure besides providing repayment guarantees.

This administration will also liquidate these short term loan interventions by or before it leaves office."

Kwara Coalition for Good Governance and Accountability (Kwara-CGGA statement reads in part: "We urge the EFCC and indeed the Federal Ministry of Finance to determine the appropriateness of utilisation of credit facility of N1 billion by Kwara State Government at the twilight of general elections and the status of VAT Account as collateral for the credit facility in the absence of prior approval and authorisation from Debt Management Office and Federal Ministry of Finance in tandem with extant laws and regulation on granting of loan to state governments.

"It is our expectation that your investigation will extend to individuals and corporate institutions that participated in the unwholesome act with a view of prosecuting the affected individuals and institutions with attendant cost and penalty."