🇳🇬NigeriaWest Africa
Economists question Oyo State's N200bn bond timing
via Punch Nigeria5 min read
Economists have raised concerns regarding the Oyo State House of Assembly's approval of a proposed N200bn infrastructure bond, citing issues of timing, accountability, and the state's ability to successfully raise the funds from the capital market. The bond aims to refinance short-term loans used for infrastructure projects, with Governor Seyi Makinde stating it would restructure the state's debt, lower servicing costs, and create fiscal space for development. While existing loans carry interest rates of 22-26%, the bond is projected at 17-19%. However, experts like Dr. Ayo Teriba, CEO of Economic Associates, question the timing, given the administration has less than a year left in office and upcoming elections. Teriba suggests that investors might be reluctant to back a bond for an outgoing government and recommends that any refinancing be handled by the incoming administration. Professor Akpan Ekpo of the University of Uyo described the refinancing as illogical, proposing renegotiation with creditors instead of incurring new debt, and expressed worry about increased public spending near elections. Professor Franklin Ngwu of Lagos Business School acknowledged that refinancing could reduce interest costs but highlighted concerns about transparency and accountability, questioning if the funds would be used solely to offset loans or be diverted.
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