How Cross River’s N1.4 Billion Illegal Foreign Loan Cannot Be Accounted For … BY AGBA JALINGO

In Breaking News, Business & Economy, Opinion

In 2019, despite being the only State out of the 36 states of the Federation that exceeded the borrowing ceiling due to a high debt burden, Cross River State Government went on to acquire loans including an unapproved foreign loan of N1.4 billion for what it tagged “AFD CRS National Program for Food Security”.

The loan was acquired from Agence Française De Développment (AFD), a French organization that funds projects towards the realization of Sustainable Development Goals (SDG) across the developing world. Yet, the State Government cannot account for how the money was spent.

 How The N1.4bn Illicit Loan Was Acquired

Although the 2020 revised budget had provided for the administration of Governor Ben Ayade to acquire N39 billion loan for the fiscal year, the approval was only for internal loans which are usually obtained from commercial banks. There was no approval for external loans in the revised budget. Regardless, the State executive acquired N1.4bn external loan.

A trace on this loan in the Accountant General’s Report shows that this is not the first time the Cross River State Government obtained a loan through this subhead. As of December 31, 2019, the balance on this particular loan subhead was N2.337bn. In 2020, there was no repayment on the loan. With the additional N1.4bn, the balance as of December 31, 2020, keeps the debt on this loan label at N3.719bn.

An analysis of the yearly financial statements of Cross River State reveals a trend of extra-budgetary foreign loan acquisition. For instance, in 2018, the State acquired N9.2bn external loan against the N5.6bn external loan approved by the State House of Assembly, which is a breach of the Cross River State Fiscal Responsibility Law.

Section 45 (2) of the law provides “Subject to the Fiscal Responsibility Act and without prejudice to subsection (1) of this section, each borrowing shall comply with the following conditions: (a) the existence of a prior authorization in the Appropriation Law or other laws for the purpose for which the borrowing is to be utilized.”

Besides, section 45 (1) of the law provides that when the State Executive writes the legislature for loan approval, information on how the loan will benefit the people must be provided. It states ” The State Government or its agencies/commissions and corporation and local government councils in the State desirous of borrowing shall specify the purpose for which the borrowing is intended and present a cost-benefit analysis, detailing the economic and social benefits of the purpose to which the intended borrowing is to be applied.”

Checks for the Cross River State National Program for Food Security in the revised budget of the fiscal year show that there was no provision for the implementation of any project under that nomenclature in 2020. 

Yet, a tracking of the project in the earlier approved budget for the year which was nullified by the revised budget reveals that the program was originally designed to be implemented by the Ministry for International Development Corporation. The food security program which had the program code 99000000024131 had a capital provision of N30 million in the initial 2020 approved budget.

The Commissioner, Ministry for International Development Corporation, Dr. Inyang Asibong said she is not aware of the project.

Further findings suggest that the National Program for Food Security, is a scheme implemented by the Federal Ministry of Agriculture and Rural Development and the Bank of Industry (BOI) Limited. But the Cross River Commissioner for Agriculture, Ntufam Okon Owuna, says he doesn’t grant media interviews.

As at December 31, 2019, the total debt burden of Cross River State was N230.88 billion while its total revenue was N77.46 billion. In spite of this, the Cross River State Government went on to acquire the external loan without requisite approval.

The illegal loan obtained contributed in no little measure to shoot up the total debt burden of the State. After the loan acquisition, the total debt stock of the State rose to N236.3 billion as noted by Debt Management Office, in its report of December 31, 2020. This burden left Cross River State as the 6th most indebted State in Nigeria during that fiscal year.

This Investigation was supported by Policy Alert and republished by The Mail and the International Center For Investigative Reporting ICIR.

Further reading @ 

Yours sincerely. 

Citizen Agba Jalingo is the Publisher of CrossRiverWatch and a rights activist, a Cross Riverian, and writes from Lagos.

NB: Opinions expressed in this article are strictly attributable to the author, Agba Jalingo, and do not represent the opinion of CrossRiverWatch or any other organization the author works for/with.

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