“Former Senator Shehu Sani Reflects on Unapproved $350M Loan, Nasir El-Rufai’s Legacy”

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In 2019, Governor Nasir El-Rufai enlisted Uba Sani, now the Governor of Kaduna State, to secure a $350 million loan for the state’s development. You consistently opposed the former governor on these matters, and now these concerns have materialized. Do you feel vindicated?

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Before any state can access a loan, there are stringent criteria outlined in the Debt Management Act 2007. No state can procure foreign loans without Federal Government approval. If the House of Representatives sanctions a loan but the Senate does not, access to the loan is blocked.

What are the prerequisites a state must fulfill to obtain a loan?

There are five key conditions that a state must satisfy. As the Chairman of the Senate Committee on Foreign and Local Debt, it is my responsibility to execute due diligence. Firstly, the state must disclose the amount it intends to borrow. Secondly, it must specify the purpose of the loan. Thirdly, the state must outline its repayment plan. Fourthly, it must assess the impact of the loan on the state’s finances and governance. Lastly, it must demonstrate transparency in managing the borrowed funds.

When foreign institutions loan money to a state government, they are essentially lending to the federation. The Federal Government acts as the guarantor for the state. Regarding the Kaduna State loan, the World Bank extended $350 million to Kaduna and a similar amount to Ogun State. However, Ogun State was able to convince the National Assembly that it had the internal revenue generation (IGR) capability and resources to comfortably repay the loan without compromising its financial stability. Conversely, Kaduna State failed to convince us.

Why was Kaduna State unable to persuade the Senate for the loan?

Kaduna State heavily relies on federal allocations, with around 90% of its industries defunct. The IGR touted by Kaduna State under Nasir El-Rufai was primarily derived from land extortion and excessive taxation, rather than from robust commercial or industrial activities. This model is unsustainable. Therefore, the state government failed to demonstrate that accepting the loan would not lead to financial jeopardy.

Furthermore, Kaduna State carried an outstanding debt of over $230 million accumulated since the First Republic, which remained unpaid. When I juxtaposed El-Rufai’s loan request with the state’s financial standing, it became evident that approving the loan would plunge Kaduna into severe financial distress. I consulted with my fellow senators, Suleiman Hunkuyi from Kaduna North Senatorial Zone and Danjuma Laah from Kaduna-South Senatorial District, and we collectively opposed the $350 million loan request. The loan repayment terms were structured in a way that the financial burden would extend beyond El-Rufai’s tenure.

Why do you believe so?

The loan repayment structure indicated a deliberate attempt to burden future administrations. I vehemently opposed it. Subsequently, El-Rufai publicly berated me at Ranchers Stadium, branding me and my colleagues as enemies of the state.

Do you believe you took a patriotic stance, understanding that the $350 million loan could have facilitated development in Kaduna State, while the former governor prioritized immediate outcomes over future consequences?

Borrowed funds should be directed towards investments that yield returns. El-Rufai’s loan was not earmarked for strategic sectors like agriculture, manufacturing, mining, or ICT that could generate revenue. Instead, it was intended for cosmetic improvements without a clear economic return. Patriotism compelled me to reject the loan, as approving it would have jeopardized the state’s economic stability and burdened future administrations.

I entered politics not as a conventional politician but as an activist committed to justice, freedom, and economic empowerment for the impoverished. Approving a loan that would impoverish my constituents and cripple future administrations contradicts my principles and convictions.

Do you think you have been vindicated by recent developments in Kaduna State?

Recent events validate my concerns. The revelation that Kaduna State cannot meet its payroll due to the financial strain caused by El-Rufai’s loan underscores the imprudence of approving it. I opposed the loan out of conviction, foreseeing the adverse repercussions it would have on the state.

What advice would you give Governor Uba Sani, considering he facilitated the loan for the state?

Governor Sani owes it to the public to transparently communicate the state’s financial situation, including the repercussions of the loan. It is imperative to shift from revelations to recovery. Those responsible for misappropriating the loan funds, including contractors and officials from the previous administration, should be held accountable.

Do you believe Governor Sani possesses the political will to address this issue?

Fighting systemic issues requires unwavering commitment. Governor Sani must exhibit courage and resolve in recovering misused funds to restore Kaduna State’s financial stability. This entails establishing an inquiry panel and pursuing legal action against culpable parties.

In summary, my steadfast opposition to the loan was driven by a sense of duty and patriotism. Recent events validate my concerns, highlighting the need for accountability and responsible governance in Kaduna State. Governor Sani must prioritize recovery and transparency to rectify the financial mismanagement that has plagued the state.


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