Osun jumbo loan (Conclusion): N19b; N30b & Others – Tola Adenle

July 2, 2015



This is NOT a good omen from Osun State, Governor Aregbesola, especially with the outstanding Oyinlola’s N19 billion loan. Or has that been paid?  

From “An essay on Oyinlola-era loan of nearly N19 billion resurfaces as Osun goes for another N30b loan – pardon me, er, ‘bond'” – Tola Adenle, January 2013.


Import of Osun’s N30b bond

Now, Osun Defender has reported Osun State as having just gone to the capital market for a N30 billion bond which a government official has described in glowing terms as well as a loan that the bond holder(s) are too glad to underwrite in view of Osun’s implied performance: the capital market “passing a vote of confidence” on Osun’s government and the bond issue being “oversubscribed”. Even with my very poor math ability, I know that the investor(s)’ eyes are firmly on a bumper harvest – even at the fixed 14.75% annual rate of return, not compounded as they will be getting back almost twice their investment; better for them than loaning money to small businesses.

On the other hand, the state and its citizens would gain much more if the state had gone out to guarantee a consortium-packaged loans for well-selected small businesses, farmers, artisans, etcetera.

Borrowing exorbitant amounts to construct roads, markets – the proposed market by Oyinlola at Ede where he had a humongous picture of himself displayed was a forest the last time I visited Osun three months ago – is not the way to go because a state cannot really borrow its way to prosperity and development or growth.

There are red flags against how these loans could be repaid. The internally-generated revenues of Osun are very low – just as in the case of Niyi Adebayo’s Ekiti back when – AND Osun’s Federation Account share are not enough to support the amounts of borrowings that Osun’s past and present governors burden the state with. The State lacks the businesses that can support it through payment of taxes and even personal income taxes cannot be much because outside government, there are very few employers of labor even in the state capital. And Osun receives very little from the Federation Account which decision rests on how much the state generates by way of natural resources.

Where, therefore, does Osun hope to get the resources to pay off Oyinlola’s incurred debt of N19 billion for which there’s nothing to show AND the new debt of N30 billion?

One of the points I mentioned in one or both of above essays [yesterday’s  was that in other climes in the states I lived in the United States and from my little knowledge of Finance from college, a State or County would not burden citizens with bonds without going through the channel of citizens’ votes on these issues. Bonds, I pointed out, would be taken AFTER citizens’ approval.

This is NOT a good omen from Osun State, Governor Aregbesola, especially with the outstanding Oyinlola’s N19 billion loan. Or has that been paid?

I think state governors taking all these various loans when campaigning as candidates should issues the caveat emptor stating that these promises we are making can only come to pass by my taking huge loans that will burden generations yet unborn.

NOTE:  Osun had borrowings prior to Oyinlola-era as well as subsequent to the N30b Aregbesola-era above.  TOLA, July 2015.


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