The Deputy Governor of Lagos State, Dr Obafemi Hamzat, says a state can “borrow constructively” in order to bridge its infrastructure deficit.
”The reality is that where do you get resources to build for today? There is something that is called constructive borrowing and there is destructive.
”If you borrow to go and buy a vehicle, you are putting yourself in trouble, but if you borrow to build a house, the house will appreciate and then you can sell even if you are in trouble,” Hamzat said.
He spoke with the News Agency of Nigeria (NAN) in Lagos in reaction to the state’s debt profile, which it put at N39.692 billion, as at December 2019.
”I remember during Asiwaju Tinubu’s government, when they took a bond of N15 billion. The opposition said Oh, he has mortgaged the lives of the young people. That loan has been paid.
”During BRF government, we took N375 billion bond, that bond has been paid. Without that, we cannot build Lekki Link Bridge, we can’t.
”This Adiyan Waterworks, the reticulation would be N78 billion, we are putting pipe. So where is that money?,” he asked.
The deputy governor said that Lagos State received about N9 billion monthly from the Federation Account.
”By the time you pay salaries, it is N1 billion left. What can you do with N1 billion? Nothing! You cannot build a single road in Lagos with that. So the reality is how do we fund?.
”There are statistics that are benchmarks around the world. In Lagos, our debt to revenue is less than 20 per cent. In the United States, it is 89 per cent.
“But we all go there, you see the airports, we see everything, we like it. But their debt is a whole lot around the world,” he said.
Hamzat said that what was important was to pay back the loan being borrowed and the state must find a way to build up its revenue and invest in things that allowed it to build the economy.
He said that during Tinubu’s administration, the cabinet disagreed with his idea of borrowing to expand the Opebi Link Bridge from two lanes to four lanes.
”Till tomorrow, all of us, we regret it. We can’t build that, it was supposed to be about N2 billion then, today you will build it with about N14 billion.
“Where will that come from? So if we had taken that initiative, and built it at that time, the story would have been different in terms of traffic,” Hamzat said.