Thursday, December 25, 2008 Guardian
Lagos launches N50 billion infrastructure renewal bond
By Felix Kuye
GOVERNOR Babatunde Fashola's administration moved further yesterday in its ongoing efforts at transforming Lagos into a mega city by launching a N50 billion fixed rate bond for renewal of infrastructure in the city.
The event, which was held at the Federal Palace Hotel, Lagos also featured the completion meeting of the debt issuance programme. It was attended by the Deputy Governor Mrs. Sarah Bisi Sosan, some members of the state House of Assembly, top government officials, financial consultants, representatives of the issuing firms and the Nigerian Stock Exchange, among others.
Speaking at the event, Fashola restated his administration's resolve to transform Lagos into a safe, functional and productive economic hub that will better the lot of the people and make greater contribution to national development.
Explaining the rationale behind the infrastructure renewal project, the governor said: " The underlying cause of this debt issuance programme is our firm determination to transform Lagos into Africa's model mega city - a save, functional and productive economic hub - within the shortest time possible. Clearly, we can only achieve this objective by rapidly renewing existing infrastructure, building the much needed new ones, and putting in place those essential structures that will ensure the eradication of poverty and promotion of sustainable economic growth in our society. If we neglect to do this now, we will have to pay far more for the same in future.
"The potentials of Lagos State are self-evident. Lagos is the dynamo of the Nigerian economy, the industrial nerve centre of the country and the major port and commercial hub of West Africa. However, the incessant influx of people from within and outside Nigeria and over two decades of consistent under-investment in infrastructure have delivered to us dilapidated facilities, widespread unemployment, security threats, mushrooming slums and environmental degradation. We can only expose the true potential of this great state by turning these challenges into opportunities through heavy investments in infrastructure renewal and expansion."
The N50 "billion bond constitutes series one (2008 to 2013) issued under the N275 billion Lagos State Debt Issuance Programme.
According to Fashola, the respective instruments that are to be issued in tranches under the programme will provide tax exempted income to investors (through coupon payments). They will also permit banks to include the instruments as a liquid asset in the computation of statutory liquidity requirements.
He said the state government decided to go for the bond because the internally generated revenue will not be enough to successfully tackle the magnitude of the challenges of infrastructure renewal, compelling the government to search for an augmentation source.
" The bond issuance programme presents an appropriate opportunity for such alternative funding. For one, it provides an avenue by which the state government can immediately access funds as and when required. It is also an opportunity for institutional and individual investors in the private sector to support government initiatives while earning good returns on investment," the governor said.
Fashola told the audience that his administration had completed the design and is set to implement the reconstruction of the Lagos-Badagry Expressways which is to be transformed into a 10-lane international highway featuring pedestrian walkways, bus routes and rail lines.
Also, the designs of the designated routes for the state's light rail mass transit scheme are nearing completion, the governor disclosed.
In his address, Commissioner for Finance, Rotimi Oyekan, described the bond as the first of its kind in the country. He said it would also be a key contributor towards achieving Nigeria's goal of becoming one of the 20 leading economies in the world.
Stressing the importance of the bond, Oyekan said: "Essential infrastructure such as power, good roads, water and wastewater, waste management, health and education are fundamental to economic growth and stability; to improving and maintaining the social welfare and wellbeing of the citizens; and to sustainable protection of our environment."
