MENU HOME / INTERVIEWS / YAKOWA TOOK ONLY N20BN BANK LOAN – FORMER FINANCE COMMISSIONER Yakowa Took Only N20bn Bank Loan – Former Finance Commissioner Midat Joseph — June 8, 2014 Dr John Ayuba, a former lecturer and a banker with close to 30 years’ experience in the financial sector, was the commissioner of Finance in Kaduna State when Governor Patrick Yakowa died in a helicopter crash. Recently, he sat with MIDAT JOSEPH and spoke on various issues that include the real debt profile of Kaduna State when Yakowa died As a commissioner of finance to the late Governor Patrick Ibrahim Yakowa, you must have spent hours with him in the course of your work. As an insider, what type of a person can you say he is? Yes, I was close to the late Yakowa, just as I expect every other Commissioner in his cabinet was, because I was the one saddled with the task of managing the state financial resources and advising where they can best be put into good uses. I always say that if you want to know somebody’s character very well, expose him to money and that is why the commissioner of finance is in a very good position to know the characters of most people who come to him on money related issues. When people see money, it brings out some hidden elements that others have never seen before. I had known the late Governor a long time before he invited me to be part of his government. I knew him as a frugal person with resources. I knew him as a very contented person. He didn’t look like somebody who is too interested in money or other vain things like that. This was what influenced my quick acceptance of the offer to work with him. I knew I was coming to work with somebody who was generally accepted as a good man and an honest man. His style of leadership can be summarised as somebody who will never say anything he didn’t mean. To a large extent, the typical Nigerian politician felt Yakowa was not a politician. That he was more of a technocrat than a politician. His style of leadership was based on integrity. His word was his bond and he was fair to everybody. When you come and you tell him that somebody doesn’t like him, he will tell you that God likes him and that person and he doesn’t expect everybody to like him. He was a very pragmatic person. He knew that a few might not like the way he was operating, but the truth is that not everybody likes an honest person. We in Nigeria keep saying we want honest leaders, but a few of those saying that, actually want a dishonest person so that they can easily put their hands on the pie. But in public they will always tell you that they want an honest person. Yakowa was the kind of person who was interested in protecting the pie so that everybody can have a bit. You described him as a frugal and honest person around money, but after his death, allegations were made that he left a huge debt that has stifled governance in Kaduna state. As his commissioner for finance, what is your take on that? Let me start by saying that I believe that governance is a continuum without any break in it. One individual comes in and does what he can do and leaves. Another one comes in and continues and so on and on. The process of governance doesn’t stop at all and that is why you could see that 24 hours after his demise, a new governor was sworn in because there should be no room for a vacuum. Secondly, let me also say that I am yet to see a government in the world today that has not borrowed or doesn’t have a debt. The richest country in the world today is the United States, but it is also the biggest borrower. So borrowing per se or indebtedness per se is not bad. The issue is the application of that debt that you are taking to enhance the lifestyle of the people you are governing. The utilization of the proceeds of that debt is very critical. When you took the debt, what did you use it for? Once you took the money and it was used for the purpose it was meant to be, once the purpose is well-conceived, it becomes wrong for people to see anything bad in debt. That is why when the current minister of finance said that Nigeria is under-borrowed people raised eyebrows, saying what does she mean when she just negotiated debt forgiveness for us and she is saying we are underborrowed. She is just talking reality because sometimes the cost of borrowing may end up being cheaper and faster than other sources of funding you have. Also your debt/service capacity is critical. So you really have to talk and look at things from the financial angle. Once your debt repayments are not such that they are strangulating the economy, it means you are ok to borrow; the next thing is to ensure you use the money on the project intended. Now when I became the commissioner of Finance, within the first two months that I was on seat, a lot of people came to me, saying that they learnt the previous government left huge debts and that we are struggling to survive. They said they wanted to know the true position of the debt profile of the state. I came out and told them that the debt profile of Kaduna state is sustainable and even today; I still believe that they are sustainable. I know that because we never defaulted in the repayment of any of our debts – principal or interest – the Kaduna State debts have been sustainable, before Yakowa, during Yakowa and even after Yakowa, that is the true position. The Debt Management office of the Federal Ministry of Finance clears any state that wants to borrow and they can attest to that. We got clearance from them before we borrowed. Some of the people who kept asking me about the debt profile of Kaduna State wanted me to play politics then and tell them that we cannot perform because we had inherited a huge debt that the previous government had borrowed but I told them the Yakowa Government was aware of the financial position of the state when it was sworn in. If the governor was not prepared he would not have sat on that seat. And therefore he didn’t have time to start saying oh debts were left for him and he can’t operate his government. Now having given you that background, the true position is that the Yakowa Government, during my time as Finance commissioner took only N20 billion loan and that was from the banks. This was less than 20 per cent of the total debt stock of the state as at that time, and as at the time I left office as commissioner of Finance, about 50 per cent had been repaid, with some over N3bn cash left in the project account. That money was strictly for capital projects and no kobo went into any recurrent expenditure. How did we arrive at borrowing N20 billion? We sat down and looked at how much the state was getting from the federation account from VAT and the Governor took a decision that out of the money we were getting from the federation account, he was going to dedicate the whole proceeds from VAT to only capital projects. In fact he jokingly said that even if salaries would be delayed he would make sure that VAT exclusively goes to capital projects. Two, he also decided that all internally generated revenue will go to projects. So we now have two sources of funding capital projects because without capital projects, there will be no visibility of any government activity. So once the governor took that decision, we put together how much we were earning as IGR and how much, on average, that the state was getting from VAT. It gave us a monthly figure of what we were getting. Now the option was to wait for every month and apply the money to capital projects when they come in. But when you do that you will not benefit from the multiplier effect of quicker development. I then advised that since we are certain that this money will come at the end of every month, we can project what would accrue to the state over a three year period since his administration was for a four-year term. We can then design projects that this amount will cover, roll out these projects with this amount and be sure that we have the money to comfortably cover them. This is to ensure that once these projects are started they will be completed without any break. Most of the projects had a completion period of between nine months and two years. He chose the projects to ensure his desire to that every part of the state benefited from that N20 billion. Recognizing that a few of the projects may be completed ahead of time or some going beyond the completion period, thus requiring more funding, we came up with the solution; The ones that can be completed within a year, we will pay them completely. The ones that will take two years, by the time we are done with the one-year projects, we will have repaid about 60 -70 per cent of the initial loan of N20 billion. Now we could go back to the banks and further ask them to extend or rollover a portion of the repaid amount to fund the extended projects based on the amount required. This will ensure that we complete all these capital projects by then end of 2014 and the loan fully repaid before the end of his first term of office by May 2015. As at the time I left office as commissioner of Finace after the death of Yakowa, almost half of that money had been repaid and infact, we still had over N3 billion left in that dedicated project account. So at the end of the day, we believe that these projects should have been sustainably implemented from the way their funding was designed. Maybe, maybe, I am just speculating, when there are changes in government, the people who conceived these projects and how the funding will be done, when they are not there, it is possible for those ideas to be lost on the new people. You do handing over notes, but it is possible that, not everything gets in, possibly that is what might have happened to delay those projects. However, as I speak to you, I understand that the state has gone ahead to do exactly what we had prepared to do, that’s to take half of the N20 billion and continue with the projects, based on the repayment plan. So I think it was just a small break and I think they are getting back on track. But certainly, I can confirm to you that the Yakowa Government never over borrowed. The amount of money that was borrowed, was being serviced as at when due. Nothing would have been a clog in the wheel of governance in Kaduna state. The late Governor was a prudent person in managing his personal resources that came into his hands, it became necessary for him to even be more prudent, with resources that belong to the state. After your stint with the Kaduna State Government as a Commissioner for Finance, so many expected you to go back to the banking sector where you came from, but you have not, any particular reason? So many people have been asking me that question and this may be a good opportunity to answer them all. I left Diamond Bank in 2011 as a General Manager on leave of absence when the late Yakowa called me to join his cabinet. I actually had the intention of going back after being in government because I didn’t think I will be away for long. But somehow, when you move into a certain position in this life, you realize that you could also make a positive impact in the lives of people by being in other areas rather than just in your professional calling. As a General Manger in Diamond Bank, I was serving the shareholders of the bank, my family members, a few other stakeholders in and outside the bank and a few persons around me. But when I became a commissioner, it broadened my horizon as to the social services and community services that one can offer on a much bigger scale. I also realized that age was also not on my side as a commercial banker in the private sector having decided early in my career that I was not going to work in the bank all my life. My three children also completed their University Education during this period and are looking for work and I felt a moral burden at 56 years leaving them at home every morning like most of their peers in the country and heading to the office for a strenuous job in the bank when they are fitter to do this. So looking at all these reasons, I decided not to go back but rather create a vacancy for one of them or one young person to join the industry. However the biggest reason I didn’t go back to the bank is the death of the late Governor Yakowa. I initially told him when he asked me to join his government that I will be going back after I am through. But having interacted with him at a very close level, understood him well and agreed with the vision he had for Kaduna state when he died, I feel I should stay in politics and help those who share his brand of politics, project those laudable visions that he had. He was in the process of bringing in total decency in politics and commitment to service in the politics of Kaduna state. He never made any promises that he was not sure he could fulfill. It was politics of sincere service to the people that he was trying to implant in the body polity of the state. He took promises that he made in politics like the promises that one makes to his God in the religious circle. So when the man died I just felt a sense of obligation that all of us who share his vision should project this vision further and make good out of it. You were in the private sector and then moved to the public sector, with both experiences, one would expect you to be actively involved in politics, but it seems you are not. Why? I don’t think that is right. I was involved in subterranean politics even before Yakowa called me into his government. It is just that his calling me to join his cabinet as Commissioner for finance projected me politically by giving me more visibility. Every man is a political animal. Even the mere fact that I always voted means that I am involved in politics. I want people to always draw a distinction between the facts that you do not have to seek elective office before you are considered to be a politician. I can tell you that I am a PDP card carrying member and a member of the Southern Kaduna PDP Elders Unity Forum and we are contributing in different ways in galvanizing support for the PDP in the state. I am also involved in politics in my Local Government as a major stakeholder. As a member of the Southern Kaduna PDP elders forum, there are a lot of people in the southern parts of Kaduna state that said they are now ready to shift their block votes to another party. You are well aware that the southern part of the state has always been known as a PDP strong hold. Are you disturbed? I have heard and seen a few number of people, some founding members of the PDP who said they want to experiment with another political party. As a Catholic, my perception of politics is like a catholic marriage that doesn’t have an end except when one party dies. To a large extent, that is my idea of how it should be in politics, the party represents an ideology. In the PDP, a united Nigeria under one God and that is why every ethnic nationality in the country is represented in it. To be honest with you, most of the good things that we have gotten in southern Kaduna in the last 14 years of PDP is because we belong as a block to the PDP. I can tell you that we have played opposition politics in the past in southern Kaduna. There was a time we were in NPP, during the time of Pa Solomon Lar of blessed memory when NPN was the national party then. Our fathers played the UMBC party politics of the first republic which was a middlebelt party and we have the experiences to tell. So it is a deliberate choice of southern Kaduna to play mainstream politics now. And based on history, whenever we played minority politics, we lost a lot of benefits that could come our way, but within the last 14 years of belonging to the mainstream politics, things have been going well for us. That’s why I urge my brothers from the northern part of the state to remain in the PDP. Of course, politics is a game that encourages people to freely associate with whoever they want to, but very importantly, if your brand of politics is to improve your community, then you should be very careful in leaving where you have been benefiting and moving on to somewhere where you will be experimenting with another party. Southern Kaduna people are in mainstream politics and for our few brothers who have decided to experiment with new parties, when they find things not working for them, we will welcome them back although we advise them to remain in the family. Very soon, you will be adding one more year, what will be your birthday wish in 2015 Thank you for wishing me a good 56th birthday. My own birthday wish is to see President Goodluck Jonathan returned as the president of Nigeria next year to continue transforming Nigeria. I sometimes read all the old newspapers I have kept. I remember how people used to describe Obasanjo as a tyrant, a jackboot, that he is still a soldier and not a democrat and all sorts of things. Here we are with somebody different from Obasanjo who likes to consult before taking a decision and people are saying that this man is too weak. I have told myself that this country is difficult to please. When he is gone one day, people will sit down and remember that it was during his time a lot of the things we didn’t know are known. He has opened up governance for people to see how it is run. He has made people to be involved in governance and people are now saying that he is too soft. We are still living with the mentality of the military time and unconsciously, still believe certain things should be done haphazardly. The military were not used to consulting at all, but the president has been consulting all steps of the way. Yes, we have crisis, but Jonathan is the best president at this time to resolve this crisis. We don’t want another Odi or Vandeikya. Nigeria must not lose this unique opportunity to continue with the positive transformation we are into and risk starting all over again at very great cost to all of us.
Posted on: Tue, 15 Jul 2014 03:30:00 +0000