Former House of Representatives member and chieftain of the Action Congress of Nigeria (ACN) in Ondo State Dr. Jaiyeola Ajata has condemned the bid by the administration of Governor Olusegun Mimiko to raise a N27 billion bond from the capital market.
The chartered accountant, who holds a doctorate degree in Business Administration, said the timing is wrong.
He said it is shocking that the Mimiko administration is trying to drag the state into debt in the last year of its tenure.
In a statement yesterday, Ajata said: “A bond is a debt instrument with which a borrower seeks fund from a lender. Its repayment period usually spans over a long period of time. It is irresponsible, therefore, for an administration that has less than 15 months to go to pile up debt for its successor.
“It is a most cruel move to condemn the good people of Ondo State to gruelling poverty and malnutrition by scheming to channel their future resources to the repayment of a debt they know its proceeds would be misused, just like the funds that have come into the state in the past three years.
“Secondly, because of the fluctuation of the federal allocation, the professionally correct option is to tie the repayment of bonds to Internally Generated Revenue (IGR), which is often more certain, reliable and within the control of the borrowing government.
“However, the Mimiko administration’s lack of initiative in raising IGR has led to a situation in which it has no domestic revenue stream to absorb the shock of the bond conditions.
“I am, by this statement, issuing a Caveat Emptor to those who may be hoodwinked into putting their money in this instrument to beware, so that they do not burn their fingers. They should look critically at the number of projects that have been delivered by the Mimiko administration vis-a-vis the billions of naira of federal allocation.
“It is unethical to use the bond instrument to encourage a government on the path of profligacy and reckless dissipation of public funds. The Securities & Exchange Commission must ensure that due diligence is carried out, so that false claims of prudence and accountability are not allowed to go unchecked.”
He said the people are monitoring the transaction and would resist any attempt to enslave them.
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Ajata knocks Ondo’s N27b bond bid