BEING A PRESENTATION BY THE CIVIL LIBERTIES ORGANISATION (CLO), AKWA IBOM BRANCH AT THE PUBLIC HEARING ON “AKWA IBOM STATE BONDS, NOTES AND OTHER SECURITIES ISSUANCE BILL, 2022.” HELD AT THE OLD CHAPEL, HOUSE OF ASSEMBLY, UYO, ON FRIDAY, 16TH DECEMBER, 2022.
By a letter with reference number AKHA/S/65/T.1/12384 dated 9th December, 2022, the Akwa Ibom State House of Assembly invited the Civil Liberties Organisation (CLO) to a Public Hearing on Akwa Ibom State Bonds, Notes and other Securities Issuance Bill 2022.
The letter, which was signed by Barr. Bassey Umoren for the Chairman, House Committee on Appropriations and Finance, AKHA, stated that the Public Hearing is scheduled for today, Friday, 16th December, 2022 by 10:00 a.m. in the Old Chapel, House of Assembly, Uyo.
CLO appraised the Bill and makes the following inputs:
The Bill has 29 Sections and 1 Schedule. The Bill seeks to enact a Law to provide for the raising of loans through issuance of Bonds, Notes and for Other Matters Connected Therewith.
The import of the Bill is seen in Section 1 of the Bill which has the marginal note: “Authority to Raise Loans and Provide Credit Enhancements.” Thus, the Bill seeks to enact a Law authorising the Akwa Ibom State Government to raise loans and borrow monies to finance capital budget and expenditures of the Akwa Ibom State Government (Section 1(1)(a) of the Bill) and provide credit enhancements and support in respect of loans and debt instruments borrowed or issued by any State-Owned Entity (Section 1(1)(b) of the Bill). The loans, borrowings, and debt instruments are in respect of projects as are from time to time determined by the Executive Council to be necessary and appropriate for the social, infrastructural and economic development of the State.
The Bill provides for the establishment of Sinking Fund (Section 11 of the Bill). The Sinking Fund is meant to receive sums of money set aside by the Government for specific purposes with respect to debt securities and credit enhancement. Provision is made in the Bill for the appointment of Trustee to manage the Debt Service Fund and the Sinking Fund (Section 16 of the Bill and the Schedule to the Bill). The Bill also provides for the appointment of a Registrar (Section 18 of the Bill) and the maintenance of a register of instrument (Section 19 of the Bill).
- Authority to Raise Loans and Provide Credit Enhancements:
Section 1(1) of the Bill states that:
“The Government is hereby authorised, through the Office, to:
(a) raise loans and borrow any sums of money required to finance the capital budget and expenditures of the Government or to refinance the maturing obligations of the government; and
(b) provide credit enhancement and support in respect of loans and debt instruments borrowed or issued by any State-Owned Entity,
in respect of projects as are from time to time determined by the Executive Council to be necessary and appropriate to provide for the social, infrastructural and economic development of the State.”
CLO suggests that the power of the Executive Council to authorise loans and credit enhancement in respect of projects should be made subject to approval by the State House of Assembly. CLO, therefore, calls for an amendment of Section 1(1) of the Bill.
CLO also suggests that Section 1(2) of the Bill should also be amended to provide for the approval of the Akwa Ibom State House of Assembly in respect of State Government guarantee or provision of credit enhancement and support in respect of any loan to be taken or debt obligations to be incurred by any local government, other Agencies or a State-Owned Entity.
- Issuance of Debt Securities:
Section 3 of the Bill:
(1) “The Office, pursuant to section 1 above, may, with the approval of the Executive Council, and subject to the provisions of this Law –
(a) issue any form of Debt Securities with fixed, variable, linked, floating or zero-coupon rates, on such dates, including the tenor and other terms and conditions as it deems fit; and
(b) raise and borrow any sums of money required to finance the capital budget of the Government or to refinance the maturing obligations arising from any Debt Securities.
(2) To give full effect to sub-section (1) of this section, the Commissioner, upon approval by the Executive Council, may direct the Accountant-General of the State to issue, on behalf of the Government, the appropriate irrevocable undertaking, irrevocable standing payment orders or such other undertakings, documents or authorisations as may be required to raise any loan, borrow any sum of money or provide any credit enhancements and support.”
CLO suggests that Section 3(1) and (2) of the Bill should be amended to provide for the approval of the Akwa Ibom State House of Assembly.
- Appointment of Trustee:
Section 16(1) of the Bill states that:
“The Commissioner shall, subject to the approval of the Executive Council, appoint a registered corporate trustee company or companies for the purpose of –
(a) managing the Debt Service Fund in accordance with the provision of this Law, or
(b) acting on behalf of the holders of any Debt Securities and managing any Sinking Fund established in connection with a particular tranche, series or issue of Debt Securities or provision of credit enhancements and support.”
CLO suggests that Section 16(1) of the Bill should be amended to provide that the registered corporate trustee company or companies nominated by the Executive Council as Trustee should be forwarded to the Akwa Ibom State House of Assembly for approval.
Section 18 of the Bill: “The Office shall, with the approval of the Executive Council, appoint a Registrar registered with the Securities and Exchange Commission subject to any terms and conditions which it deems fit for the purposes of maintaining and administering a register of all transactions in Debt Securities issued pursuant to this Law.”
CLO suggests that Section 18 of the Bill should be amended to provide that the Registrar shall be nominated by the Executive Governor of Akwa Ibom State after approval of the Executive Council subject to the screening and confirmation of the Akwa Ibom State House of Assembly.
i) CLO would have preferred that the Akwa Ibom State Bonds, Notes and Other Securities Issuance Bill, 2022, be stood down by the 7th Akwa Ibom State House of Assembly gauging public perception of the Bill and in view of the critical moment the State finds itself.
ii) CLO, however, urges that this Bill, when eventually becomes a Law, should not be used as a vehicle by the Government of Akwa Ibom State to guarantee loans, securities and such other financial instruments sought and/or obtained by private entities, even when government has some measure of interest in such private entities.
iii) CLO urges that this Bill, being a very important one as it affects present and future generations of Akwa Ibom people, should be thoroughly scrutinised by the entire Members of the 7th Akwa Ibom State House of Assembly before it passage.
iv) CLO further request that the House Committee on Appropriations and Finance and the entire Members of the 7th Akwa Ibom State House of Assembly should take into consideration all inputs made by stakeholders within and without this Public Hearing so that posterity will be fair to the entire Members of the 7th Akwa Ibom State House of Assembly and in the best interest of Akwa Ibom State.
CLO thanks the Speaker, Rt. Hon. Aniekan Bassey, and the Chairman, House Committee on Appropriations and Finance, Rt. Hon. Uduak A. Odudoh, and the Akwa Ibom State House of Assembly, for the invitation to this Public Hearing.
Otuekong Franklyn Isong
Comrade (Barr.) Christopher Ekpo