The burden of monitoring how states disburse proceeds from the bond market remains that of the citizens. This admonition is coming as more states have approached the bond market in the last few months to raise funds while others are lined up to also access funds from the capital market.
Abraham Nwankwo, the Director General of the Debt Management Office (DMO), said even though the Securities and Exchange Commission (SEC) has the primary responsibility to ensure that states utilize such proceeds for the purpose they are meant for, the citizens are empowered by the Constitution to question government on how state funds are utilised.
According to the figures from the Nigerian Stock Exchange, 12 states, from 1999 to date, have raised about N374.6 billion from the bond market. In the last one year, Imo, Bayelsa, Kaduna, and Ebonyi have approached the capital market to raise N18 billion, N50 billion, N8.5 billion and N20 billion.
The Act
"The Fiscal Responsibility Act gives you as an individual or organisation the locus standi to go to court to ask a public officer or institution to explain why he is in contravention of the law. We are tired of Nigerians complaining in the air. Once you have your facts, go to court and complain," Mr Nwankwo said
Part 12 (52) of the Act states that "A person shall have legal capacity to enforce the provision of this Act by obtaining prerogative orders or other remedies at the Federal High Court, without having to show any special particular interest." Mr Nwankwo said no state can raise funds from the bond market without meeting the guidelines of SEC.
Lanre Oloyi, spokesperson of the Securities and Exchange Commission (SEC), however, said state governments that raise funds from the bond market are expected to deploy the proceeds for that which they stated it would be used for. "There have not been any issues about funds misappropriation," he said. "The market is rule based and due process must be followed and complied with. If there are instance of states not acting responsibly, they would have been so advised." He added that SEC has the responsibility to ensure that states use the funds judiciously, adding that the commission conducts monitoring exercise and on-the-spot assessment.
Self regulation
Mr Nwankwo said there should be self regulation and self monitoring. "That is why we are trying to help every state to have a capable debt management office so that in the next two years instead of asking us, you should ask the debt management office in your state," he said. "It is the responsibility of all of us to demand explanation of how funds are managed."
He also explained that 13 states spread across the six geo-political zones have completed their domestic debt data reconstruction (DDR) exercise working in collaboration with the DMO. This provides a harmonized computerized total debt data base which indicates total state debt obligations and other state commitments at a specific period in time. He said the 13 states so far have a cumulative debt profile of N200 billion. "By the end of December 2010, the DDR exercise will have been completed for 16 states while by year 2012, the exercise would have been completed by all the 36 states of the federation," he said.
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