Speeches

Maiden Induction/Investiture Ceremony Of Portfolio & Debt Management In The Public Sector

Aug 29, 2008 - Poor debt management strategies have been linked to persistent economic crisis in many countries particularly in sub- Saharan Africa. This is so, because whatever is said to have been achieved over time, are often eroded by grinding poverty, socio-economic disequilibrium, poor infrastructural management and ineffective debt servicing strategy.

Indeed, our country Nigeria, inspite of her huge human and material resources has not been spared the debt malaise. For years after attaining political independence, our country’s economic progress has been gravely distorted by a huge debt burden. The nation was until recently neck-deep in debt with dire socio-economic and political consequences for the citizenry. The debt servicing instruments have proved to be ineffective and counterproductive while the creditors have remained uncooperative. The establishment of Debt Management Office (DMO) in the year 2000, by the Federal government was the response and positive step towards reversing the unsatisfactory debt management practice in Nigeria.

The broad objectives of the Debt Management office are to assist the country in achieving a sustainable debt management portfolio consistent with economic growth and development policies. In achieving these objectives, the strategic plan (2002- 2006) was designed to achieve the specific goal of making Nigeria’s external debt sustainable by the year 2006.

To a large extent, the DMO has made considerable progress, and significant successes were recorded in the areas of debt conversion, securing wavers from creditors and developing guidelines for new borrowings in order to avoid further build up of unsustainable debt. However, these initiatives and measures were unable to yield the desired results until the year 2006 when Nigeria exited the Paris Club and London Club of Debts respectively.

Ladies and gentlemen, what we are witnessing here today is significant in our collective commitment towards sustainable economic growth and development in the country. Achieving sustainable debt management requires the commitment and concern of the government, the citizens and all stakeholders in the Nigeria project. The portfolio and debt managers in particular have crucial roles to play in ensuring effective debt management in public sector financing.

While congratulating all the inductees on this auspicious occasion, I must emphasize that the challenges ahead of you are indeed enormous. If you must succeed in your career, it is essential for you to always endeavour to play by the rules and operate in line with the conducts and ethics of the sector consistent with international best practice in Debt management, by ensuring a periodic and up-to-date review of securities constituting a portfolio. This is essential in assessing a country’s or sub-national indebtedness and servicing costs in order to ascertain what measures would allow or lead to a reduction of costs and risks associated with the portfolio.

As competent port folio managers, you are not only expected to monitor and identify potential improvements on the debt management practice adopted, but also to conduct a quarterly review of complete debt portfolio including, external, domestic and sub-national debt, as well as contingent liabilities that could crystallize in the future. This, I believe would among others, help in the monitoring and general assessment of the country/state’s indebtedness and provide analytical tools to debt managers for managing the portfolio in terms of cost and risk. Let me also emphasize that irrespective of the system and policies in place, discipline and transparency must remain the watchword of our public and private debt managers. To avoid a relapse into the ugly past, we must eschew corruption and ensure fiscal discipline in all tiers of government.

In Lagos State, our effort and commitment has been to ensure fiscal discipline and full implementation of the budget. While we place emphasis on infrastructural development to achieve sustainable economic development, we have remained focused and consistent in our determination to maintain discipline and prudence in public financing.

Our quarterly budget review is intended to monitor and undertake a detailed review of our budget performances and successes recorded in the previous quarter with a view to improving or adopting corrective measures where necessary. Our Public-Private Partnership initiative is part of our strategies to jump start the State’s economy, and ensure growth in critical sectors especially rebuilding the collapsed infrastructure. So far, so good, I am pleased to inform you all that we are on course. With your ideas and the contributions of you all, I have no doubt that we shall achieve our goal of transforming Lagos to a mega-city of our dream.

At this juncture, I wish to congratulate the Portfolio and Debt Management Institute of Nigeria on this occasion, and do hope that this maiden induction and investiture ceremony would provide the necessary atmosphere for capacity building and sustainable debt policies in line with global practices in portfolio and debt management.

Finally, I wish to express my sincere appreciation to the Institute for the honour of being conferred with the honourary fellow of the Institute. I commend your efforts and commitment towards sustainable debt management and economic development of our country. I am proud to be associated with you and your achievements within the few but purposeful years of your existence. I urge you to remain focused and committed to your vision of creating workable strategies for debt management and ultimate transformation of the Nation’s economy.

Thank you all, and God bless.

MR. BABATUNDE RAJI FASHOLA (SAN)
GOVERNOR OF LAGOS STATE