Press Releases

Bond Issue: Lagos Govt Appeals To Residents To Be Part Of Infrastructural Renewal

Jan 12, 2009 - The Lagos State Government Monday appealed to Lagosians to be part of the on-going massive infrastructural renewal in the State by investing in its N50 billion fixed rate bond.

The N50 billion fixed rate bond, which is the first tranche of the State Government’s total N275 billion fixed rate bond series, was launched on Wednesday, December 24 and officially opened for public purchase on Tuesday, December 30, 2008.

Making the appeal at a joint press conference at the Bagauda Kaltho Press Centre, Alausa, the State Commissioner for Finance, Mr. Rotimi Oyekan, said aside from the tax-free interests which the investors are going to reap from the investment, Lagosians have an opportunity to identify with the government they believe in and be part of the on-going development in the State.

“One major benefit of the bond series is that the people can invest in the government they believe in, an opportunity to better the environment where they live, work and play and yet reap returns and benefits from the investment. This, in itself, is the hallmark of democracy”, the Commissioner said.

The minimum that can be invested in the bond series is N100,000, but the Commissioner explained that people could pool their resources together to make up that amount in order to be part of the exercise.

Oyekan, who recalled the present administration’s commitment to the implementation of its infrastructural renewal programme in the State, said the bond series was floated in order to enable the State Government take care of all projects it started last year and to implement the 2009 Budget.

In addition, the Commissioner said, the Government is also committed to such projects as the expansion of the Lagos – Badagry Expressway to a ten-lane trans-international highway to which it has already committed huge resources for design and on which construction work will soon commence in earnest.

Describing the bond as the first of its kind in the country, Oyekan assured prospective investors that although there is a general atmosphere of gloom in the global economy to which the nation’s Capital Market is not immune, the Nigerian economy has demonstrated enough resilience and Lagos State being a major player in that economy, has the capacity to offer adequate returns on investment.

“With the failure of the global investment market, the Lagos State Government provides market opportunities for alternative investment for Africa” Oyekan said, adding that the Government has the responsibility of restoring the confidence of the people in the investment market.

Explaining the difference between investment in Equity and in bond, the Commissioner said while the investor in the former, which is investment in shares, pays tax on his unpredictable returns, the redeemable nature of the investment in the latter, makes it possible for the investor to predict what he gets as his returns which also comes tax-free, adding, “bond is an opportunity to put your money and participate in the financial market of the state and reap equitable returns”.

Giving a brief history of bond issuance in the State, Oyekan recalled that in 2002, the administration of Asiwaju Bola Ahmed Tinubu also issued the instrument to the tune of N15 billion to lapse in 2009 in order to fast track the execution of such projects as Awolowo Road in Ikoyi, Kudirat Abiola Way, purchase of trucks to assist the Ministry of the Environment in the management of refuse in the State, among others.

“The significant threshold of that venture is that it is the first of its kind in the country”, the Commissioner said, pointing out that for an administration to utilize such a debt instrument to last beyond its tenure presupposed that the administration was confident that it has enough resources to meet the term.

“Before commencing the present bond series, the Babatunde Fashola Administration has fully paid off all the debt obligations concerning that issue”, he said.

The Commissioner explained that the bond issue was necessary, in spite of the State Government’s 2009 N405 billion Budget, in order to take care of the budget deficit which could arise as a result of shortfall in revenue estimate.

Also urging Lagosians to pay their taxes regularly, Oyekan, who said it had nothing to do with investing in the bond, declared, “ while death and tax are the two inevitable obligations in life, the bond is an opportunity for you to put in your money and make more money in return”.

“The challenge of moving Lagos forward is for all of us whether you are a farmer, an artisan, a doctor or lawyer” the Commissioner said, adding that though the State Government has not gone out to ask for tax from churches or mosques, the Government has in recent times seen voluntary compliance from some of the churches and mosques. “It may be because they have seen and experienced good governance”, he said.

In his remarks, the State Commissioner for Budget and Planning Mr. Ben Akabueze, said the bond was an opportunity for people at the grassroots to participate in the on-going development of the State and also make substantial return on their investment.

Akabueze, who later translated the message of the conference in Igbo language for the benefit of Igbo residents in the State, said the N100, 000 minimum investment in the bond does not mean that farmers, traders and market women could not participate as they could come together and pool their resources, as in the local ‘asusu’, to make up the amount.

Earlier in his introductory remarks, the State Commissioner for Information and Strategy, Barrister Opeyemi Bamidele said the purpose of the conference was to further explain to the public the objectives and benefits of the bond series to both the State’s and the Nigerian economy. Barrister Bamidele later translated the message of the conference in Yoruba.

While launching the N50 billion bond series at the Federal Palace Hotel, Victoria Island in late December last year, the State Governor, Mr. Babatunde Fashola explained that the Government has put in place a ten-year business plan which provides for the debt to be serviced and repaid from the State’s Internally Generated Revenue (IGR).

The Governor also explained that the Government has provided legal backing to the process through the State’s Bond Law 2008 and the State’s Debt Office Law 2008 which provides legal authority to the Bond Issuance Programme and provide that 15 per cent of the State’s IGR is set aside monthly into a Debt Service Account to ensure retirement of the debt.

To further boost the confidence of investors, Governor Fashola declared, “Lagos State is unique in that it is the only State in Nigeria that generates a significant majority of its revenue internally. The bond coupon of 13 per cent provides a relatively attractive rate of returns to investors at a time when other investment markets are experiencing great volatility”.

The first phase of the Bond issue to the tune of N50B will end on Friday.

Also present at the conference, which was broadcast live by various television stations, were the Special Adviser to the Governor on Commerce and Industry, Mrs. Sola Oworu, the Permanent Secretary, Ministry of Finance, Mrs. Seyi Williams, the Perm. Sec. Lagos Television (LTV 8), Mr. Lekan Ogubanwo, and the Senior Special Assistant to the Governor on Media, Mr. Hakeem Bello, among other top government officials.