The Socio-Economic Rights and Accountability Projects (SERAP), has asked the World Bank to immediately suspend further loans to the states until they explain how previously acquired loans were spent.
The group also called for the probe of the loans acquired by the state governors in Nigeria.
Kolawole Oluwadare, SERAP’s deputy director, made the demand in a letter addressed to Ajay Banga, the World Bank President.
While expressing concerns over the rising debt profile of the 36 states, SERAP alleged that the states had mismanaged and diverted public funds, stressing that it would be irresponsible to continue giving loans to the states.
SERAP noted that if the World Bank failed to probe the state governors, it would not hesitate to institute legal actions against the lending body and the 36 states.
‘’The World Bank and its partners cannot continue to give loans and other funding to these states where there are credible allegations of mismanagement or diversion of public funds.
‘’We are concerned that there is a significant risk of mismanagement or diversion of funds linked to the bank’s investments in many of the country’s 36 states. It is neither appropriate nor responsible lending to give loans to these states only for the loans to be misspent.
‘’The World Bank’s lending and support for these states may create the impression of complicity in the allegations of mismanagement or diversion of public funds by the states, which may include loans from the Bank and its partners and federal allocations. We would consider the option of pursuing legal action should the World Bank fail or fail to implement the recommendations contained in this letter, and we may join the country’s 36 states in any such suit.
‘’According to Nigeria’s Debt Management Office, the total public debt portfolio for the country’s 36 states and the Federal Capital Territory is N9.17tn. The Federal Government’s total public debt portfolio is N78.2tn.’’
SERAP urged the World Bank to use its legal powers to send independent monitors to all the states that had acquired loans from it and monitor how those loans were being spent so that loans acquired by the governors would not be used to fund their private lifestyle.
‘’SERAP also urges you to demand an expressed commitment from Nigeria’s 36 governors to address credible allegations of mismanagement or diversion of public funds in their states and provide guarantees that loans and funding from the Bank and its partners would not be used to fund the luxurious lifestyles of politicians.
‘’The World Bank currently has a portfolio of about $8.5bn spread across the country. The bank has also approved several loans and other funding facilities to the country’s 36 states, including the recent $750m credit line meant for the states to carry out reforms to attract investment and create jobs. The accounts of Nigeria’s 36 states are generally not open to public scrutiny, as many of them continue to refuse freedom of information requests seeking transparency and accountability in the spending of public funds.
‘’The bank has a legal responsibility to ensure that suspected perpetrators are brought to justice and that any mismanaged or diverted public funds are returned to the treasuries of the states. The World Bank has the legal obligation to observe and promote compliance with the Nigerian Constitution 1999 [as amended] and domestic laws, including the Fiscal Responsibility Act of 2007.’’
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