Lagos State Legislature Gives Green Light to N200 Billion Loan Initiative and Federal Allocation Funding Plan

The Lagos State House of Assembly gave its stamp of approval to the state government's proposal to issue a N200bn bond on Thursday, in addition to participating in the Federation Account Allocation Committee Receivables Discounting Programme, which aims to finance critical infrastructure projects across the state.

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This approval came after the adoption of a report by the Joint Committee on Economic Planning and Budget and Finance during a plenary session, marking a significant step forward in the state's efforts to secure funding for its development projects.

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Presenting the report, the Chairman of the Joint Committee, Sa'ad Olumoh, revealed that the committee had thoroughly examined the executive's requests and deemed them worthy of legislative approval, paving the way for the state to access much-needed funding.

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Olumoh explained that the Commissioner for Finance, Abayomi Oluyomi, had informed the committee about the Federal Government's introduction of the FAAC Receivables Discounting Programme, which was conceived following a proposal by the Nigeria Governors' Forum to enable states to access funding for infrastructure development.

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According to Olumoh, participating states would be required to execute an irrevocable standing payment order, authorising the Accountant-General of the Federation to deduct agreed sums from their monthly FAAC allocations over a period of 11 months, with the deductions being paid into a sinking fund managed by the Debt Management Office and domiciled with the Central Bank of Nigeria.

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This arrangement, Olumoh noted, would provide Lagos with immediate liquidity to finance priority capital projects, including the construction of legislative quarters and other strategic infrastructure, thereby driving development and growth in the state.

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The committee also recommended that the state be allowed to raise N200bn through a Series V conventional bond under its existing N1tn Debt and Hybrid Instruments Issuance Programme, which would further bolster the state's finances and enable it to undertake critical projects.

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Gbolahan Yishawu, the Chairman of the House Committee on Waterfront Infrastructure, described the FAAC facility as an advance-payment arrangement under the ISPO framework, rather than conventional borrowing, and stressed the need for the government to clearly identify the projects to be financed with the proceeds.

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Yishawu also called for transparency in the financing arrangement, ensuring that it amounts to a restructuring of funding sources rather than an increase in the state's overall budget, thereby guaranteeing prudent financial management and accountability.

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Speaker of the House, Mudashiru Obasa, expressed his support for the borrowing plan, stating that responsible borrowing is essential for funding capital projects and accelerating infrastructure development, and that the proposed bond increase to N200bn reflects additional funding requirements rather than a computational error.

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Obasa added that the utilisation of the funds would remain subject to legislative oversight and approval, ensuring accountability and prudent financial management, and that the state government would be required to provide regular updates on the projects being financed.

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Following deliberations, lawmakers unanimously adopted the committee's recommendations with amendments, authorising the state government to participate in the FAAC Receivables Discounting Programme and proceed with the N200bn bond issuance, marking a significant milestone in the state's efforts to secure funding for its development projects.

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The approvals have paved the way for the state to finance major projects, including the New Massey Children’s Hospital, the Lagos Rail Mass Transit Line, Lagos Island General Hospital, Omu Creek Bridge, and other strategic infrastructure projects, which are critical to the state's development and growth.