A senator representing Ondo North Senatorial District, Prof. Ajayi Boroffice has warned Zenith Bank Plc against granting approval to the N7 billion loan request made by the Ondo State Government a few months to the expiration of Governor Olusegun Mimiko’s tenure in office.
The Ondo State House Assembly had approved the State government’s request to accept a N7 billion bridging loan from the Zenith Bank Plc, which Governor Mimiko said would be utilized to complete developmental projects across the 18 Local Government Areas of the state.
In a statement issued by his media office and signed by Kayode Adeniyi, Boroffice said despite the approval of the controversial loan request by the State House of Assembly, it does not enjoy the express approval of vast majority of Ondo people, as they were not consulted before state lawmakers took the unilateral decision.
Boroffice said: “Therefore, it is utterly unfortunate that state lawmakers traded the collective interests of our people on the altar of party loyalty to the retrogressive Peoples Democratic Party, PDP and the government it runs in Ondo State.
“Indeed, the reason advertised for the questionable loan request by the state government is untenable and dubious. A government reputable for doing nothing significant on infrastructural development in about seven years, should be resisted from mortgaging the future of our children under the guise of borrowing to fund infrastructural deficit.
“This is the same government that could not offset outstanding workers’ salaries despite procuring N14 billion bailout funds from the Federal Government.”
Boroffice added that “Ondo State is presently faced with gravious financial challenges like cash-flow insolvency, poor internally generated revenue, low state sustainability index, huge debt burden of over N77 billion and failure to meet basic financial obligations. Therefore, continuous and unsustainable borrowing is not a wise option at this challenging period.
“Meanwhile, what is the repayment plan of this dubious loan request? What is the interest rate? Is it true that the interest rate has been outrageously bloated to over 25 percent?
“Can Ondo State meet the contractual obligations? If the repayment plan exceeds the expiration of Governor Mimiko’s term, the bank should as well start preparing provision for credit losses in its financial statements.
“The management of Zenith Bank Plc is advised to learn and be guided by the decision of Access Bank Plc to outrightly reject the loan request having realised the high degree of risk attached.
“However, If Zenith bank goes ahead to grant the dubious loan, it will undoubtedly confirm the widely held opinion in Ondo State that the bank has been successfully co-opted into the grand conspiracy to defraud the people of Ondo State.
”Finally, howbeit it is clear and factual that government is continuum, the incoming APC-led government in Ondo State will not be committed to the repayment plan of any dubious loan granted by any commercial bank at the detriment of the people of Ondo State. At the appropriate time, the laws will be judiciously interpreted.”