Mande Defends $70 million World Bank Loan
Environment
By Dan Ede
"You are welcome to the hearing room of the House Committee on Environment, Honourable Minister. We thank you so much for honouring our invitation and being here by yourself.
"We, the committee on Environment, are pursuing Section 88 of the Nigerian Constitution of 1999, and relevant sections of the standing rules of the House of Representatives. We resolved on the committee level last week that we invite you, for you to explain to us some certain emanating issues in the Ministry of Environment.
"One of the issues is the Local Empowerment and Environmental Management Project. A lot of Nigerians have asked questions to this committee; this committee could not give them a satisfactory answer. This is against the backdrop of the committee lacking information on that programme.
"So, we considered it prudent and pertinent for the Honourable Minister to brief the committee on this programme; and also brief the committee on the source of funding because from the publications we have read in the newspapers, it is said that the Federal Ministry of Environment secured a loan of US$70 million from the World Bank and US$8 million from the Global Environment Facility (GEF) as a grant.
"That is the main purpose of our interactive section today, so that the minister could avail the committee of the information on how the programme will be implemented, how the money will be expended; and if it is a loan, the reason for the loan, how it was obtained and what the repayment pattern is".
With this preamble by the chairman of the House of Representatives' Committee on Environment, Honourable Emeka Atuma, a fortnight ago, the stage was set for what could be termed 'The trial of Bala Mande'.
The main charges were the alleged unconstitutionality of the process of obtaining a loan recently from the World Bank by the Federal Ministry of Environment, for the funding of the Local Empowerment and Environmental Management Project (LEEMP); and the illegality of spending money that is not provided for in the Appropriation Act of 2004.
The minister's summon by the House Committee on Environment had occupied generous spaces in many national dailies that Thursday, August 12, 2004. But what many people, including some committee members, had not anticipated was the minister's personal appearance.
But here was the Honourable Minister in flesh and blood, armed with documentary and human defense, wearing his military composure as the charges were being read out by no less a person than 'Presiding Justice' Emeka Atuma.
When he was ushered to the stage, Col. Bala Mande (rtd.), Honourable Minister of Environment, succinctly reviewed the recent launching of LEEMP and passed the baton to his subordinate for detailed briefing. "It was last month that LEEMP was actually launched. And in keeping to the tradition of cooperation (with) and regards for the National Assembly, I sent invitation to both the Senate and House committees on environment to the launching of that project....
"This is a programme that had been initiated before now; negotiations had taken place even before I became a minister; and structure had been set up in the country and training had also taken place for operators in the states. Here with me is the coordinator of the project, Dr. Peter Papka; I will now call upon him to give an overview of the project", he said.
Papka, the National Coordinator,Federal Programme Support Unit, Local Empowerment and Environmental Management Project, went into a long tutorial on LEEMP, starting from the history of the project to its management and financing.
He stated, for instance, that the project was conceived in the Federal Ministry of Agriculture and later transferred to the Federal Ministry of Environment; and that the project was the outcome of a study carried out by the then Ministry of Agriculture.
"In year 1993-4, the then Ministry of Agriculture undertook an assessment of the land use and vegetation study and soil degradation assessment in the country. And what we found from that study was that deforestation was very pervasive all over the country; our river system, silted; agricultural products had declined in terms of crop yield and the ability to have vegetation for animal feed.
"Between 1980s and 1993-5, poverty indices had moved from something in the region of 23 per cent to 43 per cent. We also know that government has over the years invested resources to help strengthen the natural resource base to make life more meaningful to the people.
"Therefore, if those resources were being channeled and we were not seeing the commensurate impact on the population, then something must have been wrong somewhere.
"Now, we took time to go out to some of the communities in different states; and what we found, from the information given and what we gathered, was that majority of the people were not really getting the benefits for which the investments were being made", he said, adding that this finding made them look for how best the issue of natural resource on which the majority of these people depend would be controlled for their well being.
This, according to him, led to a proposal that now metamorphosed into LEEMP.
The national coordinator also explained the project's focus which include maximizing the use of renewable resources so that their regenerative capacities are not jeopardized; minimizing the depletion of non-renewable resources so that savings in human-made, human or social capital are ensured for the benefit of all; and minimizing pollution and its attendant negative impacts on environment, human health and ecosystem.
Papka also did not forget to mention the project objective which are: strengthening of institutional framework at federal, state and local government levels to support environmentally sustainable and socially inclusive development; and assisting beneficiary communities in participating states to have planned, co-financed and implementable environmentally sustainable and socially inclusive multi-sectoral micro-projects.
Though he wanted to be very brief in his presentation, Papka felt it was necessary to also inform the committee of the project components. These, he said, are: multi-sectoral community driven investment, local government assessment and capacity building, protected area and biodiversity, strengthening the environmental institutional framework, and project management.
Nevertheless, going by the expressions on their faces, the committee members were not quite interested in Papka's story so far. Though they could not stop him, they had wished he made straight for the loan issue and tell them how it was obtained without the approval of the National Assembly and how the ministry intended to spend money that is not appropriated for in the current financial year.
So, it was a welcome relief when he mentioned 'project scope and financing'. "LEEMP is to be implemented in nine states of Adamawa, Bauchi, Bayelsa, Benue, Enugu, Katsina, Imo, Niger and Oyo, selected based on established criteria (i.e. technical relevance and financial capability).
"The LEEMP has two external fund sources of World Bank and Global Environmental Facility (GEF). In addition, both federal and participating state governments would contribute to the project whose total cost is estimated at US$70 million; the GEF is to provide grant of US$8.5 million for biodiversity conservation and management in Bauchi and Niger states. In order to facilitate the preparation of the project.
The IDA (International Development Association) credit, which has been obtained, is for an amount in SDR52.8 million or US$70 million, to be disbursed over a five year period, at no interest rate, but with a 0.75 per cent service charge. The grace period is 10 years, while the repayment period is 30 years.
He then began to give a blow by blow account of how the loan was negotiated and eventually obtained. "Consequent upon the completion of project preparation, negotiations were held between the World Bank, the Federal Ministry of Finance, Federal Ministry of Environment and all participating state governments between August 1 and 2, 2002, at the World Bank Country Office, Abuja.
"In order to conclude the IDA credit process, the Federal Executive Council approved the project in May, 2003. Acceptance letter was issued by the Federal Ministry of Finance to the World Bank, the basis of which the World Bank Executive Board of Directors granted a formal credit approval on July 29, 2004.
"The Development Credit Agreement was signed between the World Bank and the federal government on December 3, 2003", Papka narrated.
For the sake of emphasis, the national coordinator of the project stated severally that the loan negotiation was handled by the Federal Ministry of Finance, which also signed the Development Credit Agreement on behalf of the Nigerian government.
"The Ministry of Finance, being the loan administrator for the country, the Ministry of Environment submitted that request through the Ministry of Finance; and the Ministry of Finance now approached the World Bank to see whether it would be possible for them to consider financing this project in the content of the portfolio of the World Bank", he said, adding that the bank gave conditions for financing the project. These were: the programme should be such that would improve the economic base of a majority of the people, ensure that the way of handling the resources should be such that a lot of emphasis and responsibilities are given to the beneficiaries directly; an opportunity for the private sector to participate very effectively; and empowering communities to identify what their needs are and giving them the opportunity to implement some programme interventions.
On counterpart funding, he said the federal government was required to pay US$76,460,510 by 2004; US$77,139,777 by 2005; US$109,590.250 by 2006; US$102,549,750 by 2007; and US$106,908,300 by 2008.
"As a result of the delay in fulfilling the conditions given by the World Bank for project effectiveness (before the country could access the credit funds), the launching of the project was delayed.... All the conditions... have been met and the World Bank had declared the project effective at the end of April, 2004", he said.
But the project was formally launched on July, 15, 2004.
As soon as �he rested his case, Honourable Atuma took over the stage once again: "My question is coming from a constitutional angle", he interjected. Continuing, he said: "First of all, living up to the responsibility of representing Nigerians and my oath of office, the 1999 constitution, in the Exclusive List, clearly stated that borrowing of money within and outside Nigeria for the purpose of the federation or of any state will have to be a determination of the National Assembly.
"We have heard your history of how you started this programme. We also appreciate the fact of what you are doing in order to enhance the capacity of our people and be able to introduce a development project to the beneficiaries direct.
"...We have high respect for our constitution; and our oath of office is to defend this constitution at any given time. Whatever loan any institution in this country secures from any agency or institution, that loan is tied to the Nigerian people. What you are saying is that unilaterally, you had an approval from the executive council; and you moved to secure a loan of US$70 million at this time that Nigerians are discouraging loans, no matter what the source is; at this time we do not want to incur any foreign debt, no matter how little; at this time we want to be seen to manage our economy; we want to be seen to use our local resources to support our people, no matter how little. Here again, the loan has been secured.
"Secondly, this project, from what you have just explained, will involve counterpart funding. This committee prepared the 2004 budget of the Federal Ministry of Environment which is the implementing agent. And as such, if this money is to be utilised in this financial year, there should be fund provided in the budget to match this loan so that you will be able to utilise that which you have secured from the World Bank. But there is no such provision in the Federal Ministry of Environment budget.
"And we also know that the government of today always provides money in pool for counterpart funding; and such monies also are not captured in the budget. And we made it mandatory that any sub-head that is to be expended in this country this year has to go in accordance with the provision of the Appropriation Act of 2004. That has also incapacitated the ministry's ability to spend that money with enough legal backing.
"My question is: we agree that we cannot take the hand of the clock backwards again because I know that you people have really taken this loan. But it is not constitutional. The Federal Executive Council lacks the capacity of approving a loan for the nation no matter what the institution is. But having secured this loan, we now want to know from what sub-head we are getting the position of the federal government?
At this point, the matter appeared to be a straight fight between the committee chairman and the minister. "You raised the question of constitutionality of the loan. My ministry was preparing this project as conceived under the Ministry of Agriculture, until it was developed and eventually transferred to my ministry. The fact is that the packaging was done and sent to the Ministry of Finance. Constitutionally, it is the Ministry of Finance that has the right to negotiate for loans from international agencies or countries. So, the Ministry of Environment was not directly involved in the negotiation.
"As to constitutionality, the question should be addressed to the Ministry of Finance. We are an implementing agency; and we did not go asking the Ministry of Finance if they had the constitutional responsibility", the minister said.
"Secondly", he continued, "the counterpart funding of this kind of project must have been in kind not in cash; and if there is any cash counterpart on the part of the federal government, it is also the Ministry of Finance that takes care of that. But I know it is going to be in kind".
Many committee members did not buy into the minister's explanation, as they felt he was only trying to shirk responsibility for the loan. Some were more interested in finding out under what sub-head the ministry wanted to implement LEEMP this year. Honourable Mbaja, for instance, wanted to know if the Federal Ministry of Finance was implementing a parallel budget, as he argued that even if the loan was sought and obtained by that ministry, it should have reflected in its own budget for this financial year.
Honourable Atuma disagreed with the minister over his comment that it was the constitutional role of the Federal Ministry of Finance to obtain loans for the country or any part thereof. He contended that the arrangement was only made by the Federal Executive Council and had nothing to do with the constitution.
The committee chairman also explained to the minister that the way he prepares the budget estimates of his ministry and submit to the National Assembly for approval is the same way he should prepare anything pertaining to sourcing of funds and submit same for approval.
At the end of the day, nobody was convicted or sentenced; and both parties back slapped each other before departing.
But the fear is that this may not be the last time this committee would find Col. Mande constitutionally wanting, as it is not the first.
The first was the establishment of the National Oil Spill Detection and Response Agency (NOSDRA) at a time the executive bill seeking the setting up of the agency was yet to be passed by the National Assembly.
However, Dr. Bamidele Ajakaye, the Director-General of the agency, told THISDAY recently that the agency had not actually been established; contending that what was done was the appointment of a director-general, to facilitate the take-off of the agency whenever it is eventually set up.
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