Having conducted surveys on existing and proposed infrastructure across 16 local government areas domiciled in the state, with infrastructure deficit at N255 billion, the Kwara State government has launched a special intervention fund that bridges the gap over the years with joint, automatic financing.
This move was undertaken by Kwara State government in conjunction with various financial institutions and Kwara State Internal Revenue Service as part of measures to discourage abandonment of infrastructural development projects across the state, targeting capital projects worth N300 million and above.
The infrastructure fund, which is expected to commence with an accumulated N11.1 billion debt accrued on on-going capital projects in the state, will take effect in December 2016, with a commitment of initial seed fund of N5 billion and N500 million monthly contribution from the state’s internally-generated revenue through an Irrevocable Standing Payment Order (ISPO).
Speaking during the signing of a memorandum of understanding with various financial institutions at the Government House in Ilorin on Monday, Governor Abdulfatah Ahmed said the fund was launched not only to bridge the perceived infrastructure gap, but to discourage capital projects abandonment by subsequent governments.
He said, “In 2014, I approved the Kwara State Infrastructure Investment and Finance Strategy (KIIFS), as the framework for plugging the infrastructure gap of about N255 billion identified in a study conducted that year. After exploring several financing options, we opted for a modulated approach to meeting the funding required for this infrastructure.
“The purpose of the IF-K, therefore, is to pool funds for infrastructure projects, optimally leverage private sector resources for infrastructure development and channel State IGR to directly impact economic diversification and growth strategies.
“The fund will be financed through N5 billion seed fund and a N500 million monthly contribution from the state’s Internally Generated Revenue through an Irrevocable Standing Payment Order (ISPO). This implies that the money will be taken at source from the state’s Internally Generated Revenue and provides an additional layer of assurance to project partners.
“Under IFK, funds will be disbursed on a quarterly basis, and are projected to grow by N6 billion by the end of the year. In order to ensure accountability, and insulate the funds from political control, the IF-K will be managed by a reputable investment company, Investment One, which has been appointed by law as trustee for the scheme.
“I must also emphasize that we will continue to fund smaller projects through other platforms as only projects worth N300m and above will be included on the IF-K payment grid. Following today’s launch, the payment grid will commence in December, 2016 with all on-going and new projects targeted for completion by December, 2018.
“The total value of on-going project debts to be addressed through IF-K is estimated at about N11.1b. As a demonstration of faith and a token of our commitment to pay all outstanding contractor debts, we have disbursed N1.7 billion to significantly reduce current debt to contractors. The balance to be paid from IF-K is estimated at N9.4 billion.”
“Over the next 10 months, N5.8 billion will be pumped into the state’s economy via IF-K. Our expectation is that this injection will keep our project partners in business and have a positive spiral effect on employment generation.
“In the medium term, the remaining N5.3 billion of government spending will boost the state’s Gross Domestic Product (GDP) for about 18 months while sustaining the multiplier impact on job creation.”
Meanwhile, the N3.7 billion, three-phase construction of interchange diamond-split at Gerin Alimi Roundabout in Ilorin metropolis will be inaugurated today (Tuesday) by Governor Ahmed which is being undertaken as a precursor to the infrastructural development interventions launched for the North Central state.