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🇳🇬 Nigeria /Economy & Trade

Lagos Assembly approves N200bn bond, FAAC financing scheme

From The Punch · () English

Summarized and contextualized by DistantNews.

At a glance

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  • Lagos State House of Assembly approved a N200bn bond and FAAC financing scheme to fund infrastructure.
  • The FAAC program allows states to access funds by authorizing deductions from monthly allocations.
  • Lawmakers emphasized legislative oversight to ensure accountability in the use of funds.

The Lagos State House of Assembly has given the green light for the state government to raise N200 billion through a bond issuance and participate in the Federation Account Allocation Committee (FAAC) Receivables Discounting Programme. These financial maneuvers are intended to fund critical infrastructure projects across the state.

The initiative would provide Lagos with immediate liquidity to finance priority capital projects, including legislative quarters and other strategic infrastructure.

— Sa’ad OlumohChairman of the Joint Committee on Economic Planning and Budget and Finance, explaining the benefits of the FAAC program.

The approval followed the adoption of a report by the Joint Committee on Economic Planning and Budget and Finance. Committee Chairman Sa’ad Olumoh explained that the FAAC program, introduced by the Federal Government, enables states to access immediate funding for development. Under this scheme, states agree to irrevocable standing payment orders that allow the Accountant-General of the Federation to deduct specified amounts from their monthly FAAC allocations over 11 months. These deductions are then channeled into a sinking fund managed by the Debt Management Office and held by the Central Bank of Nigeria.

the FAAC facility as an advance-payment arrangement under the ISPO framework rather than conventional borrowing.

— Gbolahan YishawuChairman of the House Committee on Waterfront Infrastructure, describing the FAAC facility.

Lawmakers highlighted the benefits of the FAAC facility, with some describing it as an advance-payment arrangement rather than conventional borrowing. They stressed the importance of transparently identifying projects to be funded and ensuring the arrangement restructures funding sources without increasing the state's overall debt. Speaker Mudashiru Obasa supported the plan, noting that responsible borrowing is essential for capital projects and infrastructure development. He also assured that the utilization of the N200bn bond, which reflects increased funding needs, would be subject to legislative oversight to ensure accountability and prudent financial management.

responsible borrowing remained necessary to fund capital projects and accelerate infrastructure development.

— Mudashiru ObasaSpeaker of the House, supporting the borrowing plan.
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Originally published by The Punch. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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