Kano state governor, Dr. Abdullahi Ganduje, has explained that the $1.85 billion development loan obtained by the state government from China is of concessional nature on favorable terms and not meant to mortgage the future of the state, as insinuated by political detractors.
He stated that the interest on the loan will not be more than three percent while the loan has a repayment period of 15 years. According to the agreement, the Chinese Bank will give 85 percent of the contract sum while the state government is to provide the remaining 15 percent.
He made the clarification while inaugurating a 13-member committee to ensure effective implementation of the Kano Metropolitan Light Rail project, to be executed by a joint venture of China Railway 18thBureau Group Ltd and China Railway Construction Electrification Bureau Group.
The governor stated that from its improving revenue earnings, the state government realized that it can pay the 15 percent of funds required for the project, adding that the rail project will pay for itself in the long term and leave a lasting legacy for future generations.
He added that his government has decided to take the loan to finance the project because developed countries across the world resort to development financing, in the form of bank loans, to finance capital intensive developmental projects.
The governor was quoted saying that, “the rail projects in Britain Germany, France and the US were constructed with bank loans. Also, the light rail projects in Lagos, Port Harcourt and Kaduna were constructed with loans obtained from banks. Even the Lagos – Abuja – Kaduna – Kano rail project, being constructed by the Federal government is financed with a loan. Ours is not an exception, so anybody who thinks we can do it alone is economically naïve.”