Exclusive: Bala Mohammed’s Bauchi Government Took A Loan Of N15 Billion From Bank Without the Cost-Benefit Analysis the Law Requires

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Bauchi State’s projects funded by a N15 billion loan from a major Nigerian bank were physically found on the ground and judged to be of good quality by federal auditors but neither Governor Bala Mohammed’s administration nor the bank ever produced the cost-benefit analysis or compliance certificate that Nigerian law makes mandatory before the loan was disbursed, SecretsReporters can authoritatively report

The government Commission’s verification exercise centred on a N15 billion FAAC-backed facility granted to Bauchi State by the bank in January 2023, at an 11 percent interest rate over a 12-month tenor, for infrastructural development. Investigators traced the money to five identifiable project lines: the Tambar-Sabon Kaura road, the Bogoro-Lusa road, construction of a new Government House, rehabilitation of healthcare facilities across the state, and the Bakari-Kafin Larabawa road. On the ground, the team found the Tambar-Sabon Kaura Jos road and the Bogoro-Lusa-Maillar road fully completed and in use, and the Bakari-Kafin Larabawa road also 100 percent complete.

The centrepiece of the state’s infrastructure claims, the Bauchi Specialist Hospital which is a referral facility with an administrative block, physiotherapy unit, medical records library, renal dialysis unit, laboratory, radiology unit, surgical wards, a maternity ward and an accident and emergency unit was found 100 percent complete and in use, equipped with functioning dialysis machines and diagnostic equipment. On project execution, in other words, Bauchi State did not fail.

Where Bauchi failed was the paperwork the law says must come before the money

The investigators findings on compliance are unambiguous. “No evidence of cost-benefit analysis, as required by section 44(1) of the Fiscal Responsibility Act (FRA) 2007, was found before the said loan was obtained,” the Commission’s report states of Bauchi State’s borrowing.

Investigators likewise found no evidence that the Bala Mohammed administration sought or obtained compliance verification from the Fiscal Responsibility Commission before acquiring the loan, as Section 45 of the FRA mandates. Under the same section, the bank, as the lending institution, carried an obligation to demand proof of that compliance from Bauchi State before disbursing a single Naira, an obligation the record shows the bank, did not enforce.

The investigating team FRC recommended that Bauchi State obtain proof of compliance from the Fiscal Commission before any future borrowing, that future loan applications be accompanied by a cost-benefit analysis as Section 44(1) requires, and that the state domesticate the Fiscal Responsibility Act to entrench prudent management of public resources going forward.

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