Kano State Government debunks rumour on interest rate figure over N9B overdraft

The Kano State Government has debunked the rumour going round that it paid N1.3 billion charges for the N9 billion overdraft it took from banks to pay state and local government workers salaries in June. The state Commissioner of Finance, Prof Kabiru Dandago who made the clarification while briefing newsmen in Kano on Thursday, said the state government paid only N10.7 million to the banks as charges.

The attention of the Ministry of Finance has been drawn to some mischievous speculations being circulated through some media houses on the overdraft facility accessed from some deposit money banks in the month of June.
“The mischief makers are speculating that the monthly cost of the facility to the state government is around N1.3 billion, totalling more than N15 billion per annum, “ he said.
He said the Ministry on behalf of state government negotiated the interest from the normal 27 per cent to 30 per cent.
According to him, the two banks that granted the overdraft charged 14 per cent and 15 per cent respectively.
The Commissioner said the state government took the facility in its commitment to ensure that salaries and pensions are paid before 25th of June, to enable the workers access their salary before Eid-el-Fitr.
He said the state government paid the charges for only three days as the Federal Government was able to remit the state share of the Federation Account three days after collecting the facility.
As you calculate 14 per cent of N4.5 billion times 3/365 plus 15 per cent of N4.5 billion times 3/365, the total amount payable will be N5.2 million plus N5.5 million is equal to N10.7 million.
“The need to pay salaries and pensions in good time in Kano state is worth much more than a monthly cost of a meager N10.7 million to people of goodwill in view of the multiple economic benefits of doing that, “he said.

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