the edo state government of nigeria - fmdq group...06.01.11 transfer net issue proceeds to edo state...

THIS PROSPECTUS AND THE SECURITIES THAT IT OFFERS HAVE BEEN APPROVED AND REGISTERED BY THE SECURITIES & EXCHANGE COMMISSION. IT IS A CIVIL WRONG AND CRIMINAL OFFENCE UNDER THE INVESTMENTS AND SECURITIES ACT (NO. 29 OF 2007) TO ISSUE A PROSPECTUS WHICH CONTAINS FALSE OR MISLEADING INFORMATION. THE CLEARANCE AND REGISTRATION OF THIS PROSPECTUS AND THE SECURITIES WHICH IT OFFERS DOES NOT RELIEVE THE PARTIES FROM ANY LIABILITY ARISING UNDER THE ACT FOR FALSE AND MISLEADING STATEMENTS CONTAINED HEREIN OR FOR ANY OMISSION OF A MATERIAL FACT.

THE REGISTRATION OF THIS PROSPECTUS DOES NOT IN ANY WAY WHATSOEVER SUGGEST THAT THE SECURITIES & EXCHANGE COMMISSION ENDORSES OR RECOMMENDS THE SECURITIES OR ASSUMES RESPONSIBILITY FOR THE CORRECTNESS OF ANY INFORMATION CONTAINED HEREI STATEMENT MADE OR OPINION OR REPORT EXPRESSED THEREIN.

THIS OFFER FOR SUBSCRIPTION OF FIXED RATE INFRASTRUCTURE DEVELOPMENT BONDS IS RESTRICTED TO QUALIFIED INSTITUTIONAL INVESTORS AND HIGH NETWORTH INDIVIDUALS AS DEFINED BY RULE 78 (C)(2) OF THE SECURITIES & EXCHANGE COMMISSION (SEC)

THIS DOCUMENT IS IMPORTANT AND YOU ARE ADVISED TO CAREFULLY READ AND UNDERSTAND ITS CONTENTS. IF YOU ARE IN DOUBT ABOUT ITS CONTENTS OR THE ACTION TO TAKE, PLEASE CONSULT YOUR STOCKBROKER, SOLICITOR, BANKER OR AN INDEPENDENT INVESTMENT ADVISER. THIS PROSPECTUS HAS BEEN SEEN AND APPROVED BY THE MEMBERS OF THE EDO STATE EXECUTIVE COUNCIL AND THEY JOINTLY AND INDIVIDUALLY ACCEPT FULL RESPONSIBILITY FOR THE ACCURACY OF ALL INFORMATION GIVEN AND CONFIRM THAT, AFTER HAVING MADE INQUIRIES WHICH ARE REASONABLE IN THE CIRCUMSTANCES AND TO THE BEST OF THEIR KNOWLEDGE AND BELIEF, THERE ARE NO OTHER FACTS, THE OMISSION OF WHICH WOULD MAKE ANY STATEMENT HEREIN MISLEADING. For information concerning certain risk factors which should be considered by prospective investors, see risk factors on page 77.

THE EDO STATE GOVERNMENT OF NIGERIA

Offer for Subscription

[NXX] BILLION [%] FIXED RATE INFRASTRUCTURE DEVELOPMENT BOND ISSUE 2010/2017

Issue Price: [N1, 000] per Unit

Payable in Full on Application

Offer Opens: December 31, 2010 Offer Closes: December 3, 2010

RC 261272

THIS PROSPECTUS IS DATED December 31, 2010

Lead Issuing House and Lead Book Runner

Joint Issuing Houses / Book Runners

THIS DOCUMENT IS IMPORTANT AND YOU ARE ADVISED TO CAREFULLY READ AND UNDERSTAND ITS CONTENTS. IF YOU ARE IN DOUBT ABOUT ITS CONTENTS OR THE ACTION TO TAKE, PLEASE CONSULT YOUR STOCKBROKER, SOLICITOR, BANKER OR AN INDEPENDENT INVESTMENT ADVISER. THIS PROSPECTUS HAS BEEN SEEN AND APPROVED BY THE MEMBERS OF THE EDO STATE EXECUTIVE COUNCIL AND THEY JOINTLY AND INDIVIDUALLY ACCEPT FULL RESPONSIBILITY FOR THE ACCURACY OF ALL INFORMATION GIVEN AND CONFIRM THAT, AFTER HAVING MADE INQUIRIES WHICH ARE REASONABLE IN THE CIRCUMSTANCES AND TO THE BEST OF THEIR KNOWLEDGE AND BELIEF, THERE ARE NO OTHER FACTS, THE OMISSION OF WHICH WOULD MAKE ANY STATEMENT HEREIN MISLEADING.For information concerning certain risk factors which should be considered by prospective investors, see risk factors on page 77.

THE EDO STATE GOVERNMENT OF NIGERIA

Offer for Subscription

N25 BILLION 14%FIXED RATE INFRASTRUCTURE DEVELOPMENT BOND ISSUE 2010/2017

Issue Price: 1, 000 per UnitN

Payable in Full on Application

Offer Opens: December 31, 2010Offer Closes: December 31, 2010

Lead Issuing House and Lead Book Runner

THIS PROSPECTUS AND THE SECURITIES THAT IT OFFERS HAVE BEEN APPROVED AND REGISTERED BY THE SECURITIES & EXCHANGE COMMISSION. IT IS A CIVIL WRONG AND CRIMINAL OFFENCE UNDER THE INVESTMENTS AND SECURITIES ACT (NO. 29 OF 2007) TO ISSUE A PROSPECTUS WHICH CONTAINS FALSE OR MISLEADING INFORMATION. THE CLEARANCE AND REGISTRATION OF THIS PROSPECTUS AND THE SECURITIES WHICH IT OFFERS DOES NOT RELIEVE THE PARTIES FROM ANY LIABILITY ARISING UNDER THE ACT FOR FALSE AND MISLEADING STATEMENTS CONTAINED HEREIN OR FOR ANY OMISSION OF A MATERIAL FACT.

THE REGISTRATION OF THIS PROSPECTUS DOES NOT IN ANY WAY WHATSOEVER SUGGEST THAT THE SECURITIES & EXCHANGE COMMISSION ENDORSES OR RECOMMENDS THE SECURITIES OR ASSUMES RESPONSIBILITY FOR THE CORRECTNESS OF ANY INFORMATION CONTAINED HEREI STATEMENT MADE OR OPINION OR REPORT EXPRESSED THEREIN.

THIS PROSPECTUS IS DATED DECEMBER 31, 2010


RC 261272

RC. 672560

Stanbic IBTC Bank PLC A Member of Standard Bank Group

RC125097

A MEMBER OF THE FIRST CITY GROUP

RC 446561

RC 444999

TABLE OF CONTENTS

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ABRIDGED TIMELINE ....................................................................................................................................................................3 DEFINITIONS ................................................................................................................................................................................4 PARTIES TO THE OFFER ................................................................................................................................................................7 DECLARATION BY THE ISSUER ....................................................................................................................................................12 SUMMARY OF THE BONDS .........................................................................................................................................................13 THE ISSUE...................................................................................................................................................................................16 TERMS AND CONDITIONS OF THE BONDS ..................................................................................................................................17 THE EDO STATE EXECUTIVE COUNCIL .........................................................................................................................................21 NIGERIA – AN OVERVIEW...........................................................................................................................................................27 DESCRIPTION OF THE ISSUER .....................................................................................................................................................35 UTILIZATION OF PROCEEDS ........................................................................................................................................................40 EXTRACTS FROM THE ISSUE RATING REPORT.............................................................................................................................47 EXTRACTS FROM THE ISSUER RATING REPORT...........................................................................................................................48 FINANCIAL FORECASTS...............................................................................................................................................................50

MEMORANDUM ON THE FINANCIAL PROJECTIONS........................................................................................................................50 ASSUMPTIONS ....................................................................................................................................................................................55 LETTER FROM THE FINANCIAL ADVISERS AND ISSUING HOUSES .......................................................................................................................61

HISTORICAL FINANCIAL INFORMATION – FIVE YEAR FINANCIAL INFORMATION ........................................................................62 REPORTING ACCOUNTANTS REPORT ON HISTORICALS .............................................................................................62 STATEMENT OF ACCOUNTING POLICIES ....................................................................................................................................................63 STATMENT OF CONSOLIDATED REVENUE FUND..........................................................................................................................................65 STATEMENT OF CAPITAL DEVELOPMENT FUND ..........................................................................................................................................66 STATEMENT OF CASH FLOWS .................................................................................................................................................................67 NOTES TO THE FINANCIAL STATEMENTS ...................................................................................................................................................68

RISKS & MITIGATING FACTORS ..................................................................................................................................................77 STATUTORY AND GENERAL INFORMATION................................................................................................................................79

STATEMENT OF INDEBTEDNESS .....................................................................................................................................................79 CLAIMS, LITIGATIONS & DISPUTES................................................................................................................................................79 MATERIAL CONTRACTS .................................................................................................................................................................79 EXTRACT OF THE TRUST DEED......................................................................................................................................................79 REMITTANCE TO THE SINKING FUND ..........................................................................................................................................90 CONSENTS ......................................................................................................................................................................................91 DOCUMENTS AVAILABLE FOR INSPECTION ..................................................................................................................................94 RELATIONSHIP BETWEEN THE STATE AND ADVISERS..................................................................................................................94 COST AND EXPENSES......................................................................................................................................................................94

PROCEDURE FOR APPLICATION AND ALLOCATION/ALLOTMENT................................................................................................95 APPLICATION .................................................................................................................................................................................95 PAYMENT INSTRUCTIONS ..............................................................................................................................................................96 ALLOCATION/ALLOTMENT............................................................................................................................................................96 DETAILS OF BANK ACCOUNTS.......................................................................................................................................................96

ABRIDGED TIMETABLE

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Abridged Timeline DATE ACTIVITY RESPONSIBILITY

30.12.10 Circulate Prospectus to Qualified Investors (Pre-Marketing) Issuing Houses/Book Runners

31.12.10 Offer Opens Issuing Houses/Book Runners

31.12.10 Offer Closes Issuing Houses/Book Runners

31.12.10 Determine Coupon Rate and aggregate amount of Bonds to be issued Book Runners/EDSG

31.12.10 Dispatch Allotment Confirmation Letters to successful Participants Issuing Houses/Book Runners

31.12.10 File amended/ updated Prospectus with the SEC Issuing Houses/Book Runners

31.12.10 Effect payment for Allotted Bonds to Receiving Banks Allottees / Participants

31.12.10 Completion Meeting All Parties

31.12.10 Allotment of Bonds to successful Participants Issuing Houses/Book Runners

04.01.11 File Allotment Schedule with SEC Issuing Houses/Book Runners

06.01.11 Transfer net Issue proceeds to Edo State Government Receiving Banks

06.01.11 File executed Issue documents with the SEC Issuing Houses/Book Runners

10.01.11 Receive SEC Clearance of Allotment Issuing Houses/Book Runners

12.01.11 Publish Allotment Announcement Issuing Houses/Book Runners

12.01.11 Dispatch Bond Certificates/Credit CSCS Accounts Registrars

20.01.11 [Quotation Comittee Meeting] Issuing Houses/Book Runners

24.01.11 List the Bonds on the Floor of the Exchange Stockbrokers

28.01.11 Forward Post Compliance Report to SEC Issuing Houses/Book Runners

DEFINITIONS

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Definitions “Afrinvest” Afrinvest (West Africa) Limited.

“AGF” The Accountant General of the Federation or any public officer for the time being in charge of the Federation Account in accordance with the Constitution of the Federal Republic of Nigeria.

“Allotment Date” Date on which the Bonds are allotted to successful Participants.

“Bond Issue” or “the Offer” Means the offering of N25billion 14% Fixed Rate Infrastructure Development bonds on the terms and conditions set out in this Prospectus.

“Bondholders” or “Holders” Any person(s) (individual, joint or body corporate) registered in the register established and maintained for the purpose of this Bond Issue as a holder of the Bonds.

“Bonds” The N25,000,000,000 14% Fixed Rate Infrastructure Development Bond due 2017 issued under the terms of this Prospectus.

“Book Building Process” The process, as provided under rule 78 (C) in the SEC Rules and Regulations in terms of which this Bond Issue is being made.

“Business Day” Monday to Friday excluding any day designated as a public holiday by the FGN.

“CAC” Corporate Affairs Commission.

“CAMA” Companies and Allied Matters Act Cap C20 2004, Laws Of the Federation of Nigeria.

“CBN” Central Bank of Nigeria.

“Consolidated Revenue Funds” Fund established by the State in accordance with the provisions of the Constitution and into which all revenues or other monies raised or received by the State, including statutory allocations from the Federation Account are paid; except otherwise prescribed by any law.

“Coupon” Interest to be paid on the Bonds semi-annually.

“Coupon Payment Rate” The Coupon Rate for the issue to be determined on the Pricing Date by the issuer in conjunction with the Book Runners.

“Coupon Payment Date” Six (6) months from the date of Allotment of the Bond and every six (6) months thereafter until final maturity.

“Commitment Form” or “Bid Form” The form attached to this Prospectus on the terms of which a Participant shall make an order for the Bonds.

“CSCS” Central Securities Clearing System.

“DSRF” Debt Service Reserve Fund. A dedicated fund created pursuant to the Enabling Law for the purpose of accumulating monies to make payments of principal and or interest for the Bonds of the State as further security to the ISPO.A charge on the DSRF in accordance with the terms of the Trust Deed and shall be funded from the State’s monthly IGRs. The portion that will be funded to the DSRF shall be proposed by the DMO of the State and approved by the House of Assembly, and may be up to 30% of the State’s monthly IGR.

“Enabling Law” The Edo State Bonds, Notes and Other Securities Issuance Law, 2010.

“EDSG” or “the State” or “the Issuer” Edo State Government of Nigeria.

DEFINITIONS

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“FBN Capital” FBN Capital Limited.

“FCMB Capital Markets” FCMB Capital Markets Limited.

“Federation Account” The special account set up under Section 162(1) of the Constitution of the Federal Republic of Nigeria, 1999 into which is paid all revenues collected by the FGN to be distributed among the Federal, States and the Local Government Councils in each State, on such terms and in such manner as may be prescribed by The Nigerian National Assembly.

“FGN” Federal Government of Nigeria.

“IGR” Internally Generated Revenue.

“ISA” Investments and Securities Act No 29 2007.

“ISPO” The Irrevocable Standing Payment Order dated 13th December 2010 and issued by the State’s Accountant-General to the Accountant General of the Federation for the periodic deduction of monies from the State’s statutory allocation from the Federation Account and payment thereof into the Sinking Fund held by the Trustees for the Bonds.

“Issuing Houses”/ “Book Runners” Afrinvest, FBN Capital, FCMB Capital Markets, Skye Financial, Stanbic IBTC, UBA Capital.

“LFN” Laws of the Federation of Nigeria.

“Maturity Date” The date the Bond expires in 2017 i.e. 7 years from the Allotment Date.

“PFA” Pension Fund Administrators.

“Pricing Range” The price band advised by the Book Runners within which Qualified Investors are required to make their Order.

“Participants” Any prospective Qualified Investor who participates in the Issue pursuant to the terms of this Prospectus and the Completion of the Commitment Form.

“Placement Agents” or “Receiving Agents”

Market operators authorized to receive Application Forms/Monies from investors for this Bond Issue.

“Pricing Date” The date being the Book Building Closing date on which the Issuer in consultation with the Book Runners shall determine the Coupon Rate and size of the Issue.

“Principal” The face amount of Bonds to be repaid on the Maturity date.

“Prospectus” This Prospectus dated December 31, 2010 issued pursuant to SEC Rules and Regulations and the ISA, which shall be circulated to Qualified Investors during the Book Building Period.

“Qualified Investors” The class of investors designated as eligible to participate in this Issue being Qualified Institutional Investors or High Networth Individuals as defined under the provisions of Rule 78 (C) of the SEC Rules and Regulations.

“Registrar” First Registrars Nigeria Limited.

“SEC” or the “Commission” Securities & Exchange Commission.

“Sinking Fund” Fund established by the State pursuant to the Enabling Law, ISA and Trust Deed into which contributions shall be made from deductions pursuant to the

DEFINITIONS

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ISPO and out of which shall be paid all Trustee fees and expenses, coupon payments, principal and other monies due in respect of the Bonds.

“Skye Financial” Skye Financial Services Limited.

“Stanbic IBTC” Stanbic IBTC Bank PLC.

“The NSE” or “The Exchange” The Nigerian Stock Exchange.

“Trust Deed” Means the agreement dated December 31, 2010 appointing the Trustees to manage the Sinking Fund Account/DSRF established for the purpose of the Bond Issue.

“Trustees” UBA Trustees Limited and Skye Trustees Limited appointed by the State to manage the Sinking Fund account established for the Bond Issue.

“UBA Capital” UBA Capital Limited.

PARTIES TO THE OFFER

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Issuer

The Edo State Government Edo State Secretariat Benin City Edo State

Representatives of the State Executive Council

His Excellency, Comrade Adams Aliyu Oshiomhole Governor and Chairman, State Executive Council

Rt. Hon. (Dr.) Pius Egberanmwen Odubu Deputy Governor

Hon. Pally Isumafe Obokhuaimen Iriase Secretary to the State Government

Dr. Simon Omoaka Imuekemhe Head of Service

Mr. Osarodion Ogie Chief Of Staff

Dr. Osagie Osariemen Obayuwana Honourable Commissioner for Justice & Attorney General

Mr. John Osagie Inegbedion Honourable Commissioner for Finance

Mr. Ahonsi Unuigbe Honourable Commissioner for Budget, Planning & Economic Development

Dr. Tunde Lakoju Honourable Commissioner for Agriculture & Natural Resources

Hajia Mamuna Momodu Honourable Commissioner for Women Affairs and Social Development

Mr. Clement Agba Honourable Commissioner for Lands, Survey and Housing

. Miss. Iziegbe Evbuomwan Honourable Commissioner for Youth & Sports

Mr. Victor Enoghama Honourable Commissioner for Local Government & Chieftaincy Affairs

Mr. Abdul Oroh Honourable Commissioner for Arts & Culture

Engr. Jackson Eribo Honourable Commissioner for Oil & Gas

Mr. Adodo Didi Honourable Commissioner for Energy and Water Resources

Dr. (Mrs) Ngozi Osarenren Honourable Commissioner for Education

Dr. Moses Momoh Honourable Commissioner for Health

Mr. Anselm U. Ojezua Esq Honourable Commissioner for Information & Orientation

Dr. Cordelia Aiweze Honourable Commissioner for Commerce & Industry

Barrister Lucas Okojie Honourable Commissioner for Transport

Engr. Jackson Eribo Honourable Commissioner for Oil & Gas; Commissioner Supervising Ministry of Environment

Mr. Anselm U. Ojezua Esq Honourable Commissioner for Information & Orientation; Commissioner Supervising Ministry for Works


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Auditor-General to the State

Mr. Bernard E. Aigbe Edo State Secretariat Benin Edo State

Accountant-General to the State

Mr. Isaac E. Ehiozuwa Edo State Secretariat Benin Edo State

Lead Issuing House / Book Runner

Afrinvest (West Africa) Limited 27 Gerrard Road Ikoyi Lagos State

Joint Issuing Houses / Book Runner

FBN Capital Limited 16 Keffi Street South-West Ikoyi Lagos State FCMB Capital Markets Limited 6th Floor, First City Plaza 44 Marina Lagos State Skye Financial Services Limited Plot 287 Ajose Adeogun Victoria Island Lagos State

Stanbic IBTC Bank PLC I.B.T.C. Place Walter Carrington Crescent Victoria Island Lagos State

UBA Capital Limited 6th Floor UBA House 57 Marina Lagos State

Joint Stockbrokers BGL Plc Millennium House No 12A Catholic Mission Street Lagos Island Lagos State

Partnership Investment Company Plc 37 Ademola Street Off Awolowo Road South-West Ikoyi Lagos State


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Solicitors to the Offer Udo Udoma & Belo Osagie

St Nicholas House – 10th &13th Floors Catholic Mission Street Lagos State

Solicitors to the Trustees Banwo & Ighodalo 98 Awolowo Road South-West Ikoyi Lagos State

Receiving Banks First Bank of Nigeria Plc Samuel Asabia House 35 Marina Lagos State First City Monument Bank Plc Primrose Tower 17A Tinubu Street Lagos State Skye Bank Plc 3 Akin Adesola Street Victoria Island Lagos State Stanbic IBTC Bank PLC I.B.T.C. Place Walter Carrington Crescent Victoria Island Lagos State United Bank for Africa Plc UBA House 57 Marina Lagos State

Joint Trustees Skye Trustees Limited Skye Bank Building 15th Floor 30 Marina Lagos State UBA Trustees Limited 15th Floor, UBA House 57 Marina Lagos State

Rating Agencies Global Credit Rating New Africa House, 8th Floor 31 Marina Lagos State


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Agusto & Co. Limited UBA House (5th Floor) 57 Marina Lagos State

Reporting Accountant Akintola Williams Deloitte Akintola Williams Deloitte House 235 Ikorodu Road Ilupeju Lagos State

Registrars to the Issue

First Registrars Nigeria Limited Plot 2 Abebe Village Road Iganmu Lagos State

Receiving Agents

Afrinvest (West Africa) Limited 27 Gerrard Road Ikoyi Lagos State FBN Capital Limited 16 Keffi Street South-West Ikoyi Lagos State FCMB Capital Markets Limited 6th Floor, First City Plaza 44 Marina Lagos State Skye Financial Services Limited Plot 287 Ajose Adeogun Victoria Island Lagos State Stanbic IBTC Bank PLC I.B.T.C. Place Walter Carrington Crescent Victoria Island Lagos State UBA Capital Limited 6th Floor UBA House 57 Marina Lagos State BGL Plc Millennium House No 12A Catholic Mission Street Lagos Island Lagos State


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Partnership Investment Company Plc 37, Ademola Street Off Awolowo Road South-West Ikoyi Lagos State Guaranty Trust Bank Plc Plot 1669 Oyin Jolayemi Victoria Island Lagos State Reading Investment Limited 24 Keffi Street Ikoyi Lagos State Morgan Capital Limited 3 Biaduo Street Off Keffi Street Ikoyi Lagos State Greenwich Trust Limited Plot 1698A Oyin Jolayemi Street Victoria Island Lagos State Bestworth Asset & Trust Limited 50/50 Broad Street Bestworth Suite Lagos State First Securities Discount House Limited UAC House (5th - 8th floor) 1/5 Odunlami Street Lagos State

DECLARATION BY THE ISSUER

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Declaration by the Issue

SUMMARY OF THE BONDS

13

Summary of the Bonds 1. Issuer: The Edo State Government of Nigeria

2. Description: Fixed Rate Infrastructure Development Bonds due 2017

3. Issue Size: N25Billion (Twenty Five Billion Naira Only)

4. Par Value: N1,000 (One Thousand Naira)

5. Issue Price: At par

6. Units of Sale: Minimum subscription of 10,000, units and multiples of 5,000 units thereafter

7. Tenor: 7 years

8. Bond Issue Date: December 31, 2010

9. Bond Rating: A – (Global Credit Rating)

10. Bond Maturity Date: December 31, 2017

11. Coupon Basis: Fixed Rate

12. Coupon

Commencement Date:

December 31, 2010

13. Coupon Rate: 14% per annum

14. Coupon Frequency: Semi-annual and payable in arrears on June 30, and December 31 of each year up to and including the Maturity Date

15. Day Count Convention:

Modified following business day

16. Day Count Fraction: Actual/Actual 17. Listing: An application has been made to the Council of The Nigerian Stock Exchange for the

admission of the Bonds to the Daily Official List of the Exchange

18. Method of Distribution:

Offer for Subscription by way of Book Building.

19. Qualified Investors: The Investors that are permitted to participate in this Book Building are High Net worth Individuals and Qualified Institutions as stipulated by Rule 78 (C)(2) of the Rules and Regulation of the Securities & Exchange Commission. Retail Investors are exempted from the offer

20. Issuer Rating: BBB – (Global Credit Rating) 21. Redemption/Payment

Basis: Bullet payment of Principal at Maturity

22. Security: A Sinking Fund shall be created in accordance with the provisions of the Enabling Law and the Investments & Securities Act No. 29, 2007. The Sinking Fund shall be funded by way of the ISPO and be administered by the Trustee to the Issue. The Bonds will be further secured by a charge on the DSRF in accordance with the terms of the Trust Deed and shall be funded from the State’s monthly IGRs. The portion that will be funded to the DSRF shall


14

be proposed by the DMO of the State and approved by the House of Assembly, and may be up to 30% of the State’s monthly IGR.

23. Utilisation of Proceeds:

The estimated net issue proceeds of N24,074,981,250 after deduction of N925,018,750 (representing 3.7% of the Gross Issue Proceeds) will be utilized for the repayment of existing debt obligations to Equatorial Trust Bank Limited, United Bank for Africa Plc and Skye Bank Plc and Finbank Plc banks. The balance of the proceeds will be used to part finance on-going infrastructural projects within the State (see below)

(Please refer to page 40 for the full breakdown of the use of proceeds)

24. Summary of Claims and Litigations:

The Solicitors’ enquiries revealed that the State is currently involved in 18 pending suits that involve claims against the state in the sum of N5,000,000.00 or more. The Solicitors have assessed that the State’s potential financial liability in such number of these cases as involve monetary claims that have merit, is in the region of N1,084,837,220.99 (one billion and eighty-four million, eight hundred and thirty-seven thousand, two hundred and twenty Naira, and ninety-nine Kobo), excluding interest calculated from the date the judgment is given until the judgment is satisfied. The Solicitors are of the view, however, that none of these cases should materially affect the ability of the State to discharge its repayment and interest payment obligations in respect of the Bonds.

25. Underwriting: The Bond Issue will not be underwritten at the instance of the Issuer

26. Governing Law: The Laws of the Federal Republic of Nigeria

27. Security Trust Structure:

Security for the repayment of principal and coupon in relation to the Bond Issue shall be held by the Trustee and shall comprise the ISPO issued by the Office of the Accountant General of the Federation as a first line charge upon and payable out of the Statutory Allocation of the State. A Sinking Fund will be established into which a monthly deduction of N520,000,00.00 from the State’s ISPO will be funded into this account. The Bonds shall be further secured by a charge on the Debt Service Reserve Fund that will take effect from January 2011 and will be funded from the State’s monthly IGRs. The portion that will be funded to the DSRF shall be as proposed by the DMO of the State and as approved by the House of Assembly, and may be up to 30% of the State’s monthly IGR.

28. Final Redemption Amount:

N25,000,000,000.00

29. Status of the Bonds: The Bonds qualify as securities in which Pension Fund Administrators may invest under the Pension Reform Act, Cap P4, LFN 2004; and

The Bonds qualify as securities in which Trustees may invest under the Trustees Investment Act Cap T22 LFN 2004 subject to the listing of the Bonds on the Nigerian Stock Exchange.

The tenor of the Bonds shall be for 7 years, with a coupon rate of 14% and will be redeemable on December 31, 2017.

30. Sinking Fund: A Sinking Fund will be created in accordance with the provisions of the Bond Law and the ISA. The Sinking Fund shall be principally funded from the Statutory Allocation by way of the ISPO and shall be administered by the Trustees.


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31. Fee Consideration: Registration, transfer, coupon interest payments, principal repayment, issue of certificates of title and certifications of transfers of bonds will be made and will only accrue fees, duty, charges, deductions or levy to extended required by law.

32. Tax Considerations: The Bonds are exempted from taxation in Nigeria. As such, all payments made to Bondholders shall be free and clear of Withholding, State and Federal Income and Capital Gains Taxes with no deductions whatsoever being made at source.

33. Delivery:

Investors’ respective CSCS accounts will be credited electronically upon allotment. Investors are required to provide their CSCS account number and their Clearing House Number (“CHN”) on the commitment form.

34. Bonds Settlement: Bond purchases will be settled by electronic funds transfer; the CBN Inter-bank Funds Transfer System (CIBFT), Nigerian Inter-bank System Electronic Transfer (NEFT) or Real Time Gross Settlement System (RTGS)

35. Currency of Payment:

Nigerian Naira.

THE ISSUE

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THE ISSUE A copy of this Prospectus and the documents specified herein has been delivered to the Securities & Exchange Commission for clearance and registration.

This Prospectus is being issued in compliance with the provisions of the Investments and Securities Act No. 29 2007, the Rules and Regulations of the Commission and the Listing Requirements of The Exchange and contains particulars in compliance with the requirements of The Commission and The Exchange for the purpose of giving information with regard to the N25 Billion 14% Fixed Rate Infrastructure Development Bond 2010/2017 by the Issuing Houses specified therein on behalf of the Edo State Government of Nigeria.

The Issue Price is 100% of the Par Value of the Bonds. The Coupon on the Bonds will be payable semi-annually in arrears in equal installments at the rate of 14% per annum six months from the Allotment Date of the Bond for each year till the Maturity Date of the Bonds. Payments of Principal and Coupon on the Bonds will be made without withholding or deductions for or on account of any Federal and State income and capital gains taxes in the Federal Republic of Nigeria. An application has been made to the Council of The Exchange for the admission of the Bonds to the Daily Official List (Bonds) of the Exchange.

The Edo State Executive Council collectively and individually accepts full responsibility for the accuracy of the information contained in this Prospectus and have taken reasonable care to ensure that the material facts contained herein are true and accurate in all respects and confirm, having made reasonable enquiries that to the best of their knowledge and belief there are no other material facts, the omission of which would make any statement herein misleading and untrue.

Lead Issuing House / Book Runner

RC 261272


On Behalf of

THE EDO STATE GOVERNMENT OF NIGERIA Offer for Subscription

N25 BILLION 14% FIXED RATE INFRASTRUCTURE DEVELOPMENT BOND ISSUE

2010/2017 Issue Price: N1, 000 per Unit

Offer Opens: December 31, 2010 Offer Closes: December 31, 2010

Statement of Indebtedness: As at December 2009, the total loans and overdraft of the State was N21,420,528,000 (Twenty One Billion, Four Hundred and Twenty Million, Five Hundred and Twenty Eight Thousand Naira) Other than as stated above, the State has no outstanding debentures, mortgages, loans, charges or similar indebtedness other than in the ordinary course of governance.

TERMS AND CONDITIONS OF THE BONDS

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Terms and Conditions of the Bonds The following are the Terms and Conditions applicable to the Bonds. I. THE BONDS

The Issuer of the Bonds is the Edo State Government of Nigeria. Pursuant to Section 5 of the Law, the State House of Assembly has authorised the borrowing of monies by way of the issue of Bonds. The Trustees shall act for the benefit of the Bondholders (which expression shall mean the several persons whose names are entered in the register of holders of the Bonds (the “Register”) as the holders thereof in accordance with the provisions of the Trust Deed. The Bondholders are deemed to have notice of, and are entitled to the benefit of, all the provisions of the Trust Deed, and other transaction documents which are applicable to them. The statements in the Prospectus include summaries of, and are subject to, the detailed provisions of the Trust Deed.

Words and expressions defined in the Trust Deed or used in the Prospectus shall have the same meanings where used in these Terms and Conditions unless the context otherwise requires or otherwise stated herein, provided that, in the event of inconsistency between the Trust Deed and the Prospectus, the Trust Deed will prevail.

I. Minimum Participation on Bond

The minimum participation in the Bond shall be 10,000 units of the Bond, being N10,000,000, and further multiples of 5,000 units thereafter.

II. Form and Title

The Bonds will be issued in registered form.

Bonds issued, will have the right of survivorship in accordance with the provisions of the ISA.

Organizations or trusts which are not incorporated should complete their application in the full name(s) of the partner(s) or trustee(s). No notice of any trust in respect of any Bonds will be entered in the register or receivable by the Registrar.

III. Status

The Bonds issued, constitute direct obligations of the Issuer. The Bonds qualify as securities in which Trustees may invest under the Trustees Act and as “Government Security”, for purposes of tax exemption. The Bonds qualify as securities in which Pension Fund Administrators may invest under the Pension Reform Act and the Regulations on Investment of Pension Fund Assets issued by the National Pension Commission.

IV. Transfer of Bonds

a. The Bonds shall be transferable, subject to the provisions for registration of transfers thereof

contained herein or on the Bond Certificates.

b. The Issuer shall cause the Register to be maintained at the offices of the Registrar and the Registrar shall provide for the registration of any Bonds or its transfer under such reasonable regulations as the Registrar with the approval of the Issuer and the Trustees may prescribe.

c. Any transfer of Bonds shall be effective only to the extent that such transfer is registered in the

Register, by the Holder in person or by his attorney duly authorised in writing, upon presentation and surrender of the Certificate together with a written instrument of transfer in a form satisfactory to the Registrar and the Trustees duly executed by or on behalf of the registered Holder and the transferee or by their attorneys duly authorised in writing. Upon surrender of the aforesaid documents to facilitate the registration of transfer of any Bonds, the Registrar shall if the above


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stated conditions are met, register such transfer, and deliver a new Certificate(s) to the transferee as appropriate.

d. The transfer of Bonds in dematerialized or immobilized (book entry) form shall be regulated by the

CSCS procedures and guidelines.

e. No Holder may require that the transfer of a Bond should be registered during a period of 21 (twenty one) days immediately preceding a Coupon Payment Date and the Register of the Holders shall be closed during this period (“the Record Date”).

PAYMENTS

a. Coupon on the Bonds shall accrue from the Allotment Date and payments will be made to those persons whose names appear (or to the first Holders in the case of joint Holders) in the Register on the Record Date.

b. Subject to Condition 3 (Taxation), any principal, interest or other moneys payable on or in respect of

any Bonds may be made by the Trustees through the Registrar by cheque or warrant sent through recorded delivery post to the registered address of the Holder or person entitled thereto, or in the case of joint holders to the registered address of the joint holder who is first named on the Register in respect of such Bonds, or to such person and to such address as the Holder or holders may in writing direct. Provided that any payment of value above N10,000,000.00 (Ten Million Naira) shall be made through electronic payment transfer by credit into the specified bank account specified by the Holder. Provided that where a Holder has not provided a specific bank account, the Issuer shall withhold amounts above N10 Million until a bank account is specified in writing by the Holder and the Holder shall not be entitled to any further Coupon or other payment in respect of any such delay.

c. The Holder shall be the only person entitled to receive payments in respect of Bonds and the Issuer

will be discharged by payment to, or to the order of, the Holder, in respect of each amount so paid, or in the case of joint Holders, the first-named joint Holder. Every such cheque or warrant shall be sent at the risk of the person entitled to the moneys represented thereby. However, upon application or notification by the Holder to the Registrar or the Trustees not less than 15(fifteen) days before the due date for payment, such payment may be made by transfer to a designated account (denominated in naira) maintained by the payee with any Nigerian bank as notified to the Registrar.

d. If the due date for payment of any amount in respect of the Bonds is not a Business Day, then the

Bondholder thereof shall not be entitled to payment of the amount due until the next following day unless the day falls on in the next calendar month, in which case the due date will be the first preceding day that is a Business Day, and the holder shall not be entitled to any further Coupon or other payment in respect of any such delay. For the purpose of this Condition, “Business Day” means any day on which banks are open for business in the Federal Republic of Nigeria, and in the case of transfer to or from an account held by a non-resident investor, in the place where such bank account is maintained.

TAXATION

All payments of principal, Coupon and any other sum due in respect of the Bonds shall be made free and clear of, and without withholding or deduction for any taxes, duties, levies and assessments or any other governmental charges of whatsoever nature imposed, levied, collected, withheld or assessed by the Federal Government of Nigeria or any political subdivision or any authority thereof having power to tax.


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SECURITY/REPAYMENT STRUCTURE

The Trust Deed provides that the Bonds will be payable from a Sinking Fund to be created and managed by the Trustees for the benefit of the Bondholders. The Sinking Fund shall be funded through an ISPO, pursuant to which upfront deductions will be made by the AGF on a monthly basis from the State’s share of the Federation Account. The Bonds are further secured by a charge on the DSRF and the Consolidated Revenue Fund in accordance with the terms of the Trust Deed.

EVENTS OF DEFAULT AND REMEDIES

An event of default (“Event of Default”) shall be triggered if the Issuer amongst others, fails to pay or fails to cause to be paid, when due, Coupon or Principal amount of the Bonds. The Trust Deed sets out detailed Events of Default and remedial procedures available to the Trustees acting on behalf of Bondholders.

COUPON AND COMPUTATION

a. Coupon Rate

The Coupon rate payable on the Bonds shall be 14% fixed rate per annum (“Coupon Rate”) and shall be determined as follows:

Coupon Payment = Principal Amount of Bonds x Coupon Rate 2

The Trustee shall apply the monies in the Sinking Fund for Coupon payments to the Holders on the Coupon Payment Dates.

b. Period of Accrual of Coupon

The Bonds shall accrue Coupon from (and including) the Allotment Date. Coupon will cease to accrue on the Bonds on the due date for redemption thereof unless upon due presentation thereof, payment of principal is improperly withheld or refused. Any overdue principal of the Bonds will continue to bear interest at rates determined by the Issuer in conjunction with the Trustee acting on behalf of Bondholders.

c. Coupon Payment Dates

Coupon is payable in arrears on June 30 and December 31 in each year that the Bonds remain outstanding. The first Coupon Payment Date shall be 6 months from and including the Allotment Date. If the Coupon is required to be calculated for a period of less than one year (other than a semi-annual period), it will be calculated on the basis of the actual number of days in the month divided by the actual number of days in the year and in the case of an incomplete month, the number of days elapsed.

FEES

The registration, transfer, interest payments, principal repayment, issue of certificates of title and certifications of transfers of Bonds will be made free of any fees, duty, charges, deductions or levy, except to the extent required by law.


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REDEMPTION

The Bonds will be redeemed at their Principal Amount plus accrued but unpaid Coupon on the Maturity Date. Holders of the Bonds in certificated form shall be required to surrender the Bond Certificates evidencing their beneficial ownership to the Registrar for proper identification/authorisation. For Bonds issued in dematerialised form, CSCS shall be required to transfer the final position from Bondholders’ CSCS accounts to the Registrar. Upon the determination and verification of the beneficial ownership, the Registrar will repay the Par Value of the Bonds plus Coupon accrued but unpaid from the last Coupon Payment Date. The proceeds of such redemption will be credited to the bank account indicated by the Bondholder by the Registrar acting on behalf of the Issuer and the Trustee, or where bank accounts are not provided for this purpose, redemption warrants shall be sent by registered post to the address of record of such Bondholder.

NOTICES (a) Notices to the Holders, Issuer and Trustees

All notices to be given by the Issuer, Trustees or Registrar to the Holders will be valid if mailed by pre-paid letter to them at their respective addresses of record in the Register. Any notice, or other communication may be given to the Trustees hereunder by sending the same through the post in a prepaid letter addressed to the Trustees at their registered offices in Nigeria. Any notice, or other communication may be given to the Issuer by sending the same through the post in a prepaid letter addressed to:

The Honourable Commissioner for Finance and Economic Development Ministry of Finance and Economic Development Edo State Secretariat, Sapele Road Benin City Edo State The Issuer shall also ensure that notices are duly given or published in a manner which complies with the SEC Rules and the rules and regulations of the Nigerian Stock Exchange. Any notice shall be deemed to have been given on the second day after being so mailed or on the date of publication in national newspapers, or if published more than once or on different dates, on the date of the first publication.

(b) Notices from the Holders

Notices to be given by any Holder shall be in writing and given by lodging the same, together with the relative Certificate (if any), with the Registrar.

THE EDO STATE EXECUTIVE COUNCIL

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REPRESENTATIVES OF THE EDO STATE EXECUTIVE COUNCIL

The State has an Executive Council, which comprises the State Governor, the Deputy Governor, the Secretary to the State Government, the Commissioners, the Head of Service and such other government officials as are invited into the Executive Council by the Governor.

The profiles of some key representatives of the State Executive Council are provided below:

Comrade Adams Aliyu Oshiomhole is the Executive Governor of Edo State. He majored in Economics and Industrial Relations at Ruskin College, Oxford (1978 to 1981). He is an alumnus of the prestigious National Institute for Policy and Strategic Studies, Kuru (1992). In 1969 before his tertiary education, he took up an appointment with the Arewa Textiles Company and played an active role in the union. Oshiomhole's other colleagues in the textile factory elected him as the union secretary after a shop-floor revolution, which he helped to organize and he became a full time union trade organizer in 1975. In 1982, Adams Oshiomhole was appointed General Secretary of the National Union of Textile Garment and Tailoring Workers of Nigeria representing over 75,000 workers. He became a major catalyst in the Nigerian Labour Congress (NLC) and with the restoration of democracy to Nigeria in 1999, became the 4th president of the NLC. Oshiomhole led the NLC to resist arbitrary increases in the prices of petroleum products. He personally led the strikes, demonstrations and protests, which decisively helped to moderate the serving President’s Administration on its harsh fuel pricing policy and other social and economic policies. In 2006, the Ambrose Alli University, Ekpoma awarded him an honorary doctorate of law degree. He has represented African workers for two terms on the governing body of the International Labour Organization (ILO). He served on the committee of Freedom of Association of the ILO, the only international tribunal on workers' rights issues and has been on the Executive Board of the International Confederation of Free Trade Unions as well as the Executive Board of the African Regional Organization of the International Confederation of Free Trade Unions. In 2008, Oshiomhole ran a successful campaign for the governorship of Edo State and on November 12, 2008, he was formally sworn into office.

Rt. Hon. (Dr.) Pius Egberanmwen Odubu (B.L) is the Deputy Governor of Edo State. He is a Barrister and Solicitor of Law at the Supreme Court of Nigeria. He moved to the USA in 1977 to further his studies and attended Philander Smith College, Arkansas (1978); Southern University, Louisiana (1980); Southern University School of Law, Louisiana (1983); and Georgetown University Law Centre, Washington D.C. and obtained a B.A. (Hons) in Political Science, Doctor of Jurisprudence Degree in Law and a Master of Law in International and Comparative Law in the process. He returned to Nigeria in 1985 and was called to the Nigerian Bar in October, 1986. He is the recipient of several honours and scholarship awards including being the first non-American to hold several positions at Southern University including becoming a member of the Board of Editors of the Southern University Law Review, a member of the Southern University School of Law Moot Court Board and managing editor of the Southern University Law Review. Mr. Pally Isumafe Obokhuaimhe Iriase is the Secretary to the Edo State Government. He holds a diploma in Forestry (1st Class) from Federal School of Forestry, Jos, (1975), a Bachelor's degree in Accountancy (2nd Class Upper) from the University of Nigeria, Nsukka (1982), and a Master's degree also in Accountancy from the University of Lagos (1988). He is an associate member of the Institute of Management (1989) and also a member of the Institute of Chartered Accountants of Nigeria (1991) and was the Chairman, Committee of Heads of Internal Audit Departments in Nigerian Universities (1991/1992 session). He worked as an Internal Auditor at the Bendel State


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University, Ekpoma (1986) (Now Ambrose Alli), and was Head of Internal Audit at the same University (1992). He was also a Principal Manager, and later Assistant Controller at Owena Bank (now merged into Springbank) (1998), Deputy Speaker, Edo State House of Assembly (2003), Chairman; Owan East Local Government, Edo State (2004 – 2007) Chairman of the Association of Local Governments of Nigeria (2004 to 2007) and National Vice-President of Association of Local Governments of Nigeria (ALGON) (2007). He is also the Chairman, Otuo Microfinance Bank, Otuo (2007 till date). He was appointed Secretary to the State Government on 12th November 2008.

Mr. John Osagie Inegbedion is the Honourable Commissioner for Finance. He graduated from Edo State University Ekpoma with a B.Sc. in Accounting (1995) and later from the University of Benin with a Masters in Banking & Finance (2005). He is an associate member of the Institute of Chartered Accountants of Nigeria (2000). He started his career in 1997 at Standard Trust Bank Plc in the Internal Control Unit before joining the Branch operations division of the Bank (2000). He then joined Oceanic Bank Plc where he was head, Branch operations, Warri (2001) and left as the Head, Credit and Marketing in April 2004. He was Head, Credit and Marketing at Skye Bank Plc from April 2004 to December 2005 and rose to Senior Manager, Business Development with the Bank from April 2004 to January 2009. He was appointed Commissioner for Finance in January 2009.

Mr. Ahonsi Unuigbe is the Honourable Commissioner for Budget, Planning and Economic Development. He attended the University of Sussex in England, where he received a BA (Hons.) in Economics (1997). He has an MSc in Investment Banking and International Securities from the ISMA Centre in Reading, England (2000). He worked with Citigroup, Corporate and Investment Banking Division from September 2000 to September 2004. Mr. Unuigbe was a political appointee in the previous Nigerian government administration, serving as Special Assistant to the Minister of Finance (September 2006 – May 2007), as part of the team that successfully concluded Nigeria’s exit from the London Club of creditors. Prior to his appointment, he was a General Manager at Stanbic IBTC Bank PLC. (a member of the Standard Bank Group), where he headed the Government & International Organizations Group (May 2007 to January

2009), primarily responsible for managing the bank’s public sector relationships. Mr. Unuigbe was a 2008 Recipient of the Archbishop Desmond Tutu Leadership Fellowship Award.

Mr. Osarodion Ogie is the Chief of Staff of the Edo State Government.. He graduated from University of Ife (now Obafemi Awolowo University) Ile-Ife in 1985 with a Bachelor of Law degree; he was called to the Nigerian Bar in 1986. Between 1987 and 2008, Mr. Osarodion was the Principal Partner in the Law Firm of Osarodion Ogie & Co. Until his current appointment as Chief of Staff of Edo State Government, he was the Secretary to the Oshiomhole Campaign Organization, member of the Governing Board of Eghosa Grammar School, Benin City, Member State Universal Basic Education from 2007 - 2009. He is an award winner of the prestigious Oba of Benin merit award of 2007.


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Dr. Simon Omoaka Imuekemhe is the Head of Service of the Edo State Government. He attended the University of Ibadan where he obtained a Bachelor of Medicine, Bachelor of Surgery (MBBS) in 1980. He became a fellow of the West African College of Physician (Paediatrics) in 1987 and a Fellow of the Nigerian College of Physicians (FNMCP) in 1988. He has held with distinction, several positions in public service Head of Paediatrics of General Hospital, Sapele, 1988-1991, Permanent Secretary/Chairman of the Board of Internal Revenue (October 2000 to May 2005), Chairman, Oredo Chapter of Nigerian Institute of Management (2005 till date), Secretary General of the Commonwealth Association of Mental Handicap and Development Abnormalities (West African Branch), (1988-1994) and Chairman of the Joint Committee of Joint Tax Board and Federal Road Safety Commission, (2003-2005). Dr. Imuekemhe has several honourary awards including, the Justice of Peace, Edo State, a merit award by the National Association of Resident Doctors, University of Benin Teaching Hospital. He is also a Fellow of the Nigerian Institute of Management amongst several other professional bodies. He was appointed Head of Service in May 2005.

Mr. Adodo Didi is the Honourable Commissioner for Energy & Water Resources. He is a Labour Party Chieftain who holds a degree in Political Science from the University of Benin (1987). He was the Deputy General Secretary of the Senior Staff Association of Nigeria in 1998 and later the Deputy General Secretary, Congress of Free Trade Unions (2007) where he was responsible for the creation of sector based projects, with a focus on the agricultural sector, developing micro financing and a health insurance scheme for its members. He joined the current administration in 2009 as the Honourable Commissioner for Lands, Survey & Housing and was appointed the Honourable Commissioner for Energy & Water Resources in 2010. He is a member of the Nigerian Industrial Relations Association.

Dr. Ngozi Osarenren is the Honourable Commissioner for Education. She is a graduate of the University of Calabar where she obtained a BA.(Hons) (1986) and also obtained a PhD in Guidance and Counselling in 1990 from the same institution. She was appointed the Chairman of the Postgraduate Committee in 1997 and reassumed the post in 2003. She was a Visiting Professor, Department of Psychology and Education, University of Education, Winneba, Ghana for the 2005/2006 academic year. Dr. Osarenren has authored numerous books enhancing guidance counselling education and its values. Some of these books include the “Fundamentals of Practicum in Guidance and Counselling” (2007) and the “Child Development and Personality” (2005). She is a Member of Counselling Association of Nigeria, the Nigerian Association of Counselling and Consulting Psychologists and the American Counselling Association amongst others. She was appointed the Commissioner for Education in 2009.

Dr. Moses Momoh is the Honourable Commissioner for Health. He is a Medical Doctor and an associate professor and consultant in the Department of Surgery, University of Benin. He attained his medical degree from the University of Benin (1973 - 1979), where he completed his residency training. He later distinguished himself as a renowned practitioner in healthcare planning, consulting and advisory, hospital management, clinical practice and research at the hospital for 27 years. He is a fellow of the West African College of Surgeons (1993) and the International College of Surgeons (1996). Dr. Momoh was appointed Commissioner of Health for Edo state (2009) where he works towards ensuring that adequate healthcare needs are accessible to all indigenes of the State.


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Dr. Osagie Osariemen Obayuwana is the Attorney General and Commissioner for Justice. He is the Chairman, Human Rights Committee, Nigeria Bar Association and National Chairman, National Conscience Party. He was also Vice President, Committee for Defence of Human Rights. He attended Alabama A&M University, USA where he obtained a B.Sc Accounting, Summa Cum Laude (1975-1977) and University of California, Los Angeles School of Law with a Doctorate in Jurisprudence (1978 to1981) before he attended the Nigerian Law School, where he obtained his BL in 1988. He was an attendant of National Health Enterprises, Huntsville, Alabama, USA; Staff Adviser, Office of International Students and Scholars, University of California, Los Angeles, USA; Staff Counsel, Law Firm of Davis & Parks, Los Angeles, Edo State office of Chief Gani Fawehinmi Chambers (1989 – 1992), and C. N. Nsobundu & Co, Legal Practitioners, Edo.

Dr. Tunde Lakoju is the Honourable Commissioner for Agriculture and Natural Resources. He obtained a B.A in Education from the Obafemi Awolowo University, Ile-Ife (1974), a Masters degree in Education from the Ahmadu Bello University, Zaria (1982), a Ph.D from the University of Wales, Cardiff, United Kingdom (1985), and an LL.B from the Ahmadu Bello, University, Zaria (1991). He attended Cambridge College Boston Massachusetts, U.S.A where he obtained a certificate in Comparative Education (2002). He also attended Nigerian Law School, Bwari, Abuja in 2004. He is a grassroots politician and was a member, Federal House of Representatives, representing Akoko-Edo Federal Constituency during the first dispensation of the democratic era; 1999-2003. He has held several positions including Pioneer Director of Planning, Research and Statistics (1993), Data Management and Publications Unit (1998), Special Adviser to the Hon. Minister of Education, Federal Ministry of Education (1995).

Hajia Maimuna Momodu is the Honourable Commissioner for Women Affairs and Social Development. She attended the College of Education Warri (1987 – 1990) and the University of Benin (1995-2000) where she obtained a Bachelors degree in Adult Education (Second Class Upper Division). She obtained a Diploma in Desktop Publishing from the Vienna College of Computer and Business School, Benin City (2008). She began her professional career in 1989 and was a Teacher at the Delta Steel Co. Technical High School, Warri. She was a Master Grade III classroom teacher at the Ugioma Secondary School (1997) and a Master Grade II teacher at the Oba Ewuare Secondary School, Benin City (2003). She later became self employed and a partisan politician in 2003. She served as the Public Relations Officer, Federation of Muslim Women Association in Nigeria, Edo State Chapter (1998- 2002) and was appointed as the Financial Secretary for FOMWAN in 2003 and subsequently made Secretary General of the Association in 2007. She is currently the National Adviser for the Prisons Officers Wives Association. She was appointed as Commissioner for Women Affairs and Social Development in 2009.

Mr. Clement Agba is the Honourable Commissioner for Environment and Public Utilities. He attended the then Bendel State University, now Ambrose Alli University, Ekpoma, and graduated with honours in Economics in 1985. He started his career as an NYSC Corper with Shell, Port Harcourt between 1985 and 1986 shortly after which he worked with Pegasus Industries, Lagos as a Production Supervisor. He then moved to Super Engineering Ltd, Ikorodu, as Operations Manager. From Super Engineering Ltd, he joined the Gulf Oil Company, now Chevron Nigeria Limited. He obtained an MBA in Business Administration from the University of Benin (1995). He then was seconded to the Chevron Oil Corporation in Houston (1996). Afterwards, he attended the Arizona State University, USA, where he obtained another MBA with a focus in Supply Chain Management (2006). He was then seconded again in 2006 to Kazakhstan,


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Chevroil Tengiz to run a logistic chain managing 1,600 people and a budget of over approximately $1 billion. He is also a member of the Edo State Economic team.

Miss Iziegbe Evbuomwan is the Honourable Commissioner for Youth and Sports. She holds a Bachelor's degree in Industrial Physics from the University of Benin (2002). She has a Diploma in Computer Studies from the Knightgold Computer School in Port-Harcourt (2004) and a Masters degree in Exploration Geophysics (2005) from the University of Benin. She was an Assistant lecturer in the Physics Department of the Ambrose Alli University, Ekpoma (2007). Prior to her appointment to the Executive Council of the State, she served in various companies in the private sector. She was appointed Commissioner for Youths & Sports in January 2009. Mr. Victor Enoghama is the Honourable Commissioner for Local Government & Chieftaincy Affairs. He was educated at the Kean University, New Jersey, USA where he obtained a B.Sc. in Computer Science (1999). He began his career as a medical technician with Pinkerton Services, Springfield, U.S.A (1994 - 2001) from where he moved to the Supreme Court of New Jersey Essex, U.S.A where he served as a Judiciary Clerk (2001 - 2003). In 2003, he joined Afribank Nigeria Plc as an Executive Personnel. Mr Enoghama is a grassroots politician and former Oredo Local Government Transition Committee Chairman (2007). He was the former Managing Director, Vicdalene Enterprises Nigeria Limited, and Founder/Managing Director, Erumagbe Aid Foundation both in Benin City, Edo State.

Mr. Abdul Oroh is the Honourable Commissioner for Arts, Culture & Tourism. He holds a Diploma in Journalism from the Nigerian Institute of Journalism, Lagos (1983), a Diploma in Law from the Lagos State University Ojo (1995). He is a graduate of Mass Communication from the University of Leicester, England where he obtained a Masters Degree. He has an LLB degree from Lagos State University, Ojo and attended the Nigerian Law School, Bwari Abuja where he obtained his LB (2008). An alumnus of the prestigious Nigerian Institute of Journalism, Lagos, he was a member of the House of Representatives, in 2003 - 2007 when he represented Owan East Federal Constituency. He served and worked with several media houses such as the Guardian newspaper (1983 - 1987), Thisweek Magazine (1987 - 1988), The Vanguard Newspaper, Lagos (1989) and The African Guardian, Lagos (1989 - 1992). He was, until his appointment, a Counsel at Ricky Tarfa & Company chambers, Abuja (2008). During Abdul Oroh’s assignment at the House of Representatives, he was the Deputy Chairman, Human Rights Committee; Member, House Committee on Army, Police, Judiciary, Justice, Information, Media and Public Affairs; Member, House Ad hoc committee on Review of the Police Act; Chairman, Ad hoc Committee on Freedom of Information Bill; Member, Commonwealth Parliamentary Association working group on Freedom of Information Legislation; Member, Presidential Committee on Prisons Reform and Member, National Assembly Conference Committee on the harmonization of the Freedom of Information Bill.


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Engr. Jackson Eribo is the Honourable Commissioner for Oil and Gas, Edo State. He holds a Diploma in Civil/Building Engineering from Auchi Polytechnic (1978) and a Bachelor's Degree in Civil Engineering from the Southern University, Baton Rouge, U.S.A (1988). He is a member of the Nigerian Society of Engineers (1997). He started his career as a building site supervisor with Bumates Nigeria Limited, Benin City where he supervised the technical activities of the University of Benin Teaching Hospital’s construction site (1973 - 1975), he also served as a reinforced concrete quality officer with the then Bendel State Water Board (1977). He worked with the Ministry of Works and Transport, Benin City as a Civil Technical Officer and was a Civil Engineer with the project monitoring Directorate, OMPADEC (1993 - 2000). He has attended several courses in engineering and management training. Mr. Eribo worked in different capacities in the Edo State government showing his diligence and capacity working in the Ministry of Works and Special Duties. Mr. Eribo is also the Supervising Commissioner for the Ministry of Environment.

Mr. Anselm U. Ojezua Esq is the Honourable Commissioner for Information & Orientation. He attended the University of Nigeria Enugu Campus and the Nigerian Law School in Lagos from where he acquired his educational and professional qualifications culminating in his obtaining a bachelors degree in law in 1980 and was called to Bar of the Supreme Court of Nigeria in 1981. Soon after the mandatory participation in the National Youth Service Corps Scheme, he forayed into partisan politics in 1982 when he was appointed the Special Assistant to the National Secretary of the National Party of Nigeria (NPN). Since then, he has served in various capacities in the Public Service including as Deputy Chief of Staff and Honourable Commissioner for Youth and Sports in Edo State. In the present administration, he served as the Chairman of the Edo State Post Primary Education Board from where he was appointed to serve again as Commissioner for Information and Orientation. Mr. Anselm is also the Supervising Commissioner for the Ministry of Works. Dr. Cordelia Aiweze is the Honourable Commissioner of Commerce & Industry. She obtained a Bachelors Degree in Dental Surgery from the University of Benin (2000). She started her professional career at the University of Benin, Teaching Hospital where she commenced her housemanship and residency training (2000-2001). She later joined the Military Base Hospital Benin City from 2002-2003 for her National Youth Service program. She attained a Masters in Health Planning and Management (MHPM) from the University of Benin in 2005. She then moved to Faith Medical Hospital, Benin City, until 2007, She was appointed the Honourable Commissioner for Commerce and Industry in 2010. Hon. Lucas Okojie is the Honourable Commissioner for Transport. He started his academic career in Government Primary School Uromi, Ishan Grammar School Uromi (1969) and Institute of Continuing Education Benin City (1979). He proceeded to University of Ife, Ile-Ife where he obtained an LL.B in 1984 and went to Nigeria Law School, Lagos in 1985. He started private legal practice in 1986 and was appointed as the vice-chairman of the Nigeria Bar Association, Ekpoma Branch (2001 - 2003). He served as a member of the Edo Sate Law Review Commission between 2002 and 2008. After this assignment, he reuturned to private legal practice in 2009. He was appointed again to serve as a Commissioner for Transport during the present administration in 2010.

NIGERIA- AN OVERVIEW The information in this section has been extracted from documents and publications publicly available in various public and private organizations such as the CBN, the Economic Intelligence Unit (EIU) , the World Bank, International Monetary Fund, Nigeria Bureau of Statistics, other financial magazines and journals. Neither the Issuer nor the advisers are able to ascertain if facts have been omitted that would render the reproduced information inaccurate or misleading

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INTRODUCTION Nigeria – An Overview The Federal Republic of Nigeria is situated in the west sub-region of Africa and is bordered to the north by the Republic of Niger and to the west by the Republic of Benin. It shares its eastern borders with the Republic of Cameroon and Chad right down to the shores of the Atlantic Ocean forming the southern limits of the Nigerian Territory. The capital, Abuja, is located in central Nigeria, but Lagos, which is situated in the south west, is the principal commercial centre and main port in Nigeria, whilst the official census figures put the population at over 140 million, the population was estimated to have reached approximately 160 million people by the end of 2009, making Nigeria the most populous country in Africa. The country covers an area of approximately 923,768 square kilometres. Topography and vegetation vary considerably, and includes swamps and tropical rain forest in the south, savannah and open woodlands in the central part of the country, while the northern part of the country borders the Sahara Desert. Due in part to Nigeria’s multi-ethnic and multi-religious population, the country has experienced numerous political changes since independence in 1960. Widespread poverty, environmental issues and ethnic and religious tensions have been exacerbated by the mismanagement of the economy that occurred during successive military dictatorships since 1966. In 1999, following many years of military rule, a new constitution was adopted, and a peaceful transition to civilian government was completed under the leadership of President Olusegun Obasanjo, the first democratically-elected civilian since the end of the last democratic rule in 1983. Since 1999, the Federal Government has achieved considerable success in the restructuring of Nigeria’s political institutions, improvement in its international image, reforming of the economy, management of its oil wealth in a more sustainable way and diversification of the economy beyond the oil industry. CONSTITUTION, GOVERNMENT AND POLITICAL PARTIES The Constitution Nigeria is a federation made up of three tiers of government - Federal, State and Local Governments. The Constitution was adopted in May 1999. It is modelled on the United States constitution and provides for a tripartite structure of government in which power is divided among the Executive, Legislative and Judicial branches. It establishes and sets out the powers and functions of the Presidential (Executive), the National Assembly (Legislative) and an independent judiciary. Executive Branch Nigeria has adopted a presidential system of government with the executive powers of the Federal Government vested in the President. Such executive powers, subject to the provisions of the Constitution and of any law made by the National Assembly, may be exercised by the President directly through the Vice President and Ministers of the government or officers in the public service of the federal government. The President has the power to appoint Ministers and such appointment shall be effective if confirmed by the Senate. In appointing Ministers, the President shall appoint at least one minister from each state of the Federation. The Executive is accountable to the bicameral National Assembly, comprised of a Senate and House of Representatives. The President is elected by popular vote for a four year term and is eligible to be re-elected to a second (and final) term. In addition to being the head of government, the President is also the Head of State and the Commander-in-Chief of the Armed Forces of the country. The President’s role includes overseeing the day-to-day administration of the nation, assisted by the Vice President, Ministers, Special Assistants, Special Advisers and other relevant government functionaries . The President may, in his discretion and in addition to any duties prescribed under the Constitution and other legislation assign to the Vice President or any Minister of the Federal Government, responsibility for any business of the Federal Government, including the administration of any department of government.


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Legislative Branch The Legislative powers of the federal government are vested in the National Assembly which consists of a Senate and House of Representatives. The current House of Representatives, constituted after the election held on 21 April 2007, has 360 members who are elected in single member constituencies. Members serve four year terms. The number of seats per state is based on the population of each state. The Head of the House of Representatives is referred to as the Speaker. The Senate is made up of members elected for a four-year term. Each State elects three Senators while the Federal Capital Territory (FCT), Abuja, elects one (109 seats in total). The Head of the Senate is referred to as the Senate President. The two chambers work in collaboration with the Executive Branch of Government in areas such as budgetary appropriation and the enactment of laws. A bill for a law may originate from either of the chambers but both chambers have to pass the bill for it to be assented to by the President. Judicial Branch In accordance with the Constitution, Judicial authority is vested mainly in the following courts: the Supreme Court; the Court of Appeal; the Federal High Court and the High Court, the Sharia Court of Appeal and the Customary Court of Appeal of each state of the Federation and the Federal Capital Territory; and any other court as may be authorized by law to exercise jurisdiction over matters with respect to which the National Assembly may make laws. Nigerian courts are empowered to entertain and determine disputes between private parties, disputes between a private party and any of the three tiers of government in the country or their agencies or disputes between government bodies. Thus, the courts have the power to review statutes and executive actions to ensure that they conform to the Constitution and other laws in force in Nigeria. The courts with jurisdiction and power to deal with commercial, civil, criminal and constitutional matters, mentioned above, are described as follows: Supreme Court of Nigeria The Supreme Court is the highest court in Nigeria. It exercises original jurisdiction in respect of disputes between the Federal Government and the States; between two States and between the National Assembly and a State House of Assembly. An appeal lies from decisions of the Court of Appeal to the Supreme Court. The Supreme Court Judges are appointed by the President on the recommendation of the National Judicial Council subject to confirmation of such appointment by the Senate. Court of Appeal The Court of Appeal ranks immediately below the Supreme Court. It exercises original jurisdiction in respect of the election to the office of the President or Vice President of Nigeria, the term of those offices, and in relation to the question whether those offices have become vacant. The Court of Appeal has the exclusive jurisdiction to entertain appeals from the Federal High Court, the High Courts, the Sharia Courts of Appeal, and the Customary Courts of Appeal of each state and the Federal Capital, Abuja, as well as decisions of any court martial or any other tribunal established pursuant to the Act of the National Assembly. The President of the Court of Appeal is appointed by the President on the recommendation of the National Judicial Council subject to confirmation by the Senate. Justices of the Court of Appeal are appointed by the President on recommendation of the National Judicial Council.


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Federal High Court The Federal High Court is a specialised court, with the exclusive jurisdiction to hear and determine civil cases and matters arising from a number of areas including (but not limited to): the revenue of the Government of the Federation; the operation of Companies and Allied Matters Act (CAMA); bankruptcy and insolvency; the taxation of companies (and other bodies established or carrying on business in Nigeria); and any other persons subject to federal taxation; banking and securities regulation; foreign investments and foreign exchange. High Court There is a high Court for each state and the Federal Capital Territory, Abuja. Subject to the jurisdiction of the Federal High Court as stipulated in the Constitution, the High Court has jurisdiction to hear and determine any civil proceedings in which the existence or extent of a legal right, power, duty, liability, privilege, interest, obligation or claim is in issue or to hear and determine any criminal proceedings involving or relating to any penalty, forfeiture, punishment or other liability in respect of an offence committed by any person and those proceedings brought before the Court in the exercise of its appellate and supervisory jurisdiction. The Constitution also establishes the election tribunal and authorises the National Assembly to constitute other tribunals as may be required. The more prominent of these special “courts” are the Investments and Securities Tribunal, which handles disputes in relation to capital market activities, and the National Industrial Court, which deals with labour matters. Alternative Dispute Resolution Notwithstanding the judicial powers of the Courts, parties to a contract may refer disputes arising from any agreement to arbitration pursuant to the Arbitration and Conciliation Act (Cap A18) Laws of the federation of Nigeria, 2004 STATES AND LOCAL GOVERNMENTS Each state is governed by a Governor who is the Chief Executive of the state elected to a four year term of office and is eligible for a second (and final) four year term. The Governor is assisted in carrying out his or her function by a Deputy Governor who is also elected on terms identical to the Governor. The Governor is empowered to appoint Commissioners and Advisers and to assign responsibilities to them. The legislative powers of a state are vested in a unicameral legislative body called the House of Assembly. It is made up of representatives from all the local government areas within the state and exercises identical functions at the state level with those of the National Assembly at the federal level. A State House of Assembly consists of not less than twenty-four and not more than forty members. State governments are vested with the power to collect taxable income of their residents, impose sales tax and to impose and collect certain forms of stamp duties among others. There are 774 local government councils in Nigeria. Each local government area is administered under a local government council consisting of a Chairman who is the Chief Executive of the local government area and other elected members who are referred to as Councillors. The functions of local governments include the consideration and the making of recommendations to a state commission on economic, administrative and urban planning issues including the economic development of the State, collection of rates, radio and television licenses and establishment and maintenance of cemeteries, burial grounds and homes for the destitute or confirm, naming of roads and streets and numbering of houses and such other functions as may be conferred on a local government council by the State House of Assembly.


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Political Parties There are sixty two (62) political parties currently registered in Nigeria. The main political parties include the Peoples Democratic Party (PDP), the Action Congress of Nigeria (ACN), the All Nigerian People’s Party (ANPP), the Democratic People’s Party (DPP), the Alliance for Democracy (AD), the All Progressive Grand Alliance (APGA), the National Democratic Party (NDP) and the Labour Party (LP). THE NIGERIAN ECONOMY Gross Domestic Product Nigeria’s robust economic growth output recorded in 2009 continued into 2010. Provisional data from the National Bureau of Statistics (NBS) indicated that real Gross Domestic Product (GDP) grew by 7.23% in the first quarter of 2010, down from 7.44% in the fourth quarter of 2009, but up from the 4.50% recorded in the first quarter of 2009 as shown in the GDP graph below. Overall GDP growth for 2010 is projected at 7.58% which is higher than the revised estimate of 6.66% recorded in 2009. The sustained rainfall in 2010 is expected to support the production of major crops across the country, and the resolution of the Niger-Delta turmoil is expected to boost the crude oil and natural gas production in the country. Current sector-specific policies being implemented by the current administration needed to drive manufacturing growth have enhanced the role the manufacturing sector is playing in boosting growth and employment generation in the country. Also, in view of Government’s planned capital expenditure in the 2010 budget and the fact that 2011 is an election year, a period where there is usually an increased level of expenditure on infrastructure, there should be a significant contribution to GDP from the Building and Construction Sector.

FY'08 Q1'09 Q2'09 Q3'09 Q4'09 FY'09 Q1'10 FY'10GDP Growth 5.98% 4.50% 7.22% 7.07% 7.44% 6.66% 7.23% 7.58%Agriculture 6.27% 5.46% 6.10% 5.99% 6.06% 5.94% 5.48% 6.00%Crude Petroleum & Natural Gas -6.19% -8.08% 2.01% 0.71% 0.81% -1.33% 3.21% 3.00%Manufacturing 8.89% 7.03% 8.17% 8.36% 7.75% 7.94% 6.43% 6.00%Telecommunications & Post 24.02% 31.75% 33.63% 34.53% 36.08% 34.18% 32.54% 30.00%Finance & Insurance 4.82% 4.21% 4.42% 4.10% 3.34% 4.02% 4.07% 4.00%Building & Construction 13.07% 13.12% 11.82% 10.69% 13.00% 12.26% 13.15% 13.70%Real Estate 11.79% 9.47% 10.48% 12.70% 11.21% 11.00% 9.49% 9.00%Wholesale and Retail Trade 9.69% 11.18% 11.89% 12.15% 11.27% 9.54% 9.00%

Source: National Bureau of Statistics

GDP Sectoral Growth Break Down for 2009

Oil & Gas Production Since the beginning of 2009, the crude oil price pattern has between periods of sharp upward movements followed by large corrections. The Nigeria Oil Sector continued to suffer lost output, as production volumes decreased on the back of repeated attacks by militants in the Niger Delta, which hosts a significant proportion of Nigeria’s oil and gas resources. To mitigate against this, the Federal Government launched the Amnesty Programme for weapon carrying militants in the region. The programme involved granting these militants immunity from criminal prosecution, as well as a promise to provide such ex-militants with jobs, professional training and loans, in an effort to hasten the socio-economic development in the region. The aftermath of the amnesty programme saw a quantum leap in production capacity in the nation’s crude oil capacity. It is expected that the positive outlook of the world economy and its position on oil demand should help sustain current price levels or achieve further increases in oil prices. The combination of the increase in the oil price and crude oil production is expected to improve the earning capacity of Nigeria and also bolster foreign exchange reserves. According to the Oil and Gas Journal 2009, Nigeria has an estimated 185 trillion cubic feet (tcf) of proven natural gas reserves as at January 2006, which makes Nigeria the seventh largest gas reserve holder in the world and largest in Africa. The vast majority of natural gas found in Nigeria is associated, meaning that it occurs in crude oil reserves as free gas. Because many of the fields lack the infrastructure to produce the associated natural gas, it is flared. Nigeria is one of the biggest gas flaring nations in


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the world, with 43% of its total annual natural gas production being flared. This has prompted the enactment of a gas flaring Act by the Nigerian Senate to abolish gas flaring by December 2010. The introduction of the Gas Master Plan in 2008 for the management of gas is intended to facilitate a more efficient utilization of gas for internal uses and processing for export including the liquefaction of gas as Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas (LPG), ensuring the availability of gas to fuel the various power generating plants and promoting the West African gas pipeline project, which entails the construction of a 600km pipeline to supply Nigeria’s associated gas to neighbouring Republic of Benin, Togo and Ghana. The gas master plan places emphasis on the domestic market as opposed to exports and to ensure the success of the initiative the Federal Government has given the oil companies to make available at least 50% of their total gas production to the domestic market.

Source: National Bureau of Statistics (NBS)

External Debt Nigeria became the first African nation to fully repay its Paris Club debt in April 2006, after years of economic mismanagement and excessive spending, escalating gross external debt to over US$30.0 billion by the late 1990s. Nigeria’s external debt was estimated at US$3.7 billion as at April 2009 according to the Debt Management Office (DMO). Debt owed to multilateral organizations (World Bank Group and the African Development Bank Group) accounted for 83.96% of total external debt stock in September 2007 and 85.28% of external debts in December 2008. Loans for health and social welfare, agriculture and water supply projects accounted for the largest portions of the external debt stock as at September 2009, accounting for 16.65%, 14.50% and 10.56% respectively. The steady increase in total external debts from 2007 to 2009 was due to increased spending on infrastructure development, increased budgetary allocations and drop in revenue accruable to the government as a result of the global economic crisis. The revenue decline was due to the steep dip in the price of crude oil, which is Nigeria’s main source of foreign exchange earnings, to under $40 per barrel in mid 2008. Sub-national debt (State and local Governments external debt stock) also edged up 1.81% to $3.72 billion in December 2008 from $3.39 billion in December 2007.

Oil Prices vs. Domestic Production


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Domestic Debt Nigeria’s domestic debt trend mirrored that of its external debt according to the Debt Management Office. The nation’s total domestic debt rose 6.94% to N2.32 trillion in December 2008 from N2.17 trillion in December 2007. Domestic debt stock was N3.23trillion in September 2009, representing an increase of 31.80% and 40.95% over 2008 and 2007 total domestic debt respectively. The Federal Government’s principal source of raising domestic capital between 2003 and 2006 was the issuance of treasury bills. However, there has been a shift to the issuance of Federal Government Bonds which now accounts for approximately 60.46% of the domestic debt stocks. The rise in the nation’s domestic debt stock was as a result of the need for the government to provide long-term financing for its planned infrastructure developments and budgetary allocations.

HY1 2010 2009 2008 2007 2006

External Debt Stock (US$'bn) 4.31 3.95 3.72 3.40 3.54Interest Paid on External Debt(US$'mn) 64.73 89.15 76.60 66.00 122.11External Reserves (US$'bn) 37.42 42.41 52.82 52.00 45.01Domestic Debt (N'tr) 3.47 3.23 2.32 2.17 1.75Credit to the Private Sector (N'tr) 10.07 10.21 7.40 46.00 24.90Net domestic Credit (N'tr) 8.51 7.90 5.39 2.21 0.75

Nigeria's Debt Profile 2006-2010

Source: FSDH Economic & Financial Market: Review & Outlook HY2 2010

As at September 2010, the Domestic Debt Stock was N3.76 trillion according to the Debt Management Office of Nigeria. Sovereign Credit Rating Fitch Ratings on Friday, 22nd October 2010 lowered its sovereign credit outlook on Nigeria to negative from stable, citing the depletion of its windfall oil savings and heightened political uncertainty ahead of the forthcoming elections in 2011. Nigeria’s rating of BB-minus, is three notches below investment grade. Fitch affirmed that the adverse rating was occasioned by the continued withdrawals from the Excess Crude Account (ECA), into which Nigeria saves crude oil earnings above a bench mark price, ultimately contributed to the downgrade. Also, it was stated that lower Forex reserves is a threat to economic stability. Standard & Poor’s Ratings on Tuesday, November 2nd 2010 affirmed its B+ long-term and B short-term foreign and local currency sovereign credit ratings on the Federal Republic of Nigeria. The outlook is stable. It also affirmed the ngA+ long term and ngA-1 short-term Nigeria national scale ratings on sovereign debt. Monetary Policy In line with the CBN Amendment Act, 2007, one of the principal functions of the Central Bank of Nigeria is to “ensure monetary policy and price stability”. In order to facilitate the attainment of the objective of price stability and to support the economic policy of the Federal Government, the Act provides for the constitution of a twelve (12) man Monetary Policy Committee (MPC) with the Governor of the CBN as the chairman. The CBN recognizes that achieving stable prices would require continuous assessment and evaluation of its monetary policy implementation framework to enable it respond to the ever-changing economic and financial environment. Based on this, the CBN introduced a new monetary policy framework that took effect on 11th December 2006 with the “Monetary Policy Rate” (MPR) as the operating target rate. The ultimate goal of this new framework is to achieve a stable value of the domestic currency through stability in short-term interest rates around which services as an indicative rate for transaction in the inter-bank money market as well as other Deposit Money Banks (DMBs) interest rate. With the Consumer Price Index increasing to 12.5% year-on-year, driven primarily by higher food cost- monetary policy easing may have run its course. With expectant inflationary pressures in 2011 due to the depreciation of the


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Naira, currency controls have been enacted by the CBN to ease these pressures. The continued clean-up of the troubled banks, further propagated by the institutionalization of the Asset Management Company of Nigeria (AMCON) has brought about relative calm in the markets in contrast to the exposure of irregularities of the audited banks in 2009 which destabilized the markets. Fiscal Policy In recent times, Nigeria’s approach to the formulation of fiscal policies with respect to its expenditure has been to benchmark its budget below the expected price of crude oil in the international market as the revenue from oil contributes about 95% of the country’s earnings. The 2010 budget is based on a benchmark of US$60 per barrel of crude oil despite the current price which averages in October at US$84.50 per barrel. This oil-price-based fiscal rule has ensured that the economy stays focused on the improvement and enhancement of public financial management. The Office of the President on November 24, 2009 issued a budget proposal to the Senate and House of Representatives which was characterized by supportive fiscal measures to accelerate economic recovery following the recent global recession and liquidity squeeze. This budget proposed an allocation of N1.37 trillion and N2.10 trillion for capital projects and recurrent expenditure respectively in 2010. These represented an increase of 72% and 48% from N786.74 billion and N1.41 trillion in 2009 respectively. However, the implementation of this budget following approval from the legislative arm will determine if the desired effect of stimulating the economy is achieved. Agriculture Agriculture accounts for 32% of the current GDP in Nigeria. It is the sole beneficiary of the N200bn credit scheme unveiled by the CBN in mid-2009 for the commercial side of the sector. Investment in the sector has seen significant strides, led by projects to ease the US$4bn annual costs of importing rice, wheat and sugar. Cassava production is increasing, and there are early moves to revive domestic processing of the cocoa crop. States such as Kwara and Cross River along with Edo State are investing in the sector in conjunction with foreign parties. A more generic point is that tropical agriculture has been recently blessed with favourable climatic conditions. An added benefit of this sector in its contribution to the GDP is that it expands outside the credit channels of the DMO The fact that Nigeria’s output is predominantly agriculture, a sector whose outputs are not affected by short term slow-down in economic activities will ensure that the real GDP growth rate will remain in the region of 7% and 8% in 2010. The MPC of the CBN projected a GDP growth rate of 7.74%. Telecommunications The telecoms sector has continued to perform impressively and has remained one of the key drivers of the nation’s economy. According to the Nigerian Communications Commission (NCC), the installed capacity in the industry as at April, 2010 stood at 146.60 million lines, an increase of 19.45% over 122.73 million lines as at December 31, 2009. The installed capacity is made of Mobile GSM, Mobile CDMA and Fixed Wired/Wireless in the proportion of 84.67%, 8.97% and 6.36% respectively. The Nigerian telecoms sector has recorded a real GDP growth of [1,032.54%] in Q1 compared to 31.75% recorded in the corresponding period of 2009 according to Business Monitor International. Tele-density, which measures the proportion of telephone lines in relation to the population in the country, stood at 56.32% at April 2010, up from 53.23% as at December 2009. This has led to the Nigerian telecoms sector continuing to attract significant Foreign Domestic Investment from major international telecommunications companies, seeking to get a foothold in the lucrative Nigerian Telecoms Market (e.g. Bharti Telecoms recent acquisition of Zain Telecoms). Further to this, Nigeria has overtaken South Africa as the continent’s biggest mobile market with more than 62 million subscribers. The Nigerian telecoms market as a whole generated $8.40 billion in service revenue by the end of 2008, up 23% year-on-year according to Pyramid Research Group.


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Solid Minerals An area of significant opportunity for the country is that of solid minerals. After several attempts by previous regimes to energise the sector, the Obasanjo administration in its second term turned its attention to this sector, and it is expected that 34 solid minerals of abundant commercial quantities will soon be subject to bidding rounds for prospecting and exploration. However, the contribution made by the sector to total GDP over the years has not been impressive compared to other sectors of the economy as solid minerals contributed 0.32% and 0.28% respective in Q1 and Q2 of 2009 according to the National Bureau of Statistics Foreign Direct Investment (FDI) Nigeria as a country, given her natural resource base and large market size, qualifies to be a major recipient of FDI in Africa and is indeed one of the top three leading African countries that consistently received FDI in the past decade. Foreign investors ploughed an unprecedented $12.40 billion in the Nigeria economy in 2007 according to the World Investment Report published in 2008. Despite the current global economic crisis which led to a reduction in offshore investment by transnational companies, the inflow of Foreign Direct Investment into the Nigerian economy in 2009 stood at $6 billion in 2008. Although significantly lower than its 2007 figures, it is still a substantial sum considering the painful and protracted slowdown in the world economies over the last two years. It is expected that growth in FDI in Nigeria will largely be driven by transnational companies’ investments, especially in the telecommunications sector, Oil and Gas Sector and the Power Sector driven by the ongoing reforms.

DESCRIPTION OF THE ISSUER

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OVERVIEW OF EDO STATE Description of the Issuer Edo State is located in the midwestern region of Nigeria, with Benin as its capital city. The State was created on August 27th, 1991 from the defunct Bendel State. The name Bendel was derived from the colonial heritage of the amalgamation of the Benin and Delta provinces. The State has 18 Local Government Areas and 3 Senatorial Districts. The defunct Bendel State was part of the protectorate of Southern Nigeria between 1900 and 1954 and Western Region between 1955 and 1963. Before the creation of states in 1991, the defunct Bendel State had been known by two other names, the Mid Western Region in 1963 and the MidWestern State in 1967.

MAP OF EDO STATE

Edo is located in the heart of the tropical rain forest and lies between Longitude 50 E04”E and 60 43” and Latitude 50 44”Nand 70 34”W of the Equator. The State is bordered by Kogi State to the North, to the west by Ondo State, the south by Delta state and the east by both Kogi and Anambra States. The State occupies an area of 19,794 square kilometres. Its strategic location makes it the major artery to all the regions of the Federation and the food basket of the South–South geo-political zone of the country. According to the results of the 2006 census conducted by the National Population Commission (“NPC”), Edo state has an estimated population of about 3.2 million people. Furthermore, about 51% of the population are male while 49% are female with a growth rate of 2.7% per annum (NPC, 2006). The State has a population density of 168 persons per square kilometre. Edo State comprises some main ethnic groups which are Edos, Esans, Afemas, Owans and Akoko-Edos. All these groups trace their origin to Benin City hence the dialects of these groups vary with their distance away from the capital, Benin City. There are also Igala-speaking communities as well as Urhobos, Izons, Itsekiris and Yoruba communities within and on the borderlands of the State. The Benin speaking communities


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which presently occupy seven (7) out of the eighteen (18) Local Government Areas of the State constitute about 57% of the population of the State while Esans (17%), Afemai (12%), Owan (7%) and Akoko-Edo (6%). Political Environment

Edo state has a stable political atmosphere and there exists a relatively peaceful coexistence among the various ethnic and religious group. The present administration led by His Excellency, Comrade Adams Aliyu Oshiomhole Executive Governor of Edo State was inaugurated on November 12, 2008 for a four year term. The three arms of government in the state consist of the Executive, Legislative and the Judiciary. The Executive arm of Government is made up of the Governor, Deputy Governor, Commissioners, Special Advisers and the Secretary to the State Government. The Edo State House of Assembly is the Legislative Arm of government while the Judiciary is led by the Chief Judge and the Attorney General of the State. The 18 Local Government councils of the State are led by their respective Executive Councils.

Judicial Administration This is the third arm of Government in Edo State. Its main function is the administration of justice and the interpretation of laws of the land made by the legislature. The Administrative set up is comprises the High Court of the State at the apex, headed by the Chief Judge of the State and approximately twenty-three (23) other High Court Judges manning the Courts in all the Local Government Areas of the State and also the Customary Court of Appeal headed by the President of the Customary Court of Appeal and other judges. As in other states of the Federation the state judiciary adjudicates over cases and other legal matters. The State Ministry of Justice renders legal services to the State Government. The Ministry also drafts legislations, legal notices, agreements and provides other forms of legal services to the State. The Ministry defends and prosecutes cases on behalf of the State Government. Next in hierarchy to the Customary Court of Appeal are the Magistrate Courts, Area Courts and the District Customary Courts. While the Magistrate Courts and the Area court are manned by qualified Lawyers and Magistrates of various grades and jurisdictions, the District Courts have laymen in addition to qualified legal practitioners. STATE ECONOMY Agriculture Edo State is an agrarian state. It plays a critical role in the annals of the agricultural development of the South-South region of Nigeria. The State has varied vegetation regimes, favourable soil types, adequate rainfall and ecological diversification. This is further accentuated by the availability of an arable land of almost 2 million hectares, over 25 farm service centers and 200,000 farm families. The State plays a key role in the production of various arable crops such as yam, cassava, plantain, maize, rice, cowpeas, etc and tree crops including oil palm, rubber, cocoa, ivvengea (ogbono), all in commercial quantities. However, farming is still being carried out at a subsistence level and the government has resolved to expand the holding of farmers to large areas and to introduce mechanized farming. The State is also in the frontline of palm oil and kernel production with oil processing mills at Okomu, NIFOR, Ewohimi and Obaretin. The State has farm settlement schemes at Iguoriakhi, Ekpoma and Sobe. Oil palm seedling schemes exist at Ogba, Abudu, Ehor, Irrua, Afuze, Ora, Ogheghe and Ekpoma. A few new crops hitherto grow in the wild, but are now being domesticated and awaiting possible commercialization namely; Alanblachia Floribunda (rich in edible non cholesterol oil) and cashew. The high rainforest zones (with a plethora of important oil trees) are capable of competing favourably with oil from oil palm and other oil seed materials when fully developed and harnessed. Equally, Edo State is richly endowed with timber and forestry resources.


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Tourist Attractions There are various tourist attractions in Edo State . These include Emotan statue and the Palace walls of the ancient abode of the Oba of Benin. The State also has Somorika hills in Akoko-Edo. This is an expansive mass of hills crowned by massive boulders, perched precariously on the summit of hills near the Edegbake caves in Etsako East, where remains of ancient living can be explored. Then, the Ososo Tourist Centre, the abode of colonial masters. Others sites include; Okomu Wildlife Sanctuary/Holiday Resort, Ogiamien Palace – a marvel of ageless architecture, Ebohon Shrine and Botanical Research Centre, Aruanran statue in Udo (the first African giant). There is also Ogba zoological garden, with a variety of animals, reptiles and birds, etc. In Esan land, there are several springs and waterfalls. Industrial and Commercial Activities Benin City, the capital of Edo State has for several decades been the base of notable manufacturing industries and numerous commercial enterprises. In the brewing industry, there are two big plants contiguously located on Ikpoba Hill, east of Benin City owned by Guinness Nigeria Plc and the Bendel Breweries Nigeria Plc respectively. Equally, Edo State provides the artery for distribution of goods to the South-South geo-political zone of Nigeria. In this regard, Nigerian Breweries Plc, 7-Up and others have established sales depots and outlets in the State. There also exist in the State, other manufacturing concerns that use the existing natural resources available in the State. Prominent among these are privately owned factories which prepare rubber sheets and lumps for export as well as for use by local plants. These companies include Odia Rubber Factories located at Temboga and Ogba Communities in the suburbs of Benin City. There is also a rubber industry which manufactures bicycle tyres and the Piedmount ply-wood industry located at the boundary town of Ologbo, Benin South. The State is also known for the production of high quality furniture and agro-allied products. Some of the prominent manufacturing companies in the State include Bendel Feed and Flour Mill Limited, located at Ewu, Bendel Cement Factory, etc. Commerce is well developed in Edo State. Being an agrarian state, many of the indigenes engage in the marketing of agro-allied products and wares sourced from across the country. Two organised private sector bodies are prominent in the State namely, the Edo State Chapter of Manufacturers Association of Nigeria and the Edo State Chambers of Commerce, Industry, Mines and Agriculture. Benin City has twelve markets, including the imposing ultra-modern Oba market and the large Edaiiken market located along the Uselu-Ugbowo-Edo Expressway. GOVERNANCE AND BEST PRACTICES - MEDIUM TERM POLICY FRAMEWORK The administration of Comrade Adams Aliyu Oshiomohle realised from the onset the need to craft a coherent long term vision from which a policy thrust was evolved. This policy thrust was developed from extensive dialogue and highly inclusive interface with the broad spectrum of the stakeholders from which the priority areas were identified as: • Agriculture; • Infrastructure Development; • Improvement of the delivery of Social Services (Education & Health); and • Job Creation. The Edo State Government’s vision is “To reposition Edo State to become a leading economic centre in Nigeria.” While the Policy Thrust is “Poverty Alleviation and Economic Development”. Both the vision and policy thrust of Edo State are focused at three main areas: • Production; • Operating Environment; and • Human Capital. To this end, the Government is committed to pursuing a medium term policy formulation and implementation strategy especially in the above-mentioned priority areas. To drive this process, the Government has identified as the immediate action steps the speedy reformation of the public service, commencing with the Public Sector Financial Management/Accountability and the Internally Generated Revenue mechanisms.


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The strategy for achieving this includes the pursuit of:

Prudent Economic Management Framework (Improved Expenditure Management);

Greater level of Transparency/Accountability; Introduction of Targets/Safety Nets for the Poor;

Reorientation and Strengthening of Public Service through: Training, Coaching, Exchange Programmes;

Establishment of Alternative Funding Sources for Priority Areas;

Inclusive Governance through the implementation of broad-based consultative fora (All Arms of Government,

Organised Private Sector, Informal Sector, Village Square meetings); and Inclusive sector-specific policy design and implementation.


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FINANCES OF THE STATE

The State’s income profile for 2009 indicated that Statutory Allocation was the main source of revenues at 68.4% with IGR representing approximately 24.5%. Continued Government socio-economic intervention in the State, coupled with the State’s prompting for greater tax responsibility amongst residents will continue to increase revenue generation within the Government. It is expected that as the Edo State Government continues to aggressively pursue the execution of its agenda through both government initiatives and public-private partnerships, there will be a continued increase in the State’s productivity and achievement of its medium to long term goals. This should consequently lead to the emergence of the State as an international hub centre.

Total Revenue (N’Bn)

3.2 3.0 3.4 4.9 8.2 12.4 2.4 3.2 10.5 7.2

7.8 12.9 23.1

29.0 27.3 34.0

34.6

34.3

0.0

20.0

40.0

60.0

2005 2006 2007 2008 2009 2010e

IGR (bn) Capital Receipts (bn) Statutory Allocation (bn)

Total Recurrent Expd. Vs. Capital Expd. (N’Bn)

15.3 17.623.6 29.7 26.8

40.0 8.6 7.9 14.2

18.4 30.4

38.4

0.0

20.0

40.0

60.0

80.0

100.0

2005 2006 2007 2008 2009 2010e

Recurrent Expenditures (bn) Capital Expenditure (bn)

Internally Generated Revenue, 2005 – 2009

UTILIZATION OF PROCEEDS

40

USE OF PROCEEDS Utilization of Proceeds The estimated net issue proceeds of N24,074,981,250 after deduction of N925,018,750 (representing 3.7% of the Gross Issue Proceeds), will be utilized for the repayment of existing debt obligations and to partially finance on-going infrastructure projects within the State.

SCHEDULE OF KEY INFRASTRUCTURE PROJECTS In fulfilment of the medium to long term strategy of the State, EDSG has embarked on a number of significantly advanced infrastructural projects. As stated above, the State intends to utilize some of its Bond Proceeds to finance these on-going projects. Below is a breakdown of how the net proceeds of the Bond will be utilized: S/n Description Total Project Cost Amount Mobilized

by the StateProject Cost to Completion (N)

Completion Date Amount (N)

1 Dualization of Airport Road 4,401,000,000 3,360,400,000 1,040,600,000 Dec-11 1,040,600,0003 Expansion of Akpakpava Road 4,338,375,000 2,018,430,426 2,319,944,574 Jun-12 2,319,944,574

3 Oluku-Ugbowo-Urubi-Akpakpava Road Expansion

4,472,400,000 2,065,340,000 2,407,060,000 Dec-12 2,407,060,000

4 Reconstruction of Auchi in Jattu Afashio-Ikabigbo Ojio Road

6,305,000,000 2,065,250,000 4,239,750,000 Jun-12 3,419,643,772

5

Construction of (5) Five Junction by Uselu Lagos Road, Siluko road up to Textile Mill Road Junction and Costain-Isonorho Street Benin City

2,555,000,000 1,038,750,000 1,516,250,000 Oct-11 1,516,250,000

TOTAL 22,071,775,000 10,548,170,426 11,523,604,574 12-24 Months 10,703,498,346 LOAN RE-FINANCING The State intends to utilize the sum of N13,371,482,904 (Thirteen Billion, Three Hundred and Seventy One Million, Four Hundred and Eighty Two Thousand, Nine Hundred and Four Naira Only) in refinancing its loan obligations to the below mentioned financial institutions. As at June 30th 2010, the outstanding obligations of the State are presented below: Loan Re-Financing % of Proceeds Amount (N)

Skye Bank Plc 17.98% 4,315,587,774United Bank of Africa Plc 17.29% 4,150,006,970Other Banks 14.47% 3,472,222,000Equatorial Trust Bank Limited 5.97% 1,433,666,160

Total Debt Obligations to be Refinanced 55.71% 13,371,482,904

FinBank Plc (formerly First Inland Bank)


41

BRIEF DESCRIPTION OF THE PROJECTS TO BE FINANCED WITH THE PROCEEDS

I. Dualization of Airport Road The road is being dualised from Ring Road to the Ogba River bridge. The project commenced in December

2009 and is 7.2 km long. The engineering company implementing the project is Servetek Construction

Company Limited. The duration of the project is up to 24 months, it is approximately 60% completed and is

expected to be fully completed by December 2011. The cost of the project is N4.4 billion and 76%

(N3.36billion) was given to mobilize the contractor. The road will help to ease movement within the urban

areas of the State.

II. Expansion of Akpakpava Road The road is being constructed within the Oredo Local Government Area of the State. The project

commenced in November 2009 and is 3.3km long. The project is being executed by R.C.C Nigeria Ltd one of

the leading civil engineering companies in Nigeria. The duration for the project is 2 years, it is

approximately 40% completed and is expected to be fully completed in 2012. The total cost of the project is

N4.3 billion while a total of N2.0 billion representing 47% of project cost was used to mobilize the

contractor.


42

III. Oluku-Ugbowo-Urubi-Akpakpava Road Expansion

The road is being constructed within the Oredo Local Government Area of the State. The project

commenced in November 2009 and is 11.4km long. The project is being executed by R.C.C Nigeria Limited.

The duration of the project is 2 years, it is approximately 15% completed and is expected to be fully

completed in 2012. The Total cost of the project is N4.47 billion while a total of N2.1 billion representing 47%

of project cost was used to mobilize the contractor.

IV. Reconstruction of Auchi in Jattu Afashio-Ikabigbo Ojio Road

This road is being constructed in the Edo North constituency of the State. The project commenced in

December 2009 and is 13.6 km long. The construction is being executed by Borino Prono Nigeria Limited.

The duration of the project is 2 years, it approximately 40% completed and is expected to be fully completed

in 2012. The estimated cost of the project is N6.3 billion and the State has so far mobilized the contractor

with 33% of the project amount (N2.07billion).


43

V. Construction of (5) Five Junction by Uselu Lagos Road, Siluko Road up to Textile Mill Road Junction

and Costain-Isonorho Street in Benin City

The road is being constructed within the Edo North constituency of the State. The project commenced in

October 2009 and is 5.17 km long. The project is being executed by Hi-Tech Nigeria Limited. The duration of

the project is up to 23 months, it is approximately 40% completed and is expected to be fully completed by

the end of 2011. The Total cost of the project is N2.55 billion while a total of N1.04 billion representing 41%

of the project cost was used to mobilize the contractor.


44

SUMMARY OF OTHER ON-GOING PROJECTS IN THE STATE Since the commencement of his administration in November 2009, Comrade Adams Aliyu Oshiomhole’s Government has identified Infrastructural Development as essential to poverty reduction and acts as a catalyst for economic growth, fostering the opportunity for partnerships with potential investors, both local and foreign. The State has committed to an estimated N120 billion, for the initialization and completion of critical projects within the State. Accordingly, the State Government has mobilized over 60% of the funds necessary for the initiation and completion of these identified projects. The following summarizes some of the other on-going projects being executed by the Edo State Government: Infrastructure 1. Design and construction of Roads and Drainage Structures on Isonorho road including the adjoining 4th, 5th and

6th Guobadia lands and Oni/2nd land, Benin City; 2. Design and construction of flood and erosion control structures and associated road works and beautification at

Five Junction and environments of Benin City; 3. Dualization of Sapele Road (from Ring Road to Murtala Mohammed Way Junction); Benin City; 4. Urban beautification works/ street lighting on Sakponba Road; Oba Market Road; Ring Road; Akpakpava Road

and Sapele Road; 5. Storm water master-plan design of roads and flood/erosion control structure for Benin Metropolis; 6. Back-filling/coverage of catch-pit along Igbinaduwa, Erhunmwunsee Street and environs, Benin City; 7. Flood and erosion control works at Ugbenor along Auchi Agenebode Road, Etsako-Central LGA Edo State; 8. Construction of Flood water reinjection scheme at Ogiesoba Street, off Airport Road, Benin City; 9. Installation of street lights on Forestry Road , Benin City; 10. Installation of street lights on Mission Road (from Ring Road to New Lagos Junction); 11. Installation of double arm Street Lights along 4 km Length from Ramat on Benin Agbor Road, Benin City; 12. Installation of street lights for 4km length on Ekehuan Road form Oba Market Road Junction to Bendel Wood

Factory; 13. Flood control works at Samuel Ogbemudia Stadium and environs, Benin City; 14. Maintenance of flood water reinjection scheme by retainership at the following locations, in Benin City.

Boundary Road (near Adesuwa Grammar School Road Junction); Iham/Airport Road Junction; Legislative Quarters, Ihama Road GRA; Legislative Quarters, Ihama Road, GRA (Phase 2);

15. Reconstruction of Ivbioghe-Ibiode-Uzanu Road; Iyamo-Iyora Road; Isua-Uzeneme Ebele Road; Uhen-Olumoye

Road; Iguobazuwa Umaza- Siluko Road; Ebo Street; Ekpende Street & parts of Old Oguanogbe Street; Jattu-Ayua Road; Jattu-Afowa-Iyora-Akpana-Ayogwiri Road; Jattu-Ibie Road; Igueben-udo Road; Amendokhian Ugbona Road; Evboeghae-Ugo-urhonigbe Road; Auchi-Jattu-Afashio-Ika-Bigbo Ojio Road; Ihievbe-Sebe-Ogbe Road; Otuo-Ihievbe-Ogbe; and

16. Construction of Ogan-Idumwogo Road; Ekperi-Anegbettw Road & bridges and Ayoqwiri-Akpana Emakebu-

Igodor Okpekpe Road.


45

Health 1. Rehabilitate/construct and complete the abandoned facilities in the three (3) health training institutions of the

State; 2. Construction of hospitals in Iyamho, Sobe, Ekpoma, Okada, Ehor; 3. Procurement of hospital equipment, generators, utility vehicles and blood banks to the 34 existing government-

owned hospitals; and an oxygen plant to Central hospital , Benin City; 4. Provide logistics to the Essential Drug Project for adequate supply and distribution of drugs and dressings to

health facilities in the State; 5. Construction of a lecture hall for the College of Medicine, Ambrose Alli University, Ekpoma at Irrua Specialist

Hospital, Irrua; 6. Strengthen the division of planning in the Department of Planning, Research & Statistics to coordinate

development Partners Forum Inter-Agency Coordinating Committee; 7. Provide material for zinc and diarrheal management, vitamin A, anti-helminitics (for de-worming) & equipment

for Integrated Material, Neo-natal & Child Health Activities, free anti-natal care for pregnant women; 8. Procurement of mass evacuation ambulances (Benin-Auchi Road; Benin-Ore Road; Benin-Agbor Road and

Benin-Warri Road).


46

Environment 1. Provision of secondary drains infrastructure/facilities 34,000m roads linking Upper Lawani/Upper Mission,

Boundary, Ihama, Giwa Amu, Reservation Road, Ogiesoba, Aguobasemwin and environs;

2. Beautification and street lighting projects on Mission Road from Ring Road to New Lagos Road; Street lighting of Ekenwan Road; Akpakpava Road; Asaba Road by-pass interchange at Idoikpa community; beautification of Inner Ramat Park Phase 2 (comprising of fountains and ponds);

3. Construction of drainage structures and dualization of Sapele Road from Rind Road to Murtala Mohammed

Way Junction, a total 2.1km of road and 4.2km of drainage; dualization of Siluko Road from Oba Market Road to Textile Mill Road among others;

4. Flood and erosion control structures and associated roads at Idumoza quarters, Iruekpen-Ekpoma-Hospital

Road junction; Queen Ede Secondary School, Ogbeson Quarters, Benin City; 2nd East Circular Road amongst other roads;

5. Raising of one million forest tree seedling nurseries at Ologbo Forest Reserve, South Ibie, Forest Reserve

Okhuesan, Forest Reserve Ehor and Sakpoba Forest Reserve; and

6. Acquisition of plots of land for waste management facilities in Edo South, North and Central regions. Coupled with this is the construction and installation of hazardous management equipment and a sewage and excreta treatment plant in Benin City.

EXTRACTS FROM THE ISSUE RATING REPORT

47

EXTRACTS OF THE ISSUE RATING REPORT

EXTRACTS FROM THE ISSUER RATING REPORT

48

EXTRACTS OF THE ISSUER RATING REPORT

Kogi

EXTRACTS FROM THE ISSUER RATING REPORT

49

FINANCIAL FORECASTS

50

FINANCIAL FORECAST MEMORANDUM ON THE FINANCIAL PROJECTIONS

The Executive CouncilEdo State Government of NigeriaGovernment HousePMB 1080Benin CityEdo State

and

The DirectorsAfrinvest West Africa Limited27, Gerrard RoadIkoyiLagos

Gentlemen,

Yours faithfully

Bosede A OdeloyeFor : Akintola Williams Deloitte

15 November 2010

We have reviewed the accounting bases and assumptions for the revenue and expenditure projections of Edo StateGovernment of Nigeria ("the State" or "EDSG") for the eight years ending 31 December 2017, for which the Executive Councilof Edo State Government of Nigeria is solely responsible.

We wish to emphasize that no business is free of major risks and few financial projections are free of errors of commissions oromissions. Consequently, these financial projections relate to the future and may be affected by unforeseen events as theremay be differences between forecast, estimated, budgeted or projected results and the actual results because events andcircumstances frequently do not occur as expected, and those differences may be material.

In our opinion, the revenue and expenditure projections so far as the accounting basis and assumptions are concerned, havebeen properly compiled based on the assumptions made by the State Executive Council and are presented on a basisconsistent with the accounting policies normally adopted by the State.

FINANCIAL FORECASTS

51

EDO STATE GOVERNMENT OF NIGERIA

Memorandum on financial projections

Net

YearRecurrent revenue

Capital revenue

Recurrent expenditure

Capital expenditure

(deficit)/ Surplus

N'm N'm N'm N'm N'm

2010 46,704 9,442 (38,431) (24,177) (6,462) 2011 54,062 10,677 (34,328) (21,768) 8,643 2012 59,774 11,514 (36,724) (26,029) 8,536 2013 65,544 12,429 (39,294) (30,609) 8,069 2014 71,893 13,430 (41,498) (36,183) 7,643 2015 79,874 14,524 (43,834) (42,811) 7,753 2016 87,672 15,444 (46,312) (49,031) 7,772 2017 96,262 16,428 (48,941) (62,575) 1,174

Honourable Commissioner for Finance Accountant-GeneralEdo State Government of Nigeria Edo State Government of Nigeria

BENIN, EDO STATE, NIGERIA

Dated this day of 2010.

The Executive Council of Edo State Government of Nigeria is of the opinion that subject to unforeseen circumstances, the State'srevenues and expenditures for the eight years ending 31 December 2017 will be approximately as follows:

The Executive Council of Edo State hereby approved the Memorandum on the financial projections for each of the eight yearsending 31 December 2017, a copy of which has been initialled by the Honourable Commissioner for Finance of the State foridentification purpose.

FINANCIAL FORECASTS

52

FINANCIAL FORECASTS

53


2 . STATEMENT OF ACCOUNTING POLICIES

The following significant accounting policies will be adopted by Edo State Government of Nigeria during the projected period:

(i) Basis of accounting

(ii) Investments

(iii) Revenue

The revenue of the State consists of the following:* Statutory allocation* Internally generated revenue (IGR)* Capital receipts* Grants and aids.

(iv) Expenditure

The State's expenditure comprises:* Recurrent expenditure* Capital expenditure.

(v) Fixed assets

(vi) Assets and liabilities

Assets and liabilities are stated at their net book value.

(vii) Foreign currencies

Investment in shares are held under the Ministry of Finance Incorporated (MOFI) and are stated at cost while bonus issues are shownbut not considered in value recognition. All investment income received are credited to Consolidated Revenue Fund account.

Transactions in foreign currencies are converted to Naira at the rates of exchange ruling at the dates of the transaction. Foreigncurrency balances are converted to Naira at the rates of exchange ruling at the statement of assets and liabilities date. Gains or lossesarising on translation when realised, are credited or debited to the Consolidated Revenue Fund.

The financial statements were prepared under the historical cost convention using the cash basis of accounting.

The cost of assets are written off at the date of purchase by charging to the Capital Development Fund. No depreciation is beingcharged on the assets.

FINANCIAL FORECASTS

54


3 . FINANCIAL PROJECTIONS FOR THE EIGHT YEARS ENDING 31 DECEMBER 2017

3.1 Revenue and expenditure projections

2010 2011 2012 2013 2014 2015 2016 2017N'm N'm N'm N'm N'm N'm N'm N'm

Revenues:Recurrent revenue 46,704 54,062 59,774 65,544 71,893 79,874 87,672 96,262 Capital revenue 9,442 10,677 11,514 12,429 13,430 14,524 15,444 16,428

56,146 64,739 71,288 77,973 85,323 94,398 103,116 112,690

Expenditures:Recurrent expenditure 38,431 34,328 36,724 39,294 41,498 43,834 46,312 48,941 Capital expenditure 24,177 21,768 26,029 30,609 36,183 42,811 49,031 62,575

62,608 56,096 62,752 69,904 77,680 86,645 95,344 111,516

(Deficit)/surplus of revenue over expenditure (6,462) 8,643 8,536 8,069 7,643 7,753 7,772 1,174

Bond proceeds 24,000 - - - - - - 7,249

Net revenue 17,538 8,643 8,536 8,069 7,643 7,753 7,772 8,423

Appropriations:

Repayment of internal loans (15,193) - - - - - - - Repayment of external loans (840) (840) (840) (840) (840) (840) (840) (347) Transfer to Debt Service Reserve Fund - (377) (432) (484) (543) (608) (681) (1,526) Transfer to Sinking fund - (6,240) (6,240) (6,240) (6,240) (6,240) (6,240) (6,240)

Surplus for the year 1,505 1,186 1,023 505 20 65 11 310

3.2 Bases(i)

(ii) The actual results per the management accounts for the six months ended 30 June 2010 and the estimates for the remaining sixmonths of the year ended 31 December 2010; and the years ending 31 December 2011, 2012, 2013, 2014, 2015, 2016 and 2017 havebeen prepared on a basis consistent with Government Accounting Policies and Financial Regulations.

The financial projections include results as shown by the management accounts of the State for the six months ended 30 June 2010.We must emphasise that management accounts are not expected to produce the same level of assurance as audited financialstatements. We also state that at the time of the review of these financial projections, we did not carry out any review neither did weconduct an audit examination of the management accounts in accordance with the international standards on auditing issued by theInternational Federation of Accountants. Consequently, we did not express a statutory audit opinion or make any form ofrepresentations regarding the accuracy of the management accounts.

The State Executive Council are of the opinion that subject to unforeseen circumstances, and based on the assumptions in note 3.3, theState's recurrent revenue, recurrent expenditure, capital receipts, capital expenditures and appropriations for the eight years ending31 December 2017 will be approximately as detailed below:

FINANCIAL FORECASTS

55

Assumptions EDO STATE GOVERNMENT OF NIGERIA

3.3 Assumptions

(i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

(viii)

(ix)

(x)

(xi)

(xii)

(xiii)

(xiv)

(xv)

(xvi) Inflation rate in Nigeria will be at an annual average of 8.2% during the projected period.

(xvii) The economic and political climate of Nigeria will remain stable.

(xviii)No act of God that may adversely affect the projections is envisaged.

Based on availability of fund, 2% of IGR will be appropriated to Debt Service Reserve Fund from 2011 to 2016 for future repaymentsof liabilities and debt obligations of the State while 4% will be appropriated during the year ending 31 December 2017.

Statutory allocation for the year ending 31 December 2010 is projected to decrease by 7.2%, following the trend of actual receiptsduring the first half of 2010. However, an increase of 17.9% is projected in 2011 and constant growth of 7.5% annually from 2012 to2017.

Excess crude oil revenue is projected to decrease by 17.8% in 2010 due to the depletion of the excess crude reserves account. A furtherdecrease of 47.3% is anticipated in 2011 while a constant annual growth of 10.0% is projected thereafter.

The ratios of recurrent expenditure to recurrent revenue are estimated at 82.3%, 63.5%, 61.4%, 60.0%, 57.7%, 54%, 52.8% and 50.8%for the years ending 31 December 2010, 2012, 2013, 2014, 2015, 2016 and 2017 respectively.

Capital expenditure will be based on availability of funds during the forecast period.

Consolidated revenue fund (CRF) charges is projected at N12 billion for the year ending 31 December 2010. However with therefinancing of existing loans from the proceeds of the bond issue, CRF charges will reduce by 58.5% during the year ending 31December 2011 and maintain an annual growth of 9% thereafter.

The 25,000,000 units of N1,000 each on offer at par will be fully subscribed and the net proceeds of the Offer of

Interests on the Bond shall accrue semi-annually to a Sinking Fund account while payment of principal and interest shall be madefrom the Sinking Fund Account to be managed by the Trustees.

The Bond principal shall be redeemed at par at maturity while the coupon shall be repaid in fourteen (14) equal semi-annualinstalments of N1.5 billion each on 30 June and 31 December beginning from 30 June 2011.

Receipts from 13% Oil Mineral Derivation Fund will grow by 39.2% and 15.0% in 2010 and 2011 respectively and subsequently by10.0% over the forecast period except in 2015 when it is projected to grow by 20.0% due to the expectation that the State willcommence extensive production of natural gas from its reserves from that period.

Revenue from Value Added Tax (VAT) is projected to increase by 29.8% during the year ending 31 December 2010, based on actualreceipts for the six months ended 30 June 2010. It will maintain an average annual growth rate of 10% from 2011 to 2017.

Internally generated revenue is expected to increase by 26.5%, 81.3% and 14.6% per annum in 2010, 2011 and 2012 respectively dueto an aggressive tax enforcement scheme being put in place by the State Government. It is however projected to grow at a constantrate of 12% from 2013 to 2017.

The following assumptions have been made and are expected to remain in operation throughout the projected period:

The Federation Account, Excess Crude Oil and Value Added Tax revenue sharing formula would not alter significantly from thoseused in preparing the projections.

There will be no significant changes in Federal and State Governments' monetary and fiscal policies during the forecast period thatwill adversely affect Edo State.

Nigeria's current crude oil production level would remain stable while crude oil price will not fall below US$52.0 per barrel duringthe forecast period.

approximatelyN24 billion will be received in December 2010.

FINANCIAL FORECASTS

56


4 . PROJECTED STATEMENT OF ASSETS AND LIABILITIES

Audited as at

31-Dec2009 2010 2011 2012 2013 2014 2015 2016 2017

N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000ASSETS:

Cash & bank balances 4,420,210 5,677,798 6,809,865 7,772,821 8,209,771 8,153,744 8,133,894 8,049,544 8,252,364 Investments 8.1 275,975 323,105 377,132 437,667 505,490 581,475 666,604 761,971 868,808 Other accounts (200,527) - - - - - - - - Debt Service Reserve Fund 8.2 - - 407,207 906,577 1,502,120 2,208,279 3,041,457 4,020,282 5,989,861 Excess of liabilities over assets 21,420,528 5,387,364 4,547,364 3,707,364 2,867,364 2,027,364 1,187,364 347,364 -

25,916,186 11,388,268 12,141,568 12,824,428 13,084,745 12,970,862 13,029,319 13,179,161 15,111,033

REPRESENTED BY:

Consolidated Revenue Fund (23,078,979) (17,513,819) 1,893,553 2,156,385 1,390,643 1,152,310 1,009,676 834,789 1,895,772 Capital Development Fund 27,574,637 23,514,722 5,293,444 6,054,103 7,324,617 7,582,909 7,790,822 7,976,726 7,225,399 Debt Service Reserve Fund 8.2 - - 407,207 906,577 1,502,120 2,208,279 3,041,457 4,020,282 5,989,861 Internal loans 8.3 15,193,164 - - - - - - - - External loans 8.4 6,227,364 5,387,364 4,547,364 3,707,364 2,867,364 2,027,364 1,187,364 347,364 -

25,916,186 11,388,268 12,141,568 12,824,428 13,084,745 12,970,862 13,029,319 13,179,161 15,111,033

<------------------------------------------ Projected as at 31 December ------------------------------------->

FINANCIAL FORECASTS

57


5 . PROJECTED CONSOLIDATED REVENUE FUND (CRF)

Audited Actual ProjectedYear ended 6 months to 6 months to

31-Dec 30-Jun 31-Dec2009 2010 2010 2010 2011 2012 2013 2014 2015 2016 2017

Note N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000

Recurrent receipts:Internally generated revenue 8,219,325 5,926,538 4,471,866 10,398,404 18,852,161 21,610,802 24,213,775 27,129,109 30,394,288 34,051,294 38,147,146 Statutory allocation 21,564,427 10,251,386 9,751,388 20,002,774 23,578,190 25,346,554 27,247,545 29,291,111 31,487,945 33,849,541 36,388,256 13% Oil mineral derivation revenue 4,532,012 3,369,009 2,939,171 6,308,180 7,254,407 7,979,848 8,777,833 9,655,616 11,586,739 12,745,413 14,019,955 Excess crude oil revenue 8,079,042 3,957,437 2,681,953 6,639,390 3,500,000 3,885,680 4,274,248 4,701,673 5,171,840 5,689,024 6,257,926 Other miscellaneous revenue 466,294 3,223,335 131,745 3,355,080 877,633 951,240 1,030,166 1,115,770 1,233,310 1,336,518 1,448,538

Total recurrent receipts 42,861,100 26,727,705 19,976,123 46,703,828 54,062,391 59,774,124 65,543,567 71,893,279 79,874,122 87,671,790 96,261,820

Recurrent expenditures:

Personnel costs 16,092,081 8,122,609 8,576,354 16,698,963 19,203,807 20,644,093 22,192,399 23,302,019 24,467,120 25,690,476 26,975,000 Consolidated revenue fund charges 2,661,649 4,965,899 7,153,719 12,119,618 5,030,599 5,481,390 5,973,600 6,511,117 7,098,197 7,739,502 8,440,142 Overhead costs 8,083,232 4,691,819 4,920,995 9,612,814 10,093,455 10,598,128 11,128,034 11,684,436 12,268,658 12,882,091 13,526,195

Total recurrent expenditures 26,836,962 17,780,327 20,651,068 38,431,395 34,327,861 36,723,610 39,294,034 41,497,573 43,833,975 46,312,069 48,941,337

Surplus of Revenue over Expenditure for the year 16,024,138 8,947,378 (674,944) 8,272,434 19,734,530 23,050,513 26,249,532 30,395,706 36,040,147 41,359,721 47,320,483

CRF brought forward (23,844,280) (23,078,979) - (23,078,979) (17,513,819) 1,893,553 2,156,385 1,390,643 1,152,310 1,009,676 834,789 (7,820,142) (14,131,601) (674,944) (14,806,545) 2,220,712 24,944,066 28,405,917 31,786,349 37,192,458 42,369,396 48,155,272

Appropriations:

Transfer to Debt Service Reserve Fund 8.2 - - (377,043) (432,216) (484,275) (542,582) (607,886) (681,026) (1,525,886) Repayment of internal loans 8.4 (499,355) - (15,193,164) (15,193,164) - - - - - - - Repayment of external loans 8.4 (1,359,482) - (840,000) (840,000) (840,000) (840,000) (840,000) (840,000) (840,000) (840,000) (347,364) Transfer to Sinking Fund for Bond repayments 8.5 - - - - (6,240,000) (6,240,000) (6,240,000) (6,240,000) (6,240,000) (6,240,000) (6,240,000) Transfer (from)/to Capital Development Fund (13,400,000) - 13,325,891 13,325,891 7,129,885 (15,275,466) (19,450,998) (23,011,457) (28,494,896) (33,773,581) (38,146,250)

CRF carried forward (23,078,979) (14,131,601) (3,382,218) (17,513,819) 1,893,553 2,156,385 1,390,643 1,152,310 1,009,676 834,789 1,895,772

<------------------------------ Projected for the years ending 31 December ------------------------------->

FINANCIAL FORECASTS

58


6 . PROJECTED CAPITAL DEVELOPMENT FUND (CDF)

Audited Actual ProjectedYear ended 6 months to 6 months to

31-Dec 30-Jun 31-Dec2009 2010 2010 2010 2011 2012 2013 2014 2015 2016 2017

N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000

Capital receipts:

Value Added Tax (VAT) 4,962,043 3,221,155 3,221,156 6,442,311 7,601,927 8,362,119 9,198,331 10,118,164 11,129,981 11,964,729 12,862,084 Grants & subventions 2,696,803 - 3,000,000 3,000,000 3,075,000 3,151,875 3,230,672 3,311,439 3,394,225 3,479,080 3,566,057

Other capital receipts 102,913 - - - - - - - - - - 7,761,759 3,221,155 6,221,156 9,442,311 10,676,927 11,513,994 12,429,003 13,429,603 14,524,206 15,443,810 16,428,141

Net bond proceeds - - 24,000,231 24,000,231 - - - - - - 7,248,800

Receipt from loans 10,000,000 - - - - - - - - - -

Transfer (to)/from Consolidated Revenue Fund 13,400,000 - (13,325,891) (13,325,891) (7,129,885) 15,275,466 19,450,998 23,011,457 28,494,896 33,773,581 38,146,250

Total capital receipts 31,161,759 3,221,155 16,895,496 20,116,651 3,547,042 26,789,460 31,880,002 36,441,060 43,019,102 49,217,391 61,823,191

Capital expenditures:

Economic sector 14,778,192 6,177,872 4,328,881 10,506,753 13,060,992 14,315,841 16,223,028 18,091,384 20,121,259 22,064,169 29,410,023 Social service sector 3,725,141 833,396 2,944,147 3,777,543 2,612,198 3,904,320 5,509,708 7,236,554 8,990,350 11,277,242 13,140,649 Environmental development sector 8,629,289 1,046,786 4,035,232 5,082,018 2,394,515 3,383,744 3,673,139 4,703,760 6,421,678 8,825,668 9,386,178 General administration 3,272,658 2,444,780 2,365,472 4,810,252 3,700,614 4,424,896 5,203,613 6,151,070 7,277,902 6,864,408 10,637,668

Total capital expenditures 8.6 30,405,280 10,502,834 13,673,732 24,176,566 21,768,320 26,028,801 30,609,488 36,182,768 42,811,189 49,031,487 62,574,518

Net capital receipts/(expenditures) 756,479 (7,281,679) 3,221,764 (4,059,915) (18,221,278) 760,659 1,270,514 258,292 207,912 185,904 (751,327)

CDF brought forward 26,818,158 - 27,574,637 27,574,637 23,514,722 5,293,444 6,054,103 7,324,617 7,582,909 7,790,822 7,976,726

CDF carried forward 27,574,637 (7,281,679) 30,796,401 23,514,722 5,293,444 6,054,103 7,324,617 7,582,909 7,790,822 7,976,726 7,225,399

<----------------------- Projected for the years ending 31 December ----------------------->

FINANCIAL FORECASTS

59


7 . PROJECTED STATEMENT OF CASHFLOWS

Auditedyear ended

31-Dec2009 2010 2011 2012 2013 2014 2015 2016 2017

N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000Inflows:Internally Generated Revenue 8,219,325 10,393,691 18,837,333 21,584,517 24,174,654 27,075,608 30,324,676 33,963,632 38,039,263 Statutory allocation 21,564,427 20,002,774 23,578,190 25,346,554 27,247,545 29,291,111 31,487,945 33,849,541 36,388,256 13% Oil mineral derivation revenue 4,532,012 6,308,180 7,254,407 7,979,848 8,777,833 9,655,616 11,586,739 12,745,413 14,019,955 Excess crude fund 8,079,042 6,639,390 3,500,000 3,885,680 4,274,248 4,701,673 5,171,840 5,689,024 6,257,926 Value Added Tax 4,962,043 6,442,311 7,601,927 8,362,119 9,198,331 10,118,164 11,129,981 11,964,729 12,862,084 Miscellaneous receipts 466,294 3,355,080 877,633 951,240 1,030,166 1,115,770 1,233,310 1,336,518 1,448,538 Total inflows 47,823,143 53,141,426 61,649,489 68,109,958 74,702,777 81,957,942 90,934,490 99,548,857 109,016,022

Outflows:Personnel emoluments (16,092,081) (16,698,963) (19,203,807) (20,644,093) (22,192,399) (23,302,019) (24,467,120) (25,690,476) (26,975,000) Consolidated revenue fund charges (2,661,650) (12,320,145) (5,030,599) (5,481,390) (5,973,600) (6,511,117) (7,098,197) (7,739,502) (8,440,142) Overhead costs (8,083,232) (9,612,814) (10,093,455) (10,598,128) (11,128,034) (11,684,436) (12,268,658) (12,882,091) (13,526,195) Others 221,635 - - - - - - - - Net cashflow from operating activities 21,207,815 14,509,504 27,321,628 31,386,348 35,408,743 40,460,369 47,100,515 53,236,788 60,074,684

Cash flows from investing activities:Economic sector (14,778,192) (10,506,753) (13,060,992) (14,315,841) (16,223,028) (18,091,384) (20,121,259) (22,064,169) (29,410,023) Social sector (3,725,141) (3,777,543) (2,612,198) (3,904,320) (5,509,708) (7,236,554) (8,990,350) (11,277,242) (13,140,649) Environmental sector (8,629,289) (5,082,018) (2,394,515) (3,383,744) (3,673,139) (4,703,760) (6,421,678) (8,825,668) (9,386,178) General administration (3,272,658) (4,810,252) (3,700,614) (4,424,896) (5,203,613) (6,151,070) (7,277,902) (6,864,408) (10,637,668) Transfer to debt reserve fund - - (377,043) (432,216) (484,275) (542,582) (607,886) (681,026) (1,525,886) Purchase of investments - (47,130) (54,027) (60,534) (67,823) (75,986) (85,128) (95,368) (106,836)

- 4,713 14,829 26,285 39,121 53,501 69,613 87,663 107,883 Net cash flows to investing (30,405,280) (24,218,983) (22,184,561) (26,495,267) (31,122,465) (36,747,834) (43,434,590) (49,720,218) (64,099,357)

Cash flows from financing activities:Net proceed from Bond issue - 24,000,231 - - - - - - 7,248,800 Proceeds from borrowings 10,000,000 - - - - - - - - Repayments of internal loans (499,355) (15,193,164) - - - - - - - Repayments of external loans (1,359,482) (840,000) (840,000) (840,000) (840,000) (840,000) (840,000) (840,000) (347,364) Grants & subventions 2,696,803 3,000,000 3,075,000 3,151,875 3,230,672 3,311,439 3,394,225 3,479,080 3,566,057 Other capital receipts 102,913 - - - - - - - - Transfer to Sinking Fund - - (6,240,000) (6,240,000) (6,240,000) (6,240,000) (6,240,000) (6,240,000) (6,240,000)

Net cash flows (to)/ from financing activities 10,940,879 10,967,067 (4,005,000) (3,928,125) (3,849,328) (3,768,561) (3,685,775) (3,600,920) 4,227,493

Net increase in cash and cash equivalents 1,743,414 1,257,588 1,132,067 962,956 436,950 (56,026) (19,851) (84,350) 202,820

Cash & cash equivalents at 01 January 2,676,796 4,420,210 5,677,798 6,809,865 7,772,821 8,209,771 8,153,744 8,133,894 8,049,544

Cash & cash equivalents at 31 December 4,420,210 5,677,798 6,809,865 7,772,821 8,209,771 8,153,744 8,133,894 8,049,544 8,252,364

<--------------------------- Projected for the years ending 31 December ---------------------------->

Investment income

FINANCIAL FORECASTS

60


8 . NOTES TO THE FINANCIAL PROJECTIONS

Audited as at 31-Dec

2009 2010 2011 2012 2013 2014 2015 2016 2017N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000

8.1 Debt Service Reserve Fund

As at 1 January - - - 407,207 906,577 1,502,120 2,208,279 3,041,457 4,020,282 Additions - - 377,043 432,216 484,275 542,582 607,886 681,026 1,525,886

- - 377,043 839,423 1,390,852 2,044,702 2,816,164 3,722,483 5,546,168 Interest income @8% - 30,163 67,154 111,268 163,576 225,293 297,799 443,693 As at 31 December - - 407,207 906,577 1,502,120 2,208,279 3,041,457 4,020,282 5,989,861

Audited as at31-Dec

2009 2010 2011 2012 2013 2014 2015 2016 2017N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000

8.2 Investments

As at 1 January 275,975 275,975 323,105 377,132 437,667 505,490 581,475 666,604 761,971 Additions - 47,130 54,027 60,534 67,823 75,986 85,128 95,368 106,836 As at 31 December 275,975 323,105 377,132 437,667 505,490 581,475 666,604 761,971 868,808

8.3 Internal loans

As at 1 January 5,692,519 15,193,164 - - - - - - - Additions 10,000,000 - - - - - - - -

15,692,519 15,193,164 - - - - - - - Repayments (499,355) (15,193,164) - - - - - - - As at 31 December 15,193,164 - - - - - - - -

8.4 External loans

As at 1 January 4,157,938 6,227,364 5,387,364 4,547,364 3,707,364 2,867,364 2,027,364 1,187,364 347,364 Additions 3,428,908 - - - - - - - -

7,586,846 6,227,364 5,387,364 4,547,364 3,707,364 2,867,364 2,027,364 1,187,364 347,364 Repayments (1,359,482) (840,000) (840,000) (840,000) (840,000) (840,000) (840,000) (840,000) (347,364) As at 31 December 6,227,364 5,387,364 4,547,364 3,707,364 2,867,364 2,027,364 1,187,364 347,364 -

8.5 Sinking Fund Account

As at 1 January - - - 3,614,200 7,517,536 11,733,139 16,285,990 21,203,069 26,513,515 Annual ISPO deduction - - 6,240,000 6,240,000 6,240,000 6,240,000 6,240,000 6,240,000 6,240,000

- - 6,240,000 9,854,200 13,757,536 17,973,139 22,525,990 27,443,069 32,753,515 Interest on investment - - 499,200 788,336 1,100,603 1,437,851 1,802,079 2,195,446 2,620,285

- - 6,739,200 10,642,536 14,858,139 19,410,990 24,328,069 29,638,515 35,373,800 Repayments - Coupon - - (3,125,000) (3,125,000) (3,125,000) (3,125,000) (3,125,000) (3,125,000) (3,125,000) - Principal - - - - - - - - (25,000,000)Transfer to Edo State Government - - - - - - - - (7,248,800)

As at 31 December - - 3,614,200 7,517,536 11,733,139 16,285,990 21,203,069 26,513,515 (0)


8 . NOTES TO THE FINANCIAL PROJECTIONS (CONT'D)

8.6 Capital expenditures

2010 2011 2012 2013 2014 2015 2016 2017

Economic sector 43% 60% 55% 53% 50% 47% 45% 47%Social sector 16% 12% 15% 18% 20% 21% 23% 21%Environmental development sector 21% 11% 13% 12% 13% 15% 18% 15%General administration 20% 17% 17% 17% 17% 17% 14% 17%

Capital expenditures will be based on availability of fund during the projection period. However, preference will be given to the sharing ratio shown in the table below:

<----------------------------------------- Projected as at 31 December -------------------------------------->

The Edo State Debt Securities Issuance Law empowers the State to establish a Debt Service Reserve Fund for the purpose of accumulation of funds for future repayments of liabilities and debt obligationsof the State. The reserve shall be funded through the appropriation of up to 30% of the monthly IGR of the State. Based on availability of fund, an appropriation of 2% of IGR will be made from 2011 to2016 while 4% will be appropriated during the year ending 31 December 2017. The fund will be invested at a simple interest rate ot 8% per annum.

An amount of N6.24 billion shall be set aside annually from the Consolidated Revenue Fund to a Sinking Fund account to be managed by the Trustees. Both principal and interest repayments shall bemade from the Sinking Fund Account. The annual balance in the Sinking fund account is projected to generate income at a simple interest rate of 8% per annum.

<----------------------------------------- Projected as at 31 December -------------------------------------->

FINANCIAL FORECASTS

61

The following is a copy of the letter from the Issuing Houses on the Revenue and Expenditure Projections: LETTER FROM THE FINANCIAL ADVISERS AND ISSUING HOUSES

November 11, 2010 The Executive Council Edo State Secretariat Benin City Edo State Dear Sirs/Madam

REVENUE AND EXPENDITURE FORECASTS

We have discussed the basis and assumptions upon which the forecasts were made with yourselves and Mr. B.I. Aigbe the State’s Auditor-General. Having considered the assumptions that have been made in preparing the forecasts as well as the accounting basis and calculations reviewed by Mr. B.I. Aigbe, we consider that the forecasts (for which you all as members of the State Executive Council are solely responsible) have been made after due care and careful enquiry. Yours faithfully, For: The Joint Financial Advisers/Issuing Houses

Ike Chioke Taiwo Okeowo Jonathan Long Managing Director Managing Director/ CEO Executive Director Afrinvest West Africa Limited FBN Capital Limited FCMB Capital Markets Limited Timothy Oguntayo Chris Newson Amadou Hott Managing Director/CEO Chief Executive Officer Chief Executive Officer Skye Financial Services Limited Stanbic IBTC Bank PLC UBA Capital Limited

RC 261272

HISTORICAL FINANCIAL INFORMATION – FIVE YEAR FINANCIAL INFORMATION

62

Historical Financial Information – Five Year Financial Information REPORTING ACCOUNTANTS REPORT ON HISTORICALS

9 November 2010 The Executive Council Edo State Government of Nigeria PMB 1059, Benin City Edo State Gentlemen We have examined the audited financial statements of Edo State Government of Nigeria (" the State" or "EDSG") for the five years ended 31 December 2009. The financial statements were prepared on cash basis. The financial statements in respect of the accounting periods under review were audited by the Auditor-General of the State, who issued clean audit opinions on them. No audited financial statements of the State have been prepared for period subsequent to 31 December 2009. The accompanying financial information is based on the audited financial statements of the State after making such adjustments as we considered appropriate. The principal adjustments are stated in Note 6.24 to the financial information. In our opinion, the financial information together with the notes thereon give a true and fair view of the assets and liabilities, revenue and expenditure and the cash flows of Edo State Government of Nigeria for the five years ended 31 December 2009. Yours faithfully Bosede A Odeloye For: Akintola Williams Deloitte


63

STATEMENT OF ACCOUNTING POLICIES EDO STATE GOVERNMENT OF NIGERIA

1 . STATEMENT OF ACCOUNTING POLICIES

The significant accounting policies adopted by Edo State Government of Nigeria are as follows:

(i) Basis of accounting

(ii) Investments

(iii) Revenue

The revenue of the State consists of the following:* Statutory allocation* Internally generated revenue (IGR)* Capital receipts.

(iv) Expenditure

The State's expenditure comprises:* Recurrent expenditure* Capital expenditure.

(v) Fixed assets

(vi) Assets and liabilities

Assets and liabilities are stated at their book values.

(vii) Foreign currencies

Investment in shares are held under the Ministry of Finance Incorporated (MOFI) and are stated at cost while bonus issues areadded to the number of units owned but not considered in cost recognition. All investment income received are credited toConsolidated Revenue Fund.

Transactions in foreign currencies are converted to Naira at the rates of exchange ruling at the dates of the transaction. Foreigncurrency balances are converted to Naira at the rates of exchange ruling at the statement of assets and liabilities date. Gains orlosses arising on translation when realised, are credited or debited to the Consolidated Revenue Fund.

The financial statements were prepared under the historical cost convention using the cash basis of accounting.

Fixed assets are written off at the date of purchase by charging the cost to Capital Development Fund. No depreciation is chargedon the assets.


64


2 . STATEMENT OF ASSETS AND LIABILITIES

<-------------------- As at 31 December -------------------->2009 2008 2007 2006 2005

Notes N'000 N'000 N'000 N'000 N'000

ASSETS

Cash & bank balances 6.1 4,420,210 2,676,796 7,207,460 1,492,496 (1,463,862)

Investments 6.2 275,975 275,975 - - -

Other Accounts 6.3 (200,527) 21,107 22,669 (8,917) (15,817)

Excess of liabilities over assets 6.4 21,420,528 9,850,457 8,890,842 4,445,000 4,158,573

25,916,186 12,824,335 16,120,971 5,928,579 2,678,894

REPRESENTED BY:

Consolidated Revenue Fund (23,078,979) (23,844,280) (21,068,374) (9,984,021) (4,169,324)

Capital Development Fund 27,574,637 26,818,158 28,298,503 11,467,600 2,689,645

Internal loans 6.5 15,193,164 5,692,519 5,000,000 - -

External loans 6.6 6,227,364 4,157,938 3,890,842 4,445,000 4,158,573

25,916,186 12,824,335 16,120,971 5,928,579 2,678,894


65

FUND EDO STATE GOVERNMENT OF NIGERIA

3 . STATEMENT OF CONSOLIDATED REVENUE FUND

<-------------------- Year ended 31 December -------------------->2009 2008 2007 2006 2005

Notes N'000 N'000 N'000 N'000 N'000REVENUE

Statutory allocation 6.7 21,564,427 24,149,865 20,760,274 20,081,224 17,432,097

13% Mineral resources revenue 6.8 4,532,012 1,143,120 1,717,822 4,493,000 2,830,020

Excess crude oil revenue 6.9 8,079,042 8,738,357 4,788,769 4,391,191 2,880,326

Internally generated revenue 6.10 8,219,325 4,859,284 3,373,035 3,006,606 3,165,645

Miscellaneous revenue 6.11 466,294 - 28,060 - -

Total revenue 42,861,100 38,890,626 30,667,960 31,972,021 26,308,088

EXPENDITURE

Personnel costs 6.12 16,092,081 13,803,871 11,047,756 7,178,000 6,781,285 Consolidated revenue fund charges 6.13 2,661,649 4,495,930 2,788,397 2,481,431 2,562,439 Overhead costs 6.14 8,083,232 11,397,244 9,740,976 7,913,082 5,970,701

Total expenditure 26,836,962 29,697,045 23,577,129 17,572,513 15,314,425

Surplus of revenue over expenditure for the year 16,024,138 9,193,581 7,090,831 14,399,508 10,993,663

Consolidated Revenue Fund asat 1 January (23,844,280) (21,068,374) (9,984,021) (4,169,324) 1,145,958

(7,820,142) (11,874,793) (2,893,190) 10,230,184 12,139,621

Appropriations: Repayment of loans 6.22 (1,858,837) (9,969,487) (13,675,184) (15,714,205) (14,108,945)

Transfer to Capital Development Fund (CDF) (13,400,000) (2,000,000) (4,500,000) (4,500,000) (2,200,000)

Consolidated Revenue Fund asat 31 December (23,078,979) (23,844,280) (21,068,374) (9,984,021) (4,169,324)


66

Statement of Capital Development Fund EDO STATE GOVERNMENT OF NIGERIA

4 . STATEMENT OF CAPITAL DEVELOPMENT FUND

<------------------- Year ended 31 December -------------------->2009 2008 2007 2006 2005

Notes N'000 N'000 N'000 N'000 N'000

Capital receipts:Value Added Tax (VAT) 6.15 4,962,043 4,263,723 3,333,071 2,645,949 2,061,268 Transfer from Consolidated Revenue Fund (CRF) 13,400,000 2,000,000 4,500,000 4,500,000 2,200,000

Receipt from loans/overdrafts 6.16 10,000,000 7,777,778 16,045,000 8,919,651 5,629,059 Grants and subventions 2,696,803 - - - - Other capital receipts 6.17 102,913 2,915,538 7,185,045 578,590 349,580 Total capital receipts 31,161,759 16,957,039 31,063,116 16,644,190 10,239,907

Capital expenditures:Economic sector 6.18 14,778,192 8,371,348 8,152,107 2,444,483 4,162,640 Social service sector 6.19 3,725,141 940,404 982,917 1,483,858 1,925,345 Environmental development sector 6.20 8,629,289 5,820,997 2,120,722 3,131,126 1,370,934 General administration 6.21 3,272,658 3,304,635 2,976,467 806,768 1,190,767

30,405,280 18,437,384 14,232,213 7,866,235 8,649,686

Net capital receipts/(expenditure) 756,479 (1,480,345) 16,830,903 8,777,955 1,590,221

Capital Development Fund as at 1 January 26,818,158 28,298,503 11,467,600 2,689,645 1,099,424

Capital Development Fund as at 31 December 27,574,637 26,818,158 28,298,503 11,467,600 2,689,645


67

Statement of Cash Flows EDO STATE GOVERNMENT OF NIGERIA

5 . STATEMENT OF CASH FLOWS

<--------------------- Year ended 31 December ---------------------->2009 2008 2007 2006 2005

N'000 N'000 N'000 N'000 N'000Cash flows from operating activities:

Receipts:Statutory allocation 21,564,427 24,149,865 20,760,274 20,081,224 17,432,097 13% Mineral revenue 4,532,012 1,143,120 1,717,822 4,493,000 2,830,020 Excess crude fund 8,079,042 8,738,357 4,788,769 4,391,191 2,880,326 Internally Generated Revenue 8,219,325 4,859,284 3,373,035 3,006,606 3,165,645 Miscellaneous receipts 466,294 - 28,060 - - Value Added Tax 4,962,043 4,263,723 3,333,071 2,645,949 2,061,268

Total receipts 47,823,143 43,154,349 34,001,031 34,617,970 28,369,356

Payments:Personnel emoluments (16,092,081) (13,803,871) (11,047,756) (7,178,000) (6,781,285) Overhead costs (8,083,232) (11,397,244) (9,740,976) (7,913,082) (5,970,701)

(2,661,650) (2,968,179) (2,788,375) (2,481,122) (2,235,285) Others 221,635 1,589 (51,775) (252,709) (285,898)

(26,615,328) (28,167,705) (23,628,882) (17,824,913) (15,273,169)

21,207,815 14,986,644 10,372,149 16,793,057 13,096,187

Cash flows from investing activities:Purchase/construction of assets:

Economic sector (14,778,192) (8,371,348) (8,131,940) (2,198,983) (2,378,307) Social sector (3,725,141) (940,404) (982,917) (1,483,858) (1,925,345) Environmental sector (8,629,289) (5,820,997) (2,120,722) (3,131,126) (1,370,934) General administration (3,272,658) (3,304,635) (2,976,467) (806,768) (1,190,767)

- (275,975) - - - (30,405,280) (18,713,359) (14,212,046) (7,620,735) (6,865,353)

Cash flows from financing activities:Proceeds from loan and otherborrowings 6.16 10,000,000 7,777,778 16,045,000 8,919,651 5,629,059 Grants and subventions 2,696,803 - - - - Other capital receipts 6.17 102,913 2,915,538 7,185,045 578,590 349,580 Loan repayments 6.22 (1,858,837) (11,497,265) (13,675,184) (15,714,205) (14,108,945)

10,940,879 (803,949) 9,554,861 (6,215,964) (8,130,306)

1,743,414 (4,530,664) 5,714,964 2,956,358 (1,899,472)

2,676,796 7,207,460 1,492,496 (1,463,862) 435,610

4,420,210 2,676,796 7,207,460 1,492,496 (1,463,862)

Represented by:4,420,210 2,676,796 7,207,460 1,534,620 1,335,059

Short-term finance - - - (42,124) (2,798,921) 4,420,210 2,676,796 7,207,460 1,492,496 (1,463,862)

Cash & cash equivalents as at 31 December

Cash at bank and in hand (note 6.1)

Total payments

Consolidated revenue fund charges

Net cash flows from operating activities

Cash & cash equivalents as at 1 January

Net cash flows to investing activities

Net cash flows from/(to) financing activities

Net increase/(decrease) in cash and cash equivalents

Purchase of financial market instruments


68

NOTES TO THE FINANCIAL STATEMENTS 6 . NOTES TO THE FINANCIAL STATEMENTS

<------------------------- As at 31 December ------------------------->2009 2008 2007 2006 2005

N'000 N'000 N'000 N'000 N'0006.1

6.1.1 SummaryCurrent accounts 4,367,179 2,626,796 7,007,460 1,534,620 1,335,059 Fixed deposits 50,000 50,000 200,000 - - Domiciliary account 3,031 - - - -

4,420,210 2,676,796 7,207,460 1,534,620 1,335,059 Short-term finance (note 6.1.2) - - - (42,124) (2,798,921)

4,420,210 2,676,796 7,207,460 1,492,496 (1,463,862)

6.1.2 Short-term financeEquitorial Trust Bank Limited (ETB) - - - - 1,767,606 Oceanic Bank Plc - - - - 695,455 United Bank for Africa Plc (UBA) - 38,625 Intercontinental Bank Plc - - - 42,124 - Finbank Plc - - - - 297,235

- - - 42,124 2,798,921

6.2 INVESTMENTS

6.2.1 SummaryQuoted investments 218,191 218,191 - - - Unquoted investments (note 6.2.3) 57,784 57,784 - - -

275,975 275,975 - - -

6.2.2 Quoted investmentsAt cost 218,191 218,191 - - -

Market value 504,747 670,293 - - -

6.2.3 Unquoted investmentsBendel Feeds & Flour Mill Limited 32,000 32,000 - - - NWRD Nig. & Const. Water Ltd 538 538 - - - Pedrocchi & Company Limited 346 346 - - - Okomu Hotel & Resort Limited 12,400 12,400 - - - Osse River Rubber Estates Limited 12,500 12,500 - - -

57,784 57,784 - - -

<------------------------- As at 31 December ------------------------->2009 2008 2007 2006 2005

N'000 N'000 N'000 N'000 N'0006.3 OTHER ACCOUNTS

M. V. Loan - EDHA 128,373 117,676 117,676 - - Edo Investment & Co 8,322 8,322 8,322 - - M. V. Loan - Judiciary (780) (780) (780) (436) (7,936) M. V. Loan - Civil Service (43,983) (23,535) (15,489) (8,607) (8,607) M. V. Loan - FGN - Judiciary (73) (73) (73) (73) (73) M. V. Loan - M. Cycle (144,585) (132,702) (87,186) - - Non-personal advances 40,000 40,000 - - - Other advances 12,199 12,199 199 199 799 Remittance in transit (200,000) - - - -

(200,527) 21,107 22,669 (8,917) (15,817)

CASH AND BANK BALANCES

Short-term finance represents bank overdrafts taken by the State Government for recurrent expenditures.

The State has investments in some listed companies as at 31 December 2008 and 2009. However, the information on the cost ofpurchase was not provided as the relevant documents were said to have been lost in a fire incident some years back. Informationprovided by the State Government showed that most of the quoted and unquoted investments were purchased in the 90s but thedetails were not captured in the audited financial statements of the State prior to 2008.


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6 . NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

<------------------------- As at 31 December ------------------------->2009 2008 2007 2006 2005

N'000 N'000 N'000 N'000 N'000

6.4 EXCESS OF LIABILITIES OVER ASSETS

Internal loans (note 6.5) 15,193,164 5,692,519 5,000,000 - - External loans (note 6.6) 6,227,364 4,157,938 3,890,842 4,445,000 4,158,573

21,420,528 9,850,457 8,890,842 4,445,000 4,158,573

6.5 INTERNAL LOANS

Finbank Plc (note i) 3,472,222 3,472,222 5,000,000 - - Equitorial Trust Bank Limited (note ii) 1,720,942 2,220,297 - - - Skye Bank Plc (note iii) 5,000,000 - - - - United Bank for Africa Plc (note iii) 5,000,000 - - - -

15,193,164 5,692,519 5,000,000 - -

(i) Finbank Plc

(ii) Equitorial Trust Bank Limited

(iii) Skye Bank Plc and United Bank for Africa Plc

<------------------------- As at 31 December ------------------------->2009 2008 2007 2006 2005

N'000 N'000 N'000 N'000 N'0006.6 EXTERNAL LOANS

6.6.1 Foreign loans - NairaAs at 31 December 6,227,364 4,157,938 3,890,842 4,445,000 4,158,573

Exchange rate to US$1.00 N148.10 N131.25 N116.80 N127.00 N129.00

<------------------------- As at 31 December ------------------------->2009 2008 2007 2006 2005

US$'000 US$'000 US$'000 US$'000 US$'0006.6.2 Foreign loans - US Dollars

IBRD (note i) 1,098 1,722 2,429 3,218 4,169

IDA (note ii) 17,188 10,704 9,886 7,206 123

ADB/ADF (note iii) 23,761 19,253 26,843 32,157 37,314

42,047 31,679 39,158 42,581 41,606

(i) IBRDNational FADAMA 42 55 68 81 92 National Agric Tech. Support 63 83 103 121 138 IDF - - 2 138 275 Essential Drugs 26 204 393 568 731 National Water Rehabilitation 967 1,380 1,863 2,310 2,726 MSADP - - - - 207

1,098 1,722 2,429 3,218 4,169

During the year ended 31 December 2009, the State Government negotiated loans of N5 billion each with Skye Bank Plc and UnitedBank for AfricaPlc. Although, the loans were disbursed bythe banks in January2010, the State Government recognised the inflow ofcash and issued cheques expending the loans in December 2009.

The loan was obtained by the State Government in January 2009 through the Ministry of Education.

The loan was obtained by the State Government in 2007 and has not been repaid since 2008as the current balance on the loan is in

dispute. As at 31December 2009, the balance per the bank statement was N4.56 billion made up of principal and accumulated interest

charges.

This represents the State's obligations on internal and external loans as at the respective balance sheet dates.


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<------------------------- As at 31 December ------------------------->2009 2008 2007 2006 2005

US$'000 US$'000 US$'000 US$'000 US$'000(ii) IDA

Ist Education 71 82 95 109 123 Community based System Development 13,376 7,880 7,813 5,243 - HIV/AIDS 3,148 2,742 1,978 1,854 - National FADAMA II 593 - - - -

17,188 10,704 9,886 7,206 123

(iii) ABD/ADF 14,657 10,641 17,894 23,070 27,438 ELB: Palm Oil - 8,243 - 123 338 EDF: Oil Palm Belt Rural Dev. 8,681 - 8,619 8,964 9,436 IFAD: Cassava 423 369 330 - 102

23,761 19,253 26,843 32,157 37,314

Total Multilateral loans 42,047 31,679 39,158 42,581 41,606 Unreconciled difference - - (5,846) (7,581) (9,369)

Total per DMO's schedule 42,047 31,679 33,312 35,000 32,237

6.6.3 Confirmation of external debts

<------------------ Year ended 31 December -------------->2009 2008 2007 2006 2005

N'000 N'000 N'000 N'000 N'0006.7

January 1,887,782 1,845,812 1,435,067 1,609,272 1,619,848 February 1,476,955 1,679,937 1,599,783 1,557,801 1,411,176 March 2,002,562 1,731,522 1,697,980 1,766,981 1,434,017 April 1,238,148 2,440,872 1,614,988 1,886,219 1,412,205 May 1,214,304 2,027,920 1,386,602 1,852,940 1,299,265 June 1,558,863 1,911,910 1,570,431 1,668,999 1,347,944 July 2,103,444 2,523,150 1,825,624 1,628,752 1,638,813 August 4,435,906 1,975,665 2,026,192 1,534,466 1,422,843 September 1,369,552 2,256,785 1,997,032 1,678,627 1,543,181 October 1,465,289 2,009,639 1,612,337 1,573,241 1,217,113 November 1,050,413 1,933,298 1,849,104 1,601,110 171,214 December 1,761,209 1,813,355 2,145,134 1,722,816 2,914,478

21,564,427 24,149,865 20,760,274 20,081,224 17,432,097

6.8 13% MINERAL DERIVATION

January 110,598 72,817 275,260 233,264 296,436 February 55,635 64,401 280,075 236,976 295,348 March 50,004 69,032 79,638 261,941 197,380 April 380,136 108,021 151,541 1,346,231 287,692 May 331,612 205,306 77,425 366,922 275,964 June 455,018 109,081 72,127 294,825 195,813 July 416,318 106,791 82,280 300,089 235,718 August 539,647 80,240 88,664 274,729 205,648 September 527,091 93,139 90,006 299,595 214,836 October 629,639 86,033 67,885 269,132 172,398 November 543,562 78,625 365,971 293,587 221,595 December 492,752 69,634 86,950 315,709 231,192

4,532,012 1,143,120 1,717,822 4,493,000 2,830,020

STATUTORY ALLOCATION

The balances on external debts of the State as shown above were based on the confirmation dated 27 September 2010 received bythe State Government from Debt Management Office (DMO) in respect of Edo State external debts. The State does not maintain anyother record of its external debts independent of the DMO.


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N'000 N'000 N'000 N'000 N'0006.9 EXCESS CRUDE OIL REVENUE

January 540,977 - - - - February - - - - 483,120 March - 1,544,890 1,536,402 - 241,551 April - - 336,573 - 241,551 May 2,638,318 2,238,591 585,380 - 241,551 June 682,203 518,684 54,074 - 241,551 July - 2,111,945 1,326,471 2,195,595 241,587 August - 488,670 332,280 - 241,587 September 517,744 195,171 20,360 - 241,587 October 2,820,899 445,743 429,509 2,195,596 235,413 November 878,901 532,005 167,720 - 235,414 December - 662,658 - 235,414

8,079,042 8,738,357 4,788,769 4,391,191 2,880,326

6.10 INTERNALLY GENERATED REVENUE

Taxes 5,758,871 3,288,932 2,500,619 1,951,815 1,699,768 Fines and fees 1,146,904 457,856 436,625 545,236 373,450 Licence fees 223,725 140,842 140,451 137,627 135,839

Earnings and sales 333,946 518,083 117,988 53,004 104,516 Rent from Government properties 265,457 2,939 59 - 2,646 Interest, dividend repayments 31,312 60,823 49,874 143,907 292,563 Miscellaneous 459,110 389,809 127,419 175,017 556,863

8,219,325 4,859,284 3,373,035 3,006,606 3,165,645

6.11 MISCELLANEOUS REVENUE

September - - 28,060 - - October 65,328 - - - - December 400,966 - - - -

466,294 - 28,060 - -

6.12 PERSONNEL COSTS

January 1,098,165 1,030,095 640,361 316,687 543,152 February 1,353,519 1,022,898 741,929 599,239 206,328

March 1,277,141 1,064,374 709,838 517,399 689,900 April 1,225,717 1,080,753 760,311 398,162 460,837 May 1,214,626 1,110,263 480,272 655,468 485,449 June 1,075,926 978,910 800,281 657,356 565,600 July 1,283,295 1,415,407 962,878 607,257 589,070 August 1,280,295 1,258,523 1,959,530 684,611 578,825 September 1,598,452 1,255,157 653,921 642,443 595,583 October 1,282,381 1,203,252 1,123,792 705,376 622,384 November 1,563,022 1,194,395 1,029,737 701,104 614,960 December 1,839,542 1,189,844 1,184,906 692,898 829,197

16,092,081 13,803,871 11,047,756 7,178,000 6,781,285

6.13 CONSOLIDATED REVENUE FUND CHARGES

Pensions 1,872,483 1,990,088 1,667,287 1,094,556 1,444,433 Gratuities 656,453 355,316 608,557 1,115,676 574,952 Others 132,714 120,028 110,922 101,387 86,139 NEPA arrears - 460,147 20,000 12,000 70,731 Others (in lieu of VAT) - 42,600 68,536 157,503 59,030 Edo State Oil & Gas PADC - - 313,073 - - Treasury clearance account written off (1) (27) 22 199 163,671 Other accounts - 1,527,778 - 110 163,483

2,661,649 4,495,930 2,788,397 2,481,431 2,562,439


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N'000 N'000 N'000 N'000 N'000

6.14 OVERHEAD COSTS

January 610,762 416,365 600,014 240,126 311,756 February 463,809 751,892 822,828 472,216 492,502 March 429,884 792,108 1,850,443 579,762 541,059 April 468,907 1,372,129 1,112,440 496,222 424,758 May 424,634 1,102,927 756,242 484,172 492,237 June 576,453 1,178,539 257,775 787,883 490,603 July 732,997 1,085,893 358,037 652,978 389,285 August 727,200 732,187 692,514 720,843 282,189 September 784,371 652,851 800,764 444,880 378,848 October 823,347 1,673,532 672,897 954,871 582,979 November 856,019 718,783 416,488 971,726 556,798 December 1,184,849 920,038 1,400,534 1,107,403 1,027,687

8,083,232 11,397,244 9,740,976 7,913,082 5,970,701

6.15 VALUE ADDED TAX (VAT)

January 337,626 359,753 225,285 218,418 188,892 February 491,049 344,395 239,722 126,662 151,206 March 379,304 335,129 246,244 196,144 192,051 April 379,037 366,103 257,549 191,155 185,230 May 325,883 286,821 322,382 134,881 168,365 June 443,501 359,753 331,364 194,519 179,101 July 437,058 371,604 205,472 247,344 139,706 August 507,969 369,919 339,962 214,538 156,550 September 418,555 412,328 240,822 269,682 207,815 October 390,235 307,887 344,619 383,456 176,588 November 435,569 362,565 289,837 221,764 148,288 December 416,257 387,466 289,813 247,386 167,476

4,962,043 4,263,723 3,333,071 2,645,949 2,061,268

6.16 RECEIPT FROM LOANS & OTHER BORROWINGS

Internal loans 10,000,000 - 5,000,000 1,680,952 1,635,050 Local loans for recurrent expenditure - 7,777,778 11,045,000 7,238,699 3,994,009

10,000,000 7,777,778 16,045,000 8,919,651 5,629,059

6.17 OTHER CAPITAL RECEIPTS

Capital receipts- Paris Club - 1,532,700 - - - Capital receipts- Others 102,913 1,382,838 7,185,045 578,590 349,580

102,913 2,915,538 7,185,045 578,590 349,580

Capital receipts of N7.18 billion during the year ended 31 December 2007 represented proceeds from the repurchase of Afribankshares from Edo State. We were unable to confirm details of the transaction as well as the accounting treatment as the supportingdocumentations were not made available for our review.


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N'000 N'000 N'000 N'000 N'0006.18 ECONOMIC SECTOR

Agriculture & rural development 137,054 1,082,407 739,681 145,322 142,183 Livestock - 500 850 2,000 - Forestry - 204 - - 9,000 Fishery - - - - 15,309 Manufacturing 133,532 29,760 410,473 77,674 Energy 698,702 662,482 197,970 274,626 440,454 Commerce, cooperative & Finance 262,688 - 3,879,296 26,800 2,700 Transport 1,954 6,492,223 3,284,383 1,339,762 1,690,987 Works (Roads) 13,677,794 - - - - Write-off of Revenue Bond balance - - 20,167 245,500 1,784,333

14,778,192 8,371,348 8,152,107 2,444,483 4,162,640

6.19 SOCIAL SECTOR

Arts, culture & tourism 112,000 - - - - Education 2,354,016 408,455 154,607 513,396 149,520 Health 779,585 346,720 684,136 588,256 1,626,450 Information 8,000 58,167 7,500 21,307 23,677 Culture - 2,918 12,379 2,679 - Women affairs & social development 204,194 - - - - Social development & sports 267,346 124,144 124,295 358,220 125,698

3,725,141 940,404 982,917 1,483,858 1,925,345

6.20 ENVIRONMENTAL DEVELOPMENT SECTOR

Water resources & water supply 11,938 2,626,275 687,185 444,911 211,146 Rural water sanitation 475 4,452 10,000 101,698 - Sewage, drainage & environmental protectio 8,575,439 711,145 258,521 1,168,159 89,033 Forestry 4,800 - - - - Housing 36,417 104,910 116,624 15,068 88,678

Town & country planning - 1,942,820 1,013,329 1,401,290 982,077 Community development - 283,825 35,063 - - Oil producing areas development 220 147,570 - - -

8,629,289 5,820,997 2,120,722 3,131,126 1,370,934

6.21 GENERAL ADMINISTRATION

Administrative building 567,485 801,830 433,495 264,120 295,300 Government counterpart cash 958,994 - - - - Others 1,746,179 2,502,805 2,542,972 542,648 895,467

3,272,658 3,304,635 2,976,467 806,768 1,190,767

6.22 LOAN REPAYMENTS

Repayment of external loans 1,809,639 (776,738) 1,228,987 1,032,831 1,770,595 Repayment of internal loans 49,198 10,746,225 12,446,197 14,681,374 12,338,350

1,858,837 9,969,487 13,675,184 15,714,205 14,108,945

We were unable to reconcile external loans taken and repaid during each financial year to the Debt Management Office (DMO)statement of accounts as the State did not maintain adequate records during the period.


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6.23 CONTINGENT LIABILITIES

Pending litigation

6.24 COMPARATIVE FIGURES

Certain prior year balances were reclassified in order to give a more meaningful comparison.

<------------------ As at 31 December -------------->2009 2008 2007 2006 2005

N'000 N'000 N'000 N'000 N'0006.25 STATEMENT OF ADJUSTMENTS

6.25.1 Adjustments to Statement of assets and liabilities:

(i) Cash and bank balances

Per audited financial statements 4,420,210 2,626,796 7,207,460 1,163,906 (1,813,442)

Adjustment:Prior year adjustments - - 328,590 349,580

4,420,210 2,626,796 7,207,460 1,492,496 (1,463,862)

(ii) Other cash items

Per audited financial statements 2,068,574 2,068,574 2,068,574 2,048,407 1,806,007

Adjustments:Write-off of unsubstantiated balance on revenue bond (2,050,000) (2,050,000) (2,050,000) (2,029,833) (1,784,333) Reclassification to Other accounts (18,574) (18,574) (18,574) (18,574) (21,674)

- - - - - (iii) Advances

Per audited financial statements 52,199 52,199 199 199 199

Adjustment:Reclassification to Other accounts (52,199) (52,199) (199) (199) (199)

(iv) Treasury Clearance Accounts

Per audited financial statements 163,864 163,865 163,892 163,870 163,671

Adjustment:Write-off of long outstanding balances (163,864) (163,865) (163,892) (163,870) (163,671)

- - - - -


6 . NOTES TO THE FINANCIAL STATEMENTS (CONT'D)<------------------ As at 31 December -------------->

2009 2008 2007 2006 2005N'000 N'000 N'000 N'000 N'000

(v) Other Accounts


Adjustments:Reclassification from Other cash items 18,574 18,574 18,574 18,574 21,674 Reclassification from Internal loans (189,440) (157,091) (103,529) (9,116) (16,616) Reclassification from Advances 52,199 52,199 199 199 199 Reclassification from Other funds (218,574) (18,574) (18,574) (18,574) (21,074) Write off of long outstanding balances (163,593) (163,593) (163,593) (163,593) (163,483)

(200,527) 21,107 22,669 (8,917) (15,817)

(vi) Other funds


Adjustment:Reclassification to Other accounts (218,574) (18,574) (18,574) (18,574) (21,074)

- - - - -

(vii) Excess of liabilities over assets Per audited financial statements 17,948,306 6,378,235 - - -

Adjustments:Internal loans: Finbank Plc 3,472,222 3,472,222 5,000,000 - - External loans - - 3,890,842 4,445,000 4,158,573

21,420,528 9,850,457 8,890,842 4,445,000 4,158,573

(viii) Internal loans

Per audited financial statements 15,382,604 5,849,610 5,103,529 9,116 16,616

Adjustment:Reclassification to Other accounts (189,440) (157,091) (103,529) (9,116) (16,616)

15,193,164 5,692,519 5,000,000 - -

(ix) External loans

Per audited financial statements 6,227,364 4,157,938 - - -

Adjustment:Loans from 2005 -2007 now disclosed - - 3,890,842 4,445,000 4,158,573

6,227,364 4,157,938 3,890,842 4,445,000 4,158,573

There are 18 litigations above the materiality threshold of N5 million, pending against the State Government in the ordinary courseof business with the various claims amounting to N1,084,837,221 (excluding interest from the date the judgement is given untiljudgement is satisfied). The claims are being contested in the various law courts. However, both the State Executive Council andthe Solicitors to the offer, Messrs Udo Udoma & Belo-Osagie are of the opinion that none of the claims is likely to have any materialadverse effect on the State and the Offer.


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N'000 N'000 N'000 N'000 N'0006.25.2 Adjustments to Consolidated revenue fund

(i) Consolidated revenue fund chargesPer audited financial statements 2,661,650 2,968,178 2,788,375 2,481,122 2,235,285

Adjustments:

(1) (27) 22 199 163,671 Interest payments on Finbankloan - 1,527,779 - - - Write-off of other accounts' balances - - - 110 163,483

2,661,649 4,495,930 2,788,397 2,481,431 2,562,439

<------------------ As at 31 December -------------->2009 2008 2007 2006 2005

N'000 N'000 N'000 N'000 N'000

(ii) Consolidated Revenue Fund

Per audited financial statements 1,732,135 966,835 2,214,989 1,925,730 151,840

Adjustments:Prior year adjustments (678,170) (678,170) (678,170) (349,580) - Reclassification of loans to CDF (22,277,708) (22,277,708) (22,277,708) (11,232,708) (3,994,010)

(163,864) (163,865) (163,892) (163,870) (163,671) Interest payments on Finbankloan (1,527,779) (1,527,779) - - - Write-off of other accounts' balances (163,593) (163,593) (163,593) (163,593) (163,483)

(23,078,979) (23,844,280) (21,068,374) (9,984,021) (4,169,324)

6.25.3 Adjustments to Capital development fund

(i) Receipt from loans and other borrowings


Adjustment:Loan from Finbank Plc - - 5,000,000 - -

12,696,802 7,777,778 16,045,000 8,919,651 5,629,059

(ii) Other capital receipts

Per audited financial statements 102,913 2,915,538 7,185,045 250,000 -

Adjustment:Prior year adjustments - - - 328,590 349,580

102,913 2,915,538 7,185,045 578,590 349,580

Write-off of treasury clearance account

Write-off of treasury clearance accountbalance


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<------------------ As at 31 December -------------->2009 2008 2007 2006 2005

N'000 N'000 N'000 N'000 N'000(iii) Economic sector


Adjustment:Write-off of Revenue Bond balance - - 20,167 245,500 1,784,333

14,778,192 8,371,348 8,152,107 2,444,483 4,162,640

(iv) Capital Development Fund

Per audited financial statements 1,668,759 912,280 2,392,625 1,586,555 130,388

Adjustments:Reclassification of loans to CDF 22,277,708 22,277,708 22,277,708 11,232,708 3,994,010 Prior year adjustments 678,170 678,170 678,170 678,170 349,580 Loan from Finbank Plc - - 5,000,000 - - Write-off of Revenue Bond balance (2,050,000) (2,050,000) (2,050,000) (2,029,833) (1,784,333)

22,574,637 21,818,158 28,298,503 11,467,600 2,689,645

RISKS AND MITIGATING FACTORS An investment in Bonds involves a degree of risk. Accordingly, prospective investors should carefully consider the following risk factors together with all of the other information included in the Prospectus, this Supplementary Prospectus and any other Pricing Supplement before purchasing the Bonds. The risks below are not the only risks facing the State. Additional risks and uncertainties not currently known to us or that we currently consider immaterial may also materially and adversely affect the State. Any of the following risks could result in a material adverse effect on the State’s financial condition, results of operations and ability to service debt, including the Bonds. These risks may also have a material adverse effect on the revenue, costs and other estimates and assumptions made for purposes of the financial model shown in this Prospectus, causing actual operating results to be materially lower than those reflected in the financial model.

77

RISK RELATED TO NIGERIA AND THE WEST AFRICAN SUB REGION RISKS & MITIGATING FACTORS 1. Political Risk

Since independence in 1960, Nigeria has experienced periods of political instability. Following years of military rule, a democratic government was reinstated in 1999 following the election of the Obasanjo government. The subsequent transition of power from President Obasanjo to President Umar Musa Yar’Adua in 2007 marked the first time in Nigeria’s history that power had been transferred democratically from one elected government to another. Although there are strong indications of a maturing democracy in Nigeria some risks remain. The occurrence of an event of political instability, at either State or National level, could result in the termination of the Government’s mandate or the appointment of a new administration that may not be inclined to continue with the existing bond issuance.

Mitigating Factor: The political instability that previously characterised Nigeria has been greatly reduced. Furthermore, the strengthening of political and judicial institutions suggests that democratic governance is being entrenched.

2. Currency Risk A number of the projects that are to be executed may involve a foreign currency component either in terms of the cost of manpower and equipment or other foreign denominated elements required for the execution of such projects. Fluctuations in the value of the Naira can therefore impact the projected costs of projects which might negatively or positively affect the overall finishing cost of the project to the government.

Mitigating Factor: Although the Naira has experienced some volatility in 2009 and 2010, coupled with the global economic meltdown and declining oil prices, which has resulted in a reduction of Nigeria’s external reserves, the Central Bank of Nigeria remains proactive in effectively managing both the exchange rate and Nigeria’s foreign currency reserves. 3. Credit Risk The credit risk of any bond is that the issuer will default in its obligations and consequently, neither interest payments nor the re-payment of the principal at maturity would occur.

Mitigating Factor: Security for the repayment of principal and coupon in relation to the Bond Issue shall be held by the Trustee and shall comprise the ISPO issued by the Office of the Accountant General of the Federation as a first line charge upon and payable out of the Statutory Allocation of the State. The Bonds shall be further secured by a charge on the Debt Service Reserve Fund.

4. Interest Rate Risk Changes in market conditions may affect the value of the bonds, with the bonds being made either more or less attractive to holding investors depending on the movement of prevailing rates in comparison to the coupon on the issued Bonds. Mitigating Factor: This is an inherent risk for Bond Investors that intend to trade their Bond Investment portfolio as they will be required to mark their portfolio of Bonds to market at regular financial intervals. For investors who choose to hold the Bonds to maturity and classify them as such in their financial records, there is minimal concern for recording any losses to their bond portfolio from a change of market rates of new bond issuances. Investors may also choose to hedge against interest rate risk by a variety of means including interest rate swaps.

RISKS AND MITIGATING FACTORS An investment in Bonds involves a degree of risk. Accordingly, prospective investors should carefully consider the following risk factors together with all of the other information included in the Prospectus, this Supplementary Prospectus and any other Pricing Supplement before purchasing the Bonds. The risks below are not the only risks facing the State. Additional risks and uncertainties not currently known to us or that we currently consider immaterial may also materially and adversely affect the State. Any of the following risks could result in a material adverse effect on the State’s financial condition, results of operations and ability to service debt, including the Bonds. These risks may also have a material adverse effect on the revenue, costs and other estimates and assumptions made for purposes of the financial model shown in this Prospectus, causing actual operating results to be materially lower than those reflected in the financial model.

78

5. Liquidity Risk An active trading market may not exist for the Bonds and even when developed, may be subject to price fluctuations. Mitigating Factor: The EDSG Bond’s will be listed on the Nigerian Stock Exchange. Should active trading in the Bond commence, the Bonds could trade at prices that are either higher or lower than the issue price depending on factors such as prevailing interest rates, the ratings assigned to the Bond and Issuer and the market for similar debt securities issued by other sub-nationals. 6. Regulatory Environment The statutory and regulatory environment may change and the policies that have created an enabling environment for the issuance of the Bonds may be amended Mitigating Factor: The Federal Government and the respective regulators are committed to creating and sustaining an investment-friendly environment governed by stable policies. 7. Inflation Risk The Bond instrument is a fixed rate instrument and payments on the instrument may not adjust to changes in the inflation rate in the Nigerian economy.

STATUTORY AND GENERAL INFORMATION

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NERAL INFORMATION STATEMENT OF INDEBTEDNESS Save as disclosed herein, the State had no outstanding debentures, mortgages, loan capital, overdrafts, short term loans, charges or similar indebtedness or material contingent liabilities other than those arising from the ordinary course of operations/business. However, as at December 30, 2009, the total loans and overdraft of the State was N21,420,528,000 (Twenty One Billion, Four Hundred and Twenty Million, Five Hundred and Twenty Eight Thousand Naira Only) CLAIMS, LITIGATIONS & DISPUTES The Solicitors’ enquiries revealed that the State is currently involved in 18 pending suits that involve claims against the state that are above N5,000,000.00 or more. The Solicitors have assessed that the State’s potential financial liability in such number of these cases as involve monetary claims that have merit, is in the region of N1,084,837,220.99 (one billion and eighty-four million, eight hundred and thirty-seven thousand, two hundred and twenty Naira, and ninety-nine Kobo), excluding interest calculated from the date the judgment is given until the judgment is satisfied. The Solicitors are of the view, however, that none of these cases should materially affect the ability of the State to discharge its repayment and interest payment obligations in respect of the Bonds.

MATERIAL CONTRACTS A Vending Agreement dated December 31, 2010 between Edo State Government on the one part and Afrinvest, FBN Capital, FCMB Capital Markets, Stanbic IBTC, Skye Financial, UBA Capital on the other part by which the latter had agreed to arrange the issuance of N25 Billion Edo State 14% Fixed Rated Infrastructure Development Bond 2010/217 on behalf of the State. A Trust Deed dated December 31, 2010 between Edo State Government on the one part and UBA Trustees Limited and Skye Trustees Limited on the other part by which the latter had agreed to manage, effect and co-ordinate the N25 Billion Edo State 14% Fixed Rate Infrastructure Development Bond 2010/2017 on behalf of the State. Save as disclosed above, the Issuer has not entered into any contract which may be deemed material in connection with the issue. EXTRACT OF THE TRUST DEED 3. APPOINTMENT AND REMUNERATION OF TRUSTEES

3.1 The Trustees are hereby appointed as the representatives of the Holders in accordance with the Law and the provisions of this Deed.

3.2 The Issuer shall during the continuance of this Deed and until the trust hereof shall be finally wound up, pay the Trustees an annual fee of N15million and a management fee 0.075% of the offer size for their services as trustees as from the date of this Deed. The Issuer shall also pay the Trustee a Sign-On/Participation Fee of N15million, shall be payable upon the execution of the transaction documents, while the Annual Remuneration fee is payable by annually by accounts.

3.3 The Issuer shall in addition pay to the Trustees an amount equal to the amount of any VAT or similar tax

chargeable in respect of its remuneration under this Deed, provided that it is understood that the Issuer shall deduct applicable withholding tax from all remuneration referred to in this Clause 3.

3.4 In the event of the occurrence of an Event of Default or the Trustees considering it expedient or necessary or being requested by the Issuer to undertake any duties which the Trustees agree to be of an exceptional nature or otherwise outside the scope of the duties of Trustees as set out under this Deed, the Issuer shall pay to the Trustees such additional remuneration as shall be agreed between them.

3.5 The Trustees may retain and pay to themselves out of any monies held by them upon the trusts of this Deed, all sums owing to them in respect of agreed remuneration costs, charges, expenses or interest or by virtue of any


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indemnity from the Issuer to which they are entitled hereunder or by law and all such sums as aforesaid shall rank in priority to the claims of the Bondholders.

3.6 The Issuer shall also pay all costs, charges and expenses of external advisers and solicitors which the Trustees may properly and reasonably incur in relation to:

3.6.1. the preparation and execution of this Deed;

3.6.2. to the carrying out of the trusts of this Deed; and

3.6.3. the exercise by the Trustees of the powers authorities and discretions vested in them under this Deed.

3.7 In the event of the Trustees and the Issuer failing to agree:

1.5.1 upon the amount of the remuneration as contemplated in clause 3.5; or 1.5.2 upon whether such duties shall be of an exceptional nature or otherwise outside the scope of the duties

of Trustees set out under this Deed, or upon such additional remuneration, such matters shall be determined by a person (acting as an expert and not as an arbitrator) selected by the Trustees and approved by the Issuer or, failing such approval, nominated (on the application of the Trustees and Issuer) by the Director General for the time being of the SEC (the expenses involved in such nomination and the fees of such person being payable by the Issuer) and the determination of any such person shall be final and binding upon the Trustees and the Issuer.

4. ACCEPTANCE OF TRUST AND CREATION OF SECURITY INTEREST 4.1 By execution hereof, the Trustees have accepted and agreed to be bound by the powers, duties and obligations of

the Trustees specifically set forth herein.

4.2 Pursuant to the provisions of this Deed, and in furtherance thereof, the Issuer hereby assigns, transfers, pledges, grants and conveys to the Trustees for the benefit of the Holders, a security interest in the Sinking Fund and the DSRF, to secure the payment and performance in full of all its obligations under this Deed.

4.3 The security interest created above shall be a continuing security and shall be of full force and effect until the satisfaction, performance and discharge of all of the Issuer’s obligations stated herein. The term “obligations” as used herein, means all of the indebtedness, obligations and liabilities of the Issuer to the Holders, individually or collectively, whether direct or indirect, joint or several, absolute or contingent, due or to become due or hereafter arising under or in respect of the Bonds.

4.4 Without prejudice to the generality of the foregoing and the provisions of Clause 10 of this Deed, the security interest created herein shall be a first charge and shall rank prior to any other secured obligations of the Issuer and shall not be subordinated to any present and future indebtedness of the Issuer.

4.5 The Trustees shall have no duty, responsibility or obligation for the issuance of the Bonds or for the validity or exactness thereof, or of any document relating to such issuance.

4.6 The Trustees shall have no duty, responsibility or obligation for the payment of the Bonds except in accordance

with the terms and provisions hereof, and only to the extent of the applicable Sinking Fund held in trust by the Trustees for the purpose of such payment.

4.7 Prior to an Event of Default and after the curing or waiving of all Events of Default which may have occurred, the

Trustees shall not be liable except for the performance of such duties as specifically set down herein.

4.8 The Trustees shall have no liability for any act or omission to act hereunder, or under any other instrument or document executed pursuant hereto except for the Trustees’ gross negligence and wilful misconduct.


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4.9 The duties and obligations of the Trustees shall be determined solely by the express provisions hereof, and no implied powers, duties or obligations of the Trustees, save as mandated by the ISA, shall be construed into this Deed.

4.10 Upon the occurrence of an Event of Default, the Trustees shall subject to the provisions of this Deed, exercise such rights and utilise such powers vested in them under this Deed, the ISA and the Law, and shall use the required degree of care and skill in the exercise of their duties.

4.11 The Trustees shall not be required to expend or risk their own funds or otherwise incur any liability in the performance of their duties or in the exercise of their rights or powers as Trustees, except such liability as may result from their gross negligence and wilful misconduct.

4.12 Notwithstanding any other provisions hereof, the Trustees shall have no liability for (a) an error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustees were negligent in ascertaining the pertinent facts or (b) action taken or omitted to be taken by them in good faith in accordance with the lawful direction of the Holders of not less than a majority in principal amount of the Bonds then outstanding

5. ISSUANCE OF BONDS 5.1 Amount

The Aggregate Principal Amount of the Bonds is up to a maximum of N25,000,000,000 comprising 25,000,000 registered Bonds at a par value of N1,000 each. The Bonds hereby constituted as and when allotted will be direct, unconditional and unsecured obligation of the State and will rank pari passu without preference among themselves, with all the outstanding unsecured obligations of the State, present and future.

5.2 Terms

The Bonds shall bear the terms specified in the Terms and Conditions in Schedule 4 of this Deed. 5.3 Persons Deemed Owners

A Holder (or his legal representative) shall be deemed and regarded as the legal and beneficial owner of the Bonds registered in its name for all purposes including but not limited to the payment of the Principal Amount, Coupon or premium (if any).

5.4 Issuance and Execution of Bond Certificates

Every Holder shall be entitled to receive a Certificate covering the aggregate Principal Amount of his beneficial interest in the Bonds. All Certificates shall, where applicable, be executed for and on behalf of the State by the Commissioner and the Registrar. The signatures of the Commissioner and the Registrar may be mechanically or electronically reproduced or engraved on the Certificates. If the Commissioner is removed after the execution but before the delivery of such Certificates, such signature shall remain valid and sufficient for all purposes as if the Commissioner had not been removed until such delivery.

5.5 Issue of Bonds in Dematerialised Form

Notwithstanding section 5.4 above, a Holder may elect to receive the Bonds in dematerialised/immobilised (book-entry) form and deal in the same in accordance with CSCS procedures and guidelines.

Statements issued by the CSCS as to the aggregate number of such Bonds standing to the credit of the securities account of any person shall be conclusive and binding for all purposes save in the case of manifest error and such person shall be treated by the State, the Trustees and the Registrar as the legal and beneficial owner of such aggregate number of Bonds for all purposes.


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5.6 CSCS Statements

The Issuer and the Trustees may call for and, except in the case of manifest error, shall be at liberty to accept and place full reliance on (without liability) as sufficient evidence thereof a statement issued on behalf of CSCS or any form of record made by it or such other form of evidence and/or information and/or certification as it shall, in its absolute discretion, think fit to the effect that at any particular time or throughout any particular period any particular person is, was, or will be, shown in its records as the holder of a particular nominal amount of Bonds and, if it does so rely, such statement, form of record, evidence, information or certification shall be conclusive and binding on all concerned.

5.7 Medium and Place of Payment

(a) The principal, premium (if any), and Coupon on the Bonds shall be payable in the official currency of the Federal Republic of Nigeria..

(b) Payment of the principal, premium and Coupon shall be made at the office of the Registrar in the manner

specified the Terms and Conditions.

(c) Any payment made pursuant to (a) and (b) above shall be deemed valid and shall satisfy and discharge the State of any obligation to make payment on such Bond to the extent of the amount paid.

(d) The Issuer shall ensure that monies are deposited into the applicable Sinking Fund in accordance with

the terms of this Deed. Any payment by the Issuer into the Sinking Fund shall discharge the State’s payment obligation in respect of such payment.

6.0 CREATION OF THE FUNDS 6.1 The Sinking Fund is hereby created and shall be held and administered by the Trustees. The amounts standing to

the credit of the Sinking Fund from time to time shall be applied to meet the obligations of the Issuer as follows:

(i) Trustee fees and expenses; (ii) Coupon Payments; and (iii) Repayment of Principal Amount at Maturity.

6.2 The Sinking Fund shall be credited monthly with the sums indicated in Schedule 2 (“the Funding Amount”)

until the Maturity Date in accordance with the terms of the ISPO, duly approved by the Honourable Minister for Finance through the letter dated December 13th 2010.

6.3 Pursuant to the provisions of the Law, the State shall establish the DSRF into which it shall deposit the Revenues

monthly during each year in which the Bonds remain outstanding. In the event that the State’s allocation is less than the Funding Amount in any month that the Bonds remain outstanding or the monies in the Sinking Fund is not sufficient to pay Coupon (without any withholding tax or deductions on the account of tax) or the Principal Amount, the State shall ensure that monies sufficient to meet the shortfall is transferred from the DSRF into the Sinking Fund.

6.4 The Trustees shall notify the State of a shortfall in the Sinking Fund at least ten (10) Business Days before a

Coupon Payment Date or the Maturity Date and the State shall ensure that the Shortfall is credited in the Sinking Fund within 5 Business Days of the notification by the Trustees

7. REDEMPTION OF BONDS

The aggregate Principal Amount and any Coupon (accrued up to but unpaid as of the Maturity Date) shall be paid in one bullet on the Maturity Date from the Sinking Fund account.


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8. INVESTMENT OF MONEYS IN THE SINKING FUND

8.1 Monies in the Sinking Fund shall be invested in Permitted Investments as selected by the Trustees; provided that (i) the maturity date or the date on which such Permitted Investments may be redeemed at the option of the Trustees shall coincide as nearly as practicable with (but shall in no event be later than) the date(s) on which moneys in the Sinking Fund from which the said Permitted Investments was made will be required for the purposes thereof, and (ii) the Trustees shall select Permitted Investments in accordance with prudent investment standards.

8.2 Investment of amounts comprised in the Sinking Fund shall be made in the name of the Sinking Fund. 8.3 The return on any Permitted Investment made pursuant to this Clause 8 shall be invested by the Trustees so as to

form a part of the Sinking Fund. 8.4 The Trustees shall not be liable for making any investment authorised by the provisions of this Deed in the

manner provided in this clause or for any loss resulting from any such investment so made, except for its own gross negligence, wilful misconduct and or insider or self-dealing constituting a breach of trust under the Trustees Act, the ISA or any applicable law.

10. OBLIGATIONS AND UNDERTAKINGS OF THE STATE The State covenants and undertakes that:

10.1 it shall ensure that the Sinking Fund is credited with the sums indicated in Schedule 2 on a monthly basis until 2017 in accordance with the terms of the ISPO, duly approved by the Honourable Minister for Finance through the letter dated December 13, 2010.

10.2 it shall not revoke or modify the terms of the ISPO throughout the tenor of the Bonds without the prior written

consent of the Trustees and the Commission. 10.3 it shall deposit the Revenues at least five (5) Business Days after the end of every month during each year in

which the Bonds remain outstanding or cause same to be deposited into the DSRF for the purpose of further securing the State’s obligations with respect to the Principal Amount and or Coupon payments on the Bonds.

10.4 without prejudice to the provisions of this Deed, it shall ensure that every year, for as long as the Bonds remain

outstanding, that the Appropriation Law provides that the sum of N6.24 Billion representing the annual debt service obligation on the Bonds, be charged upon and appropriated from the Consolidated Revenue Fund.

10.5 it shall procure that the investment rating of the Bonds be reviewed annually by a rating agency duly registered with the SEC and acceptable to the Trustees.

10.6 for as long as the Bonds are outstanding, it shall send to the Trustees copies of every financial report commencing with the financial year ending December 2010,

10.7 it shall submit a copy of the Appropriation Law for each year that the Bonds remain outstanding to the Trustees

within five (5) Business Days of the enactment of same. 10.8 without limiting the generality of the granting clauses set forth in Clause 4.4 above and as security for the

payment of the Principal Amount, Coupon, premium, (if any) and other payments due with respect to the Bonds, it hereby grants the Trustees as a first charge, a pledge of and lien on the DSRF. Such pledge shall be valid and binding from the date hereof and all Revenues shall immediately be subject to such pledge as and when received by the State, without any physical delivery thereof or any further act.

10.9 save for the security interest referred to in Clause 10.8 above, it will not create any pledge, lien or other

encumbrance upon, or permit any pledge, lien or other encumbrance to be created on the DSRF for as long as the Bonds remain outstanding.


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10.10 it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions on its part to be performed as provided herein, for every issue of Bonds executed and delivered hereunder and in all proceedings of the State pertaining thereto.

10.11 it shall pay the Trustees such fees as may be agreed between the Parties, and reimburse the Trustees, all

reasonable and proper out of pocket costs and expenses as they may incur in connection with the performance of their duties under this Deed including the costs for convening and holding meetings of Holders; provided that, for any additional costs which will cause the costs to exceed, in the aggregate, N500,000.00 in any one year, the Trustees shall seek and obtain the prior written consent of the Commissioner to incur such costs and expenses.

10.12 to make available to the Trustees, any monies necessary to perform or discharge any contractual commitment,

indemnity or other obligation entered into by or binding upon the Trustees in the exercise of their powers under this Deed, and all liabilities in respect thereof shall be a charge upon the applicable Sinking Fund.

10.13 it shall ensure that for as long as the Bonds remain outstanding, the Appropriation Law shall make provisions for

its annual debt service obligations under this Deed as a recurrent expenditure payable from the DSRF. 12. EVENTS OF DEFAULT

Each of the following events is hereby declared an “Event of Default” with respect to the Bonds, and subject to the provisions of this Deed, the Principal Amount and Coupon payments due to the Holders shall become immediately payable and the Trustees shall be entitled to take all necessary steps to effect such payment:

12.1 If payment by the State in respect of the Coupon and/ or premium on the Bonds shall not be made in full when

same becomes due and payable; 12.2 If payment by the State in respect of the Principal Amount shall not be made in full when same becomes due and

payable, whether at Maturity or by proceedings for redemption or otherwise; 12.3 If the State shall fail to observe or perform any other obligation, covenant or agreement on its part as prescribed

herein, for a period of [45 days] after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the State by the Trustees, or from which such notice has been given to the State and the Trustees by Holders of at least 10% in aggregate of the Principal Amount of the Bonds still then outstanding; provided however, that if the breach of covenant or agreement is one which cannot be completely remedied within the [45 days] after written notice has been given, it shall not be an Event of Default as long as the State has taken active steps within the said [45 days] after written notice has been given to remedy the failure and is to the satisfaction of the Trustees diligently pursuing such remedy;

12.4 In the event of a Material Adverse Change; 12.5 If by reason of the introduction of, or any change in, any applicable law or regulation or regulatory requirement,

or any change in the interpretation or application thereof, otherwise than by the act of the State, it becomes unlawful or it is prohibited, for the State to maintain or give effect to any of its material obligations as contemplated by this Deed

12.6 In the event of a Material Adverse Change;

12.7 If by reason of the introduction of, or any change in, any applicable law or regulation or regulatory requirement,

or any change in the interpretation or application thereof, otherwise than by the act of the State, it becomes unlawful or it is prohibited, for the State to maintain or give effect to any of its material obligations as contemplated by this Deed


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13. UTILIZATION OF PROCEEDS The State shall, upon receipt of proceeds of the Bonds, apply the proceeds for the repayment of existing obligations by the State, further infrastructure developments and other strategic investments as follows:

14. REMEDIES AND ENFORCEMENT OF REMEDIES 14.1 Upon the occurrence of the Event of Default specified in Clause 12.1 and 12.2, subject to the terms of the Bonds

and this Deed, the Trustees shall within three (3) months of such default take immediate steps to ensure that the Office deducts from the DSRF such amounts as are specified by the Trustees as required to be paid into the Sinking Fund for the purpose of redeeming any outstanding obligations thereunder.

14.2 In circumstances where at any time the DSRF is deemed to be insufficient to make the principal and interest

payments due on the Bonds, the deficiency shall be paid out of the Consolidated Revenue Fund. 14.3 Subject to the provisions of Clause 12 hereof, upon the occurrence and continuance of any of the Events of

Default specified in Clauses 12 ,the Trustees may, or by the Holders of at least three quarters (¾) of the nominal value of the Bonds or by a Special Resolution passed at a duly convened meeting of Holders; together with the due indemnification of the Trustees to their satisfaction, proceed forthwith to protect and enforce their rights and the rights of the Holders hereunder, under the ISA and under the Law by such suits, actions or proceedings, as the Trustees, being advised by counsel, shall deem expedient.

14.4 The Trustees shall also file a notice of any default and remedies being pursued with the SEC within thirty (30)

days of the occurrence of the Event of Default. 14.5 No Holder shall in any circumstance be entitled to any remedy (whether by way of action, petition, arbitration or

otherwise howsoever) for the recovery of any payment of the Principal Amount or the Coupon on the Bonds unless the Trustees, having become bound to take proceedings in accordance with this Deed, notifies the Holders in writing of their refusal to do so or such Holder is dissatisfied with the proceedings instituted by the Trustees, in which case the Holder may:

14.5.1. take such proceeding in a representative capacity on behalf of himself and, where authorised,

other Holders of not less than 10% of the Principal Amount of the Bonds, for the recovery of the payments due on the Bonds; or

14.5.2. take such proceedings in his name for the recovery only of his own portion of the Bonds.

22 TERMINATION AND DURATION

22.1 Subject to Clause 22.2, the term of this Deed shall be seven (7) years, or until the obligations secured by the Sinking Fund are fully discharged (whichever is the later), commencing on the date first above written. The term hereby created may be renewed or extended on such terms as may be mutually agreed by the Parties.

22.2 Regardless of the term specified in Clause 22.1, this Deed may be terminated where:

22.2.1 there is a material breach by the State of its obligations under this Deed (that is not an Event of Default) and the Trustees have given the State three (3) months’ notice in writing of their intention to terminate this Deed;


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22.2.2 the Commissioner receives a Special Resolution passed by the Holders, requesting that the appointment of the Trustees be determined; or

22.2.3 a binding court order is made for the termination of this Deed.

22.3 In the event of a termination of this Deed, the State shall immediately appoint a successor trustee(s) and enter into a deed on terms consistent with this Deed for the purpose of securing the State’s obligations to the Holders; provided that the predecessor Trustees shall continue in office until a successor has or successors have been duly appointed to take over their obligations herein. The predecessor Trustees shall immediately account for and deliver up all of the Assets and sums in the Sinking Fund, to the appointed successor or successors.

SCHEDULE 1

PROVISIONS FOR MEETINGS OF THE HOLDERS 1. Who may Convene Meetings

1.1 The Issuer or the Trustees respectively may at any time at their discretion and the Trustees shall on the requisition in writing of the Holders holding not less than three-quarters (¾) of the nominal amount of the Bonds for the time being outstanding, and upon being indemnified to their satisfaction against all costs and expenses to be thereby incurred, convene a meeting or meetings of the Holders in accordance with the provisions of this schedule to discuss and determine any matter affecting their interest. Any such meeting shall be held at such place as the Trustees shall determine or approve.

1.2 Holders of at least 10% of the nominal amount of the Bonds for the time being outstanding shall

be entitled to convene a meeting at which a resolution to compel the Trustees to take steps against the Issuer will be passed, upon the occurrence of an Event of Default

2. Notice of Meetings

2.1 A meeting of the Holders may be called by giving not less than twenty-one (21) days’ notice in

writing. 2.2 A meeting may be called after giving shorter notice than that specified in paragraph 2.1 above if

consent is accorded thereto by Holders holding not less than seventy-five per cent (75%) of the nominal amount of the Bonds for the time being outstanding.

3. Content and manner of service of notice 3.1 Every notice of a meeting shall specify the place, the day and hour of the meeting and shall

contain a statement of the business to be transacted and the terms of every resolution to be proposed thereat.

3.2 Notice of every meeting shall be given to: 3.2.1 every Holder; 3.2.2 the person entitled to a Bond in consequence of the death, insolvency, winding-up or dissolution

of a Holder by sending it through the post in a pre-paid letter addressed to him by name or by the title of the representative of the deceased or assignee of the insolvent or by any like description at the address (if any) supplied for the purpose by the person claiming to be so entitled, or until such an address has been so supplied by giving the notice in any manner in which it might have been given if the death, insolvency, winding-up or dissolution had not occurred;

3.2.3 to the Registrar;


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3.2.4 to the Trustees when the meeting is convened by the Issuer; and 3.2.5 the Commissioner. 3.3 The accidental omission to give notice to or the non-receipt of notice by any Holder or other

person to whom it should be given shall not invalidate the proceedings of the meeting.

4. Quorum for Meeting 4.1 Any two or more persons holding or representing by proxy at least one-quarter (¼) of the

nominal amount of Bonds for the time being outstanding shall be a quorum for the conduct of business at a meeting of the Holders unless the business of the meeting includes the consideration of a Special Resolution, in which event the necessary quorum shall be two (2) or more persons holding or representing by proxy a simple majority of the nominal amount of Bonds for the time being outstanding and no business shall be transacted at any meeting unless the requisite quorum shall be present when the meeting proceeds to business.

4.2 If within an hour from the time appointed for holding the meeting a quorum is not present, the

meeting, if called upon the requisition of Holders, shall stand dissolved. In any other case the meeting shall stand adjourned to such day and time not being less than seven (7) days thereafter and to such place as the Chairman may determine.

4.3 At least three (3) days notice of any adjourned meeting shall be given in the same manner as for

an original meeting, but it shall not be necessary to specify in such notice the business to be transacted at the adjourned meeting. Any two (2) or more persons being Holders or holding proxies for Holders whatever the amount of Bonds held by them, shall be a quorum for all purposes including the passing of Special Resolutions and to decide upon all matters which could properly have been disposed of at the meeting from which the adjournment took place.

5. Chairman of Meeting

5.1 The Trustees or such other person nominated by the Trustees shall be entitled to take the chair at

every meeting and if no such nomination is made or if at any meeting the Trustees or the person nominated shall not be present within thirty (30) minutes after the time appointed for holding the meeting the Holders personally present shall on a show of hands elect one of themselves to be the Chairman thereof.

5.2 if a poll is demanded on the election of the Chairman it shall be taken forthwith and the

Chairman elected on a show of hands shall exercise all the powers of the Chairman until the result of such poll is declared.

5.3 if some other person is elected Chairman as a result of the poll he shall be the Chairman for the

remainder of the meeting. 6. Persons entitled to attend meetings

In addition to the Holders, the Trustees, their solicitors, the Commissioner and any authorised officer of the State and any other person authorised in that behalf by the Trustees may attend any meeting but shall not be entitled to vote thereat.


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7. Evidence of Passing of Resolution At any meeting a resolution or any question put to the vote of the meeting shall be decided on a show of hands unless a poll is demanded in the manner hereinafter mentioned, and unless a poll is so demanded a declaration by the Chairman that on a show of hands the resolution has been carried either unanimously or by a particular majority or lost and an entry to that effect in the books containing the minutes of the proceedings of the meeting, shall be conclusive evidence of that fact without proof of the number or proportion of the votes cast in favour of, or against such resolution.

8. Demand for Poll

8.1 Before or on the declaration of the result of the voting on any point or question on a show of

hands, a poll may be ordered to be taken by the Chairman of the meeting on his own motion, and shall be ordered to be taken by him on demand made in that behalf by at least five (5) Holders having the right to vote on the resolution and present in person or by proxy or by the holders of not less than one-quarter (¼) in nominal amount of Bonds for the time being outstanding.

8.2 The demand for a poll may be withdrawn at any time prior to such poll being taken by any

person or persons who made the demand.

9. Time of taking Poll 9.1 A poll demanded on a question of adjournment shall be taken forthwith. 9.2 A poll demanded on any other question (not being a question relating to the election of a

Chairman as provided for in Paragraph 5.2 hereof) shall be taken in such manner and at such time not being later than thirty (30) days from the time when the demand was made, as the Chairman may direct.

10. Votes

On a show of hands, every Holder who (being an individual) is present in person or by proxy or (being a body corporate) is present by its duly authorised representative shall have one (1) vote, and on a poll every Holder who is present in person or by proxy shall have one (1) vote in respect of every unit of Bonds of which he is the holder.

11. Representatives of Bodies Corporate

Any body corporate which is a Holder may by writing under the hand of a duly authorised officer authorise such person as it thinks fit to act as its representative at any meeting of the Holders and the person so authorised shall be entitled to exercise the same powers on behalf of the body corporate which he represents as that body corporate could exercise if it were an individual Holder.

12. Proxies 12.1 The registered Holder or in the case of joint holders any one of them shall be entitled to vote in

respect thereof either in person or by proxy and in the latter case, as if such one joint Holder was solely entitled to such Bonds. A registered Holder shall be entitled to appoint another person (whether a Holder or not) as his proxy to attend a meeting and vote thereat instead of himself.

12.2 In every notice calling a meeting of the Holders there shall appear with reasonable prominence a

statement that a Holder entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of himself and that a proxy need not be a Holder.


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12.3 The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed, or a notarized copy of the power of authority, shall be deposited at such place as may be specified in the notice convening the meeting or in some document accompanying the same or if no place is so specified then at the office of the Registrars for the time being, not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote or in the case of a meeting at which a poll is to be taken, not less than twenty-four (24) hours before the time appointed for the taking of the poll, and in default the instrument of proxy shall not be treated as valid.

12.4 The instrument appointing a proxy shall:

12.4.1.1 be in writing in the usual common form or such other form as the Trustees may approve; and

12.4.1.2 be signed by the Holder so appointing or his attorney duly authorised in writing or if

the Holder so appointing is a body corporate be under its seal or be signed by an officer or any attorney duly authorised by it.

12.5 No instrument appointing a proxy shall be valid after the expiration of twelve (12) months from

the date named in it as the date of execution. An instrument appointing a proxy shall be deemed to confer authority to demand or to join in a demand for a poll.

12.6 Every Holder entitled to vote at a meeting of the Holders or on any resolution to be moved

thereat shall be entitled, during the period beginning twenty-four (24) hours before the time fixed for the commencement of the meeting and ending with the conclusion of the meeting, to inspect by himself or through a duly authorised person, the proxies lodged at any time during the business hours of the Registrar, provided that not less than three (3) days’ notice in writing of the intention so to inspect is given to the Registrar.

12.7 A vote given in accordance with the terms of an instrument of proxy shall be valid

notwithstanding the previous death or insanity of the principal or the revocation of the proxy or of the authority under which the proxy was executed, provided that no intimation in writing of such death, insanity or revocation shall have been received by the Trustee at its registered office before the commencement of the meeting or adjourned meeting at which the proxy is used.

13. Entitlement of Holder to vote differently

On a poll taken at a meeting of the Holders, a Holder entitled to more than one vote, or his proxy or other person entitled to vote for him as the case may be, need not, if he votes, use all his votes or cast all his votes in the same way.


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REMITTANCE TO THE SINKING FUND The following table indicates the amounts to be transferred to the sinking fund for the purpose of servicing interest and principal payments (The Table reflects the Coupon price at the indicated price range)


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CONSENTS The underlisted have given and not withdrawn their written consents to the issue of this Prospectus with their names and reports included in the form and context in which they appear: Issuer Edo State Government of Nigeria Representatives of the State Executive Council His Excellency, Comrade Adams Aliyu Oshiomhole Rt. Hon. (Dr.) Pius Egberanmwen Odubu Hon. Pally Isumafe Obokhuaimen Iriase Dr. Simon Omoaka Imuekemhe Mr. Osarodion Ogie Dr. Osagie Osariemen Obayuwana Mr. John Osagie Inegbedion Mr. Ahonsi Unuigbe Dr. Tunde Lakoju Hajia Mamuna Momodu Mr. Clement Agba Miss. Iziegbe Evbuomwan Mr. Victor Enoghama Mr. Abdul Oroh Engr. Jackson Eribo Mr. Adodo Didi Dr. (Mrs) Ngozi Osarenren Dr. Moses Momoh Mr. Anselm U. Ojezua Esq Dr. Cordelia Aiweze Barrister Lucas Okojie


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Engr. Jackson Eribo Mr. Anselm U. Ojezua Esq

Auditor-General to the State Mr. Bernard E. Aigbe

Accountant-General to the State Mr. Isaac E. Ehiozuwa

Lead Issuing House / Book Runner Afrinvest (West Africa) Limited

Joint Issuing Houses / Book Runner FBN Capital Limited

FCMB Capital Markets Limited Skye Financial Services Limited

Stanbic IBTC Bank PLC

UBA Capital Limited

Joint Stockbrokers BGL Plc

Partnership Investment Company Plc

Solicitors to the Offer Udo Udoma & Belo Osagie Solicitors to the Trustees Banwo & Ighodalo Receiving Banks First Bank of Nigeria Plc First City Monument Bank Plc Skye Bank Plc Stanbic IBTC Bank PLC United Bank for Africa Plc Joint Trustees Skye Trustees Limited UBA Trustees Limited Rating Agencies Global Credit Rating Agusto & Co. Limited


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Reporting Accountants Akintola Williams Deloitte Registrars to the Issue First Registrars Nigeria Limited Receiving Agents Afrinvest (West Africa) Limited FBN Capital Limited FCMB Capital Markets Limited Skye Financial Services Limited Stanbic IBTC Bank Plc UBA Capital Limited BGL Plc Partnership Investment Company Plc Guaranty Trust Bank Plc Reading Investment Limited Morgan Capital Limited Greenwich Trust Limited Bestworth Asset & Trust Limited First Securities Discount House Limited


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DOCUMENTS AVAILABLE FOR INSPECTION The following documents will be available for inspection throughout the life of the Bond at the principal offices of the Lead and Joint Issuing Houses/Book runners and from the Edo State Ministry of Finance, Benin City, Edo:

The Edo State Bond and Securities Law 2010;

The Resolution passed by the Edo State House of Assembly pursuant to the enabling Law, authorizing the monthly deduction of N520,000,000 from the Statutory Allocation by the Accountant General of the Federation for debt service throughout the tenor of the Bonds as published in the Official Gazette of the State;

The Letter of Approval dated December 13, 2010 in respect of the ISPO issued by the Honourable Minister for Finance;

The Resolution of the Edo State Executive Council dated November 02, 2010 authorising the Bond Issue, published in the Official Gazette of the State December 02, 2010;

A Vending Agreement dated December 31, 2010 between Edo State Government on the one part and the Issuing Houses/Book Runners on the other part;

The Irrevocable Standing Payment Order from the Edo State’s Accountant-General dated November 5, 2010 authorizing the Accountant-General of the federation to deduct the principal and interest obligations of the Bond directly from the State’s statutory allocation;

The Trust Deed dated December 31, 2010 between the Edo State Government and Skye Trustees Limited and UBA Trustees;

The report of Akintola Williams Deloitte on the State’s Revenue and Expenditure Statements for the five years ended 31st December 2009 and Revenue and Expenditure forecast for seven years ending December 2017;

The Schedule of Claims & Litigations involving the State, together with the opinion of Udo Udoma & Belo Osagie prepared in connection therewith;

The Prospectus dated December 31, 2010 issued in respect on the N25Billion Edo State 14% Fixed Rate Infrastructure Development Bond Issue 2010/2017;

The audited financial statements of Edo State for each of the five years ended 21st December 2005, 2006, 2007, 2008 and 2009;

The 2010 annual budget presented to the Legislative Assembly of Edo State; Written consents of the professional parties to the Issue; The Rating Report issued by GCR and Augusto & Co; The Letter from SEC confirming the registration of the Bond Issue; and The Letter conveying the approval of the Council of the Exchange for the listing and admission to trading of the

Bonds on the Official List. RELATIONSHIP BETWEEN THE STATE AND ADVISERS As the date of this Prospectus, there is no relationship between the Issuer and any of its advisers except in the ordinary course of business COST AND EXPENSES The cost, charges and expenses of and incidental to the issue, including fees payable to SEC, the NSE, professional parties fees, printing and distribution expenses are estimated at N925,018,750 amounting to 3.7% of the gross Issue proceeds. These costs are payable by the State and deductible from the proceeds of the issue

PROCEDURE FOR APPLICATION AND ALLOCATION/ALLOTMENT

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PROCEDURE FOR APPLICATION AND ALLOCATION/ALLOTMENT APPLICATION 1. Qualified Investor are hereby invited to place Orders in respect of the Bond Issue through any of the Placement

Agents.

2. Applications/Orders for the Bonds being offered must be made in accordance with the instructions set out in the Commitment Form. Investors must carefully follow all instructions as applications which do not comply with the instructions may be rejected

3. The Book Building Period for the Bonds now being offered will open on (Opening Date) and close on (Closing Date). Orders must be for a minimum of 10,000 Units and in multiples of 5,000 thereafter. The Participation Amount(s) and the Bid Coupon Rate must be entered in the space provided in the Commitment Form

4. The completion of a Commitment Form is a confirmation by each Participant that the Order is irrevocable and creates a binding obligation on the Participant which, to the fullest extent of the law, shall not be capable of recession or termination by any Participant

5. Participants may place Order for the Bonds at any coupon rate within the Pricing Range subject to the Minimum Participation Amount and the terms and conditions stated on the Commitment Form

6. A corporate Participant should affix its seal in the box and state its Incorporation (RC) Number or in the case of a corporate foreign subscriber its appropriate identification number in the jurisdiction in which it was constituted

7. Upon the completion and submission of the Commitment Form, the Participant is deemed to have authorised the Issuer and the Issuing Houses/Book Runners to effect the necessary changes in the Red Herring Prospectus as would be required for the purposes of filing the Final Prospectus with the SEC, without prior or subsequent notice of such changes to the Participant. The Bid/Commitment Form shall be considered as the Application Form for the purposes of registration of the Final Prospectus with the SEC

8. Participants shall not be entitled to withdraw/modify Order after the Book Building Closing Date 9. The Commitment Form presents the Participant with the opportunity to indicate up to 3 (three) Coupon Payment

Rates with the Pricing Range and to specify the Participation Amount for each option. The Coupon Payment Rates and the Participant Amounts submitted by the Participant in the Commitment Form will be regarded and treated as optional demands from the Participant and will not be aggregated.

10. Participants must not submit another Commitment Form after the submission of a Commitment Form to a Placement Agent. The submission of a second or other Commitment Form(s) to either the same Book Runner/Stockbroker will be treated as multiple Bids/Orders. Multiple or suspected multiple Bids/Applications will be rejected.

11. Following the determination of the Coupon Rate, the maximum Participation Amount specified by a Participant at or below the Clearing Price will be considered for allocation of Bonds and all other order(s) at prices at or below the clearing price, irrespective of the corresponding Coupon Payment Rate(s), will automatically become valid.

12. The Issuer in consultation with the Book Runners reserves the right not to proceed with the Issue at anytime including after the Book Building opening Date but before the Allotment Date without assigning any reason


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PAYMENT INSTRUCTIONS 1. Successful Participants must ensure that payment of the Participation Amount is received by [.] (Pricing Date+2) via

the CBN Inter-bank Funds Transfer System (CIBFT), Nigerian Inter-bank System Electronic Transfer (NEFT) or Real Time Gross Settlement System (RTGS) in the following designated Issue Proceeds Account domiciled with the receiving banks:

BANK ACCOUNT NAME ACCOUNT NUMBER SORT CODEUnited Bank for Africa Edo State Collection Account 04510300000144 033153979First Bank of Nigeria Plc EdoState Government Bond Issue- Issue Proceeds Accounts 4832030004534 011154835Skye Bank Plc Edo State Bond Issue Proceeds Account 171-1790000713 076-1511718Stanbic IBTC Plc Edo State Bond Issue Proceeds Account 7200197267 221First City Monument Bank Plc Edo State Bond Issue Proceeds 0011080132746001 214150018 ALLOCATION/ALLOTMENT 1. On the Pricing Date, the Issuing Houses/Book Runners will analyze the demand at respective coupon levels and, in

consultation with the Issuer, finalize the Coupon Payment Rate and the allocations to each Participant. Allocation Confirmation Notices will be sent to successful Participants.

2. The Issuer and the Issuing Houses/Book Runners reserve the right to reject any order in whole or in part for having not complied with the terms and conditions of the Issue

3. Allotment of the Bonds will be effected only upon approval at the Completion Board Meeting and Allotment will be effected in the following manner –

a. Allotment of Bonds in Certificate Form

Bond Certificates in respect of allotted Bonds will be dispatched by registered post to the addresses specified on the Commitment Form, to the Participant who have elected to receive the Bonds in physical form; not later than 15 (fifteen) Business Days from the Allotment Date.

b. Allotment of Bonds Electronically (E-Allotment) Participants who elect to receive the Bonds electronically must specify the Participants CSCS Account Number, the Primary Dealer or Stockbroking Firm and the CHN in the spaces provided on the Bid/ Application Form

Please note that Participants must ensure that the name specified in the Commitment Form is exactly the same as the name in which the CSCS Account is held. In case the Commitment Form is submitted in joint names, it should be ensured that the beneficiary CSCS Account is also held in the same joint names and are in the same sequence in which they appear in the Commitment Form. DETAILS OF BANK ACCOUNTS 1. Participants are required to indicate their bank account details in the space provided on the Commitment Form for

the purposes of coupon and principal re-payments (as the case may be). 2. Participants are advised to ensure that the bank account details provided on the Commitment Form are accurate.

These banks account details shall be used by the Registrar for the payments stated above in connection with the Bonds.

Failure to provide correct bank account details could result in delays in the credit of the payments or the issuance of cheques/warrants which shall be sent to the address specified by the affected Participant by registered post. The Issuer, Issuing Houses, Receiving Banks, Trustees and Registrar shall not have any responsibility, nor will any of these stated parties undertake any liability for the same.


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the edo state government of nigeria - fmdq group...06.01.11 transfer net issue proceeds to edo state...

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