OSUN WAGE BILL AND (CHORUS OF) DEBT UNDER AREGBESOLA
The opposition in Osun is the first to advance the contradictory debt narrative of Debt Crisis as its approach to fend off realities of Osun debt to GDP. Today, when you mention positive developments in Nigerian Correctional Service, immigration and Federal Fire Service since September 2019 when Rauf Aregbesola took over as Minister of Interior, oppositions in Osun will raise this (chorus of) debt, debt and debt. Oppositions in Osun talk more of debt without making reference to massive projects that were executed and the loan that has been paid back; there is this (chorus of) debt, debt and debt to blackmail Rauf Aregbesola. The people have rejected the politics of Osun State debt that started from the creation of Osun State in 1991. Cheap propaganda about Osun debt thrives and makes waves in the print, electronic and social media to smear Aregbesola Osun’s debt is justified and proportional to the rapid infrastructure and economic development which has proved an undeniable answer to those playing politics with the state’s debt profile. Why is opposition not singing the chorus of projects, projects and projects that Aregbesola executed?
What is Osun debt to GDP ratio? Osun debt to GDP ratio is at 17 percent, which is “conservative, by global standards.” Aregbesola’s administration in Osun was vindicated on the correct position of the state’s debt profile in 2017 by the National Bureau of Statistics (NBS) and Debt Management Office (DMO). Nigeria recorded a government debt equivalent to 17.50 percent of the country’s Gross Domestic Product in 2018. Government Debt to GDP in Nigeria was average.
In 2013, the crash in oil prices has resulted in a nosedive of government revenue projections that adversely affected revenue allocation from the Federation Account. Aregbesola found it hard to pay the wage bills owing to the declining federal allocation to the state. Osun workers wage bill was N3.6 billion in Jan 2015.
Federal allocation to the state of Osun was reduced by 40 per cent since 2013, making it difficult for government to meet up its responsibilities. The situation became so bad at a time that he resorted to the state’s reserves and exhausted it on payment of salaries. At a stage, the Federal Government had to be obtaining loan to pay Federal Civil Servants. This was in 2014 under President Jonathan’s PDP Government. By June 2015, 23 states, including Osun, were owing, workers’ salaries.
Rauf Aregbesola went ahead to ensure that salaries were paid. Osun is next to Lagos in the sheer size of its civil service. In fact, the state inherited 50 per cent of all the workers in the old western state and more than 75 per cent in the old Oyo State. Aregbesola was meeting wage bill of over N3.6 billion with N4.6 billion federal allocation until July, 2013 when the Federal Government announced a decline of about 40 per cent allocation to states. This reduced the state’s allocation from N4.6 billion with which Aregbesola was meeting wage bills. Since then, Osun has had to augment salaries by sometimes N1 billion, sometimes N1.6 billion. Where do you get resources to build for today? There is something called constructive borrowing and there is destructive. If you borrow to buy a vehicle, you’re putting your¬self in trouble. But if you borrow to build a house, the house will appreciate and then, you can sell it, especially if you are in trouble. So, we have heard this argument before. Rauf Aregbesola raised the first sukuk bond constructively in Nigeria worth ten billion naira (some $62 million) from the capital market to fund educational development. Today Osun Sukuk is driving national fund for development projects. It was the first of such step by Africa’s biggest economy. Former Governor Aregbesola was aware that Islamic financial instruments such as sukuk have been used to finance infrastructure projects in countries like Malaysia and Indonesia, and in the Middle East, and could attract investors from such countries. The former Governor knows that Islamic finance requires a clear link with real economic activity and transactions have to relate to a tangible, identifiable asset, which comes in handy in the case of infrastructure financing.
Osun State Monthly Internally Generated Revenue Increased from ₦300 million in 2010 to ₦1.5b in 2018 under Rauf Aregbesola. The financial re-engineering strategy of Aregbesola administration led to a dramatic increase in the internally generated revenue (IGR) from N300 million to N700 million within a short period of time. This feat was achieved through automation of the traditional payment system viz-a-viz payment of salaries and collection of revenues. it is also note worthy that this increase came without the government increasing the taxes payable by the citizens of the state.
In November 27, 2010, Governor Rauf Aregbesola’s Government met a strangulating financial situation in Osun as it occupies the 34th position of 36 states in Nigeria in terms of financial muscle on the one hand and a suffocating N18.38 billion loan obtained by the immediate past PDP government on White Elephant Projects where the state had to be borrowing N1 billion monthly in order to fulfill its statutory obligations. However, with ideas, determination and some financial reengineering, Osun limitations have turned around to greatness.
Speaking at Africa Digital Forum five years ago, with the theme “Deepening e-Governance, Transparency with Broadband Access”, Aregbeshola said Osun state government has continued to increase its IGR to N1.5 billion every month with the deployment of electronic payment technology (E-Payment). Aregbesola listed this achievement as one of his selling points.
There is this (chorus of) debt, debt and debt; I want to correct the wrong impression about debt by the acting Chairman of the Peoples Democratic Party in Osun State, Sunday Akanfe, who recently demanded a probe of ex-governor Rauf Aregbesola. The International Monetary Fund (IMF) has said Nigeria’s debt-to-Gross Domestic Product (GDP) ratio, which currently stands at 28 per cent, is still below the average in Africa, despite the fact that the country’s debt level has risen.
The debt owed by the state was invested on feasible projects which are of immense benefit to the populace. The debt is money well borrowed and money well spent. The debt owed by the state was invested on feasible projects which are of immense benefit to the populace. The roads constructed have begin to open up the economy, the development in agriculture begin to manifest, by the time you begin to see the children and the quality of education they get and other positive outcome, not only on the economy but our social wellbeing, then we will agree that the money was well spent“.
The Social Investment Programmes under the immediate past administration in the State of Osun did not in any way over-burden the finances, but ensured mass prosperity and influenced the economic development of the state. Nigeria’s Minister of Interior, Ogbeni Rauf Aregbesola said this while reacting to insinuations on how the massive investment. The Social Investment Programmes under the immediate past administration in the State of Osun did not in any way over-burden the finances, but ensured mass prosperity and influenced the economic development of the state.
Nigeria’s Minister of Interior, Ogbeni Rauf Aregbesola said this while reacting to insinuations on how the massive investment in infrastructure and social welfare of his administration culminated in the debt profile of the state in a virtual colloquium organized by a group of individuals in commemoration of his 63rd birthday last Saturday.
Aregbesola said, “there is this (chorus of) debt, debt and debt: a motivated people can never be in debt regardless of the size and I must correct something, we did not use debt to fund any of our social programmes. “The bulk of the debt that was overhanging now is the debt incurred on overdraft of salaries, the loans we took from the capital markets were directed at development – physical and human.
“And I must say, we have liquidated the Security and Exchanged Commission loan which was called vanilla bond by the end of last year. We are liquidating Sukuk bond 11.4 Billion Naira by November of this year. “So, what it means is that, in terms of the actual debt we took to fund development, there is no issue at all.” The former governor of Osun stated further: “The issue we have is in the money we had to take from the commercial bank which we had transferred through the instrumentality of the Governors’ Forum and the other measures that came into helping government by our president to absolve the bond as Federal Government bond with a long-term of 19-20 years which we are now paying.
“By the time we finish paying the Sukuk bond by November this year, the state will be relieved and don’t forget, if as it is said, we are doing so well in a lot of things, definitely, it will translate into Internally-Generated Revenue. And that will help.
Inwalomhe Donald writes via inwalomhe.donald@yahoo.com
