17th June, 2015
By Lateef Raji
Osun State is one of the 24 states that are currently feeling the weighty brunt of the current national economic crunch occasioned by the theft of 400,000 barrels of oil daily, slump in global oil price, which subsequently led to the reduction in monthly allocations to states. Reports indicate that, due to this situation, about 24 states currently owe their workers several months’ salaries. Expectedly, in some of the states, workers are embarking on strike in order to press home demands for the payment of their wages. In Osun State, for instance, the state civil servants recently began an indefinite strike action, “due to the failure of the government to accede to our legitimate demands, as contained in our letter to the government dated May 12, 2015.”
Local Government staffs are not owed any salary arrears except in delayed allocation. As it is now, things are a bit more complicated for the people and government of the state. Coping with dwindling resources, unpaid salaries and labour unrest is not, in any way, a palatable experience for any government. Sadly, this is what Ogbeni Rauf Aregbesola is currently contending with in Osun State. It is, however, distressing that the current development in Osun State is aimed at dwarfing the commendable and selfless service that Aregbesola has so far rendered to the good people of Osun State. The governor, while inaugurating the Sixth Assembly of the state had gone down memory lane, recounting how in less than 100 days in office his administration engaged 20,000 youths in public works through the Osun Youth Empowerment Scheme (OYES). A feat yet to be rivalled by any government in contemporary times.
Through innovative financial engineering, the administration was able to restructure a weakening loan it met and put the state on a healthier financial footing. Not only that, the administration also embarked on infrastructure renewal and development, which have transformed the state in all sectors. The government has equally helped to develop the local economy. For instance, the uniforms of pupils and students in all public schools in the state are sourced and produced locally. This has brought about a perceptible boom in the local fabric and fashion industry in the state.
Equally, local contractors have been given a great boost as they handle most of the State Government construction works.
Artisans, especially in Osogbo, the capital, would readily attest to the fact that things have never been this rosy for them as a result of the unprecedented patronage they currently enjoy from the State Government. The free meal programme for primary school pupils also offers local entrepreneurs sufficient opportunities to make ends meet.
Unfortunately, in an attempt to score cheap political points with the current economic situation in the state, some people have been accusing the State Government of financial recklessness. Contrary to this mischievous claim, however, it needs to be stressed that Ogbeni Aregbesola has run, perhaps, the most prudent and transparent government in the country, thus far. The governor in his address to the Sixth Assembly recalled that for nearly a year, after he reclaimed his stolen mandate, he did not constitute a cabinet. This shrewd move enabled his government to make some savings that were later put into good public use in uplifting public education, agriculture, job creation, road construction, culture and tourism, environmental sanitation and beautification, flood control, rural development among others.
The fact of the matter is that Osun State, just like the many others in the country, is currently facing economic challenges whose nature transcends local rationalization. Prior to the dawn of this present national economic predicament, the state has faithfully discharged its responsibilities to its workers. For a period of not less than 30 months, there was no record of rancorous moment with its workers. Indeed, the state, despite its lean purse is one of the few states in the country that paid its workforce a 13th-month salary every December. Definitely, it won’t be fair to label such a government as anti-worker.
In reality, the genesis of the current situation began in 2012 when the state’s overheads outlay increased because of the Federal Government arbitrary increase in minimum wage without recourse to the capacity of the states to meet up. The state was caught in the web of this increase and eventually had to increase junior workers’ salary. This ultimately led to the increase of total emoluments from N1.4 billion to N2.7 billion, an increase of almost 100%.
A few months later, the wage bill rose to N3.5 billion. Ironically, despite the rise in wage bill, the statutory allocation of the state was N2.5 billion by December 2012. By July of 2013, the wage bill was N4 billion while statutory allocation decreased to N2.1 billions. By now, the minimum wage increase was extended to senior workers. A breakdown of the financial position of the state, over the last three years, shows that in 2011 it received N29.9 billion net statutory allocation and spent N25.8 billion on emoluments with a net balance of N4 billion. In 2012, it got N28.4 billion and spent N31.6 billion on wage bills, thus leaving behind a deficit of N3.2 billion.
In 2013, statutory allocation dropped to N26.4 billion while wage bill grew to the N36.9 billions, leading to an enormous N10.4 billion deficits. In 2014, statutory allocation fell further to N19.3 billion. By now, the state government started defaulting on the settlement of wage bills. In a nut shell, between November 2010 and December 2014, Osun State got a total statutory allocation of N108.3 billion with a wage bill of N120.4 billion and a total deficit of N12 billion.
The foregoing represents an honest and transparent analysis of the state of finance of the State of Osun. It is a fact that could be verified by those that care to. For me, the clincher in the address is the paradox of the allocation of N5 billion in February 2013, and the N466 million the state received in April, 2015! This aptly captures the dire financial strait of the state and the country as a whole. Therefore, one would canvas that the workers in the state call off their strike, team up with the governor to find a lasting solution to the financial crisis bedevilling the state. Their cause is a justified one, and they deserve their wages, but the strike option would only worsen the parlous financial situation of the state. It is simply a counter-productive alternative.
Since the State Government did not hide the facts concerning the finances of the state from them, the rational thing to do is to put faith in the already existing line of communication between them and the State Government. Ogbeni Aregbesola is yet to constitute a new cabinet as a respect for the understanding he reached with the workers to cut the cost of governance.
In an earlier article on this subject titled, Unpaid Salaries: A Major Challenge for Buhari, I suggested that we could revisit the concept of global taxation for all citizens. We have relegated this major source of funding government to the background and over the years relied more on oil. I just hope we have learnt our lessons. The State of Osun until Rauf Aregbesola got to the saddle was predominantly a civil servant state where little or no other industry thrives. This means the source of government revenue is limited to the taxes the civil servants pay. If the civil servants rise up in unison that every eligible resident do their duty to the state, I am convinced we would readily put this ugly situation behind us.
Government the world over run on the taxes paid by its citizens. We cannot be an exception. The rent collection era is gradually disappearing. I hope President Muhammadu Buhari would still find a way to provide succour to the financially distressed states in the form of bailout. If we could bail out the banks, we should be able to bail out the states. The Greek bailout programme is a good reference. On a final note, it is important to stress that the allocation that goes to each state from the Federation Account is for the entire state, not for the public service alone. This needs to be emphasized. It is meant to provide infrastructure, provide basic services and not for the payment of salaries alone.
The public workforce, in any state, does not constitute up to 20% of the entire population. Therefore, it would be undemocratic to spend the bulk of a state’s resources on wage bills. After paying salaries, government cannot fold its hands to security, and it cannot close its eyes to health care and other critical issues. As bad as the situation seems, Osun workers should tread a cautious path by working with the government to straighten things out. What currently obtains is just a temporary setback that definitely won’t last forever.
•Raji is former Special Adviser, Information & Strategy, Lagos State.