OPINION: Understanding The Osun Crisis

Date Posted: July 22, 2015 at 7:22 am

The past few months have witnessed critical and growing press attention to the crippling insolvency of 23 of Nigeria’s 36 State Governments, a situation that became public knowledge after several states had failed to pay workers’ salaries for upwards of six months. This distress has not discriminated against the states in any discernible pattern – by political party affiliation, geographical location, ethnic composition, etc, the usual culprit factors that political commentators often latch on to.

Financial distress as grave as this was last experienced 32 years ago (in 1983) during the reckless Second Republic government led by President Shehu Shagari when  most of the then 19 states of the Nigerian Federation ran their economies aground by depleting the dwindling federal allocations that all had depended on without exception. The reasons for the 1983 salary crises at the State and Federal levels were: drastic fall in the price of Crude Oil in the international market, profligate spending, and white-elephant projects executed with little attention to financial and schedule discipline, and outright theft of state resources. The states, then as now, were heavily dependent on the tempting but unreliable income from Nigeria’s oil export, which experiences cyclical glut and price fluctuations with the boom-and-bust cycle of the world economy, a systemic problem only occasionally ameliorated when the shock of war jacks up oil prices in key oil supply markets.

We have returned to that terrible past of insolvency and economic stagnation, with some distinct differences. The country’s population has more than doubled from 68 million people in 1985 to 174million today, while the number of states has also almost doubled as if on a cue.

Of the 23 State Governments affected by the salary crisis, Governor Aregbesola’s administration has been singled out for a most severe attention about which Ogbeni (as he is fondly called), has agonized in public and in private. The crisis and the near grounding of the state’s economy and the resulting harsh situation have left an overwhelming number of government pay-dependent families without alternative income in serious financial and emotional distress. The strong feelings brought on by months of waiting for salaries, the payment of which government workers had long taken for granted has soured the governor’s once excellent relations with labour in the state; however, the generality of the citizenry has shown understanding for Aregbesola’s predicament and still support him. All that will help now is rescue by every means available. No argument, no matter how logical, will assuage the strong feelings of workers who find themselves stranded and helpless ‘for no fault of theirs’.

The Federal Government’s immediate financial rescue has forestalled turning workers’ frustration into open antagonism, the possibility of such an outcome is being constantly explored by the Osun PDP‘s warlord politicians who are stoking civil conflict with all manners of provocative publications and discredited allegations. The situation has created a feasting frenzy for faceless hack writers, paid jobbers and ‘critics’ of Governor Aregbesola who churn out damning commentary based on inaccurate data and ill-educated, and coloured observations about the State Government’s policies and the state of things in Osun.

Aregbesola, has taken the pain to explain over and over again that the seeds of today’s problem were sown by the astronomic rise in the wage bill due to the compulsory implementation of the new minimum wage set by the Federal Government in January, 2011, barely two months into his administration. The new government of Aregbesola, compelled to accede to the across-the-board pay rise had lamented that the increase meant that its financial burden rose by 300 per cent (from N1.4billion to N3.5billion per month!) and that this was unsustainable and would have consequences sometime in the future for the state’s development. But nobody listened or took him seriously.

It should be noted that Aregbesola was elected with a mandate to implement major social and infrastructural change in the State as enunciated his green book- “My Pact with the People of Osun” and was duty-bound to fulfil this mandate in the best interest of the State.

Governor Aregbesola had argued strongly back in 2011 that salaries could not be uniform across the country in a federation, since no two states had the same quantum of resources or cost of living. He also argued that salaries should not be adjusted across the board in tandem with the new minimum wage since doing so would increase the gap between the poorest paid and the highest paid, thus eroding the intent of the pay rise and leading the state into insolvency and as well as stalling the its development projects. During the emotionally-heated debate on the effects of implementing the new minimum wage by the state, Governor Aregbesola in presenting the difficult choices before the new government and people of the state had made it clear to the unions that if workers’ emoluments outstripped available revenue, government would have no choice than to retrench workers since it could not borrow perpetually just to pay salaries, whilst neglecting the core reason for having a government. It was noted that state’s revenue could not fully augment the new wage bill if there was a shortfall in federal allocation. Thus, assuaging workers’ demands for across-the-board wage rise by spending all of the state’s earnings on emoluments means leaving nothing for the future, and trusting the future to chance, postponing the evil day.

The governor had also reminded all back then to bear in mind that the Federal allocation to the state was meant for all of the state’s 3.2million residents (now 3.5 million), and not the exclusive entitlement of the 40,000 or so state employees and political appointees. This was not a popular position to take at the time, but it was, and still is the plain truth.

Between November 2010 and December 2014, Osun received a total statutory allocation of N108.3billion, and if we add Osun’s receipts from January to April 2015 of N7.04billion, this makes a total of N115.34billion. Osun expenditure on salaries alone from November 2010 to December 2014 was N120.4billion. This left the state with a deficit of N12billion. If we add other emoluments, Osun’s total recurrent expenditure comes to N206billion, compared to its statutory allocation of N108.3billion. If we add other accruals from Abuja, the grand total of all receipts from Abuja is N204billion.

To put things into perspective, in 2011, allocation from Federation Account to Osun was an average of N4billion per month, this level held steady until it fell to N2.6billion in July 2013.

•Daniyan writes from Osogbo

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