Bugged down by huge debts, months of unpaid salaries and the exhaustion of federal government bailout funds, state governors are at the moment caught between the devil and the deep blue sea. In the face of dwindling oil revenue and the attendant drop in federal allocation to the states, embattled state chief executives are considering a reduction in their workforce or pay cut for workers. The Nigeria Labour Congress, NLC has however warned that none of the two options will be accepted by the labour movement.
From the states in the South West, South South, South East, to those in the North West, North East and North Central, the story is the same. The fact remains that the various state governments still owe and have even piled a month or two more salary debts on the existing ones and may therefore be going back to Aso Villa with begging bowls.
The situation has crippled development and businesses in the states, thus generating angst and despair among the populace including public servants and even members of the non-informal sector who depend on their patronage.
The financial strait of the state governments might have also been responsible for a number of abandoned projects in the states, almost making nonsense of the massive achievements some of the regimes recorded earlier.
Harder times are certainly ahead of people and governments of states in the South West as the bailout funds released by the Federal Government that held much promise of stabilizing their economic health have run into sands.
The aid package, which became imperative after states became economically distressed as a result of downward spiral of oil revenues which shrunk federal allocations resulting in huge wage burden and stoppage or stalling of developmental projects due to governments’ inability to meet obligations to contractors, was like a mere drop of water in the desert. It had little or no impact on alleviating their problems.
A month or two after the disbursement, the states are back where they were before the temporary slush, some even trapped deeper in the vortex of insolvency. Although many of the state governors deployed the funds to offsetting arrears of salaries owed workers, the money did not go far in clearing the entire backlog stretching in many cases from four to eight months.
In Osun State, which has been embroiled in industrial crisis since late last year over non-payment of salaries, four-month salary arrears still pend against the government of Ogbeni Rauf Aregbesola, who only managed to settle the January to May arrears, with a promise to pay the those of June to November by November ending.
A whopping sum of N26.6billion came to Oyo State from the Federal Government as bailout. But this merely helped the government to pay outstanding salaries of civil servants from May up to the end of August, leaving September salary. But, Governor Ajimobi remarked that the money was rather insufficient in view of the fact that the state’s wage bill was already N21.3billion before it was received. As soon as the government finished paying the outstanding salaries, it would “start owing again as we will have to scramble for more money”, the governor lamented at a recent public forum. Oyo, whose recurrent expenditure gulped 80 per cent of its allocation that averaged N5 billion monthly with salary alone taking N2.9 billion between 2011 and 2014 suffered a dip in its income which plummeted to N3billion while the average monthly wage bill, according to Ajimobi, rose to about N5.2billion, excluding that of political office holders. The result was a monthly deficit of about N1.8billion for the state. The Internally Generated Revenue (IGR) of the state government, which is about N1billion every month, could not bail the state government out of the monthly N1.8 billion deficit. According to the information released by the Debt Management Office (DMO) in Abuja in December 2014, the external debt profile of the state stood at $72million.
Although the Ogun State government does not owe its workers salaries, it has yet to pay them the backlog of their eight months cooperative deductions amounting to about N6.3billion in full. The workers in the state still have two more months of such deductions to collect. The deductions had earlier been withheld due to the poor financial standing of the state before the disbursement of the Federal Government bail-out fund of which, Saturday Sun, learnt, it has so far accessed about N18.9billion out of the N20billion approved by the Central Bank of Nigeria.
In Ondo State, however, the workers were up in arms about a fortnight ago over unpaid four months backlog of salaries by the Olusegun Mimiko administration. The secretariat, governor’s office, House of Assembly complex and other government offices were deserted and under lock and key by the aggrieved workers who staged a demonstration round the state capital. However, with a bailout of N14.6 billion from the federal government, the state was able to pay July and August salaries last week, leaving arrears of September and October.
Saturday Sun reporter in Ekiti State reports that although the state government applied for N22 billion, it received only N9 billion out of which it paid up to August salary. The remaining money, according to sources, was kept to be added to the federal allocation for September to pay for the ninth month. Across the states, capital projects suffer as payment of salaries has taken the frontline while urban renewal projects that were the focal point of most of the states in the South West have been pushed to the bottom of governors’ priorities.
In Oyo state for instance, one of the abandoned projects is a five-star hotel in Mokola area of Ibadan, where the governor had allegedly sunk N500million counterpart fund. A recent visit to the project site revealed that perimeter fencing of the site had been done, but construction work on the hotel has not begun. Also, work seemed to have stopped by the government on the conversion of six schools in the state to model schools. The project, which is expected to gulp N3.7billion, began in 2014. The schools are Islamic High School, Orita Bashorun, Ibadan; Baptist High School, Shaki; Oba Akinbiyi School II, Mokola, Ibadan; Ogbomoso High School, Ogbomoso; Obaseku High School, Eruwa; and Abiodun Atiba High School in Oyo town. A visit to the project sites in Ibadan revealed that the construction works have not gone beyond the foundation level.
Also, major ongoing construction work has stopped in Ijebu-Igbo, Ilaro and Ijoko in Ogun State, as contractors have left sites with bridges and roads left uncompleted. Saturday SUN gathered that this was due to the inability of the state government to meet its financial obligations to the contractors due to the current paucity of funds. Our reporter in Ado Ekiti reports that although Governor Ayodele Fayose has embarked on some capital projects including the abandoned Ekiti airport, he is being incapacitated by the poor financial status of the state.
Put to the test, embarrassed state chief executives had responded with desperate measures that have, in some instances, negated their campaign promises to the electorate. For instance, in Oyo State, the governor, Senator Abiola Ajimobi, whose party’s manifesto had free education as one of its cardinal programmes, had not only embargoed the yearly payment of the fees for WASCE/SSCE candidates, but also introduced a N3, 000 development levies in public secondary schools.
His administration is also negotiating a pay cut for state workers with labour as an option to an otherwise inevitable mass sack.
Other casualties of the cost-saving measures are the cancellation of sponsorship of pilgrims to the Holy lands by government, tactical delay in constituting the cabinet, and proposed rationalization of the 23 ministries in the civil service to 13. The bill to effect this is already before the Oyo State House of Assembly.
On the way out of the financial predicament for the state, Governor Ajimobi said: “We want to set a template like Lagos on our IGR and I promise that by September 2016, we should be able to increase our revenue from N1.2billion to N2.3billion. We will also block leakages.”
Apparently backing the governor, an umbrella body of women professionals and businesswomen being led by Chief (Mrs.) Felicia Adebimpe and Alhaja Fatimah Yusuf, in the state, Women in Oyo State (WIOS), argued recently that if the student population in all public schools across the state is 250,000, the Ajimobi administration would rake in N750million in a year and a total sum of N3 billion in four years.
But, it is not clear how Osun State hoped to salvage the dire situation it has found itself as the Director General, Bureau of Communication, Osun State Governor’s Office, Mr. Semiu Okanlawon, during a recent chat with our correspondent, insisted that government would not perpetually depend on banks loans to pay salaries, even as it hoped to honour a Memorandum of Understanding (MOU) signed with workers’ unions, not to downsize the workforce or cut salaries. Yet, for almost a year now, the Osun governor is yet to constitute his cabinet.
As part of the efforts to boost the finances of Ogun state, Governor Ibikunle Amosun last July requested the approval of the State House of Assembly to restructure its N48billion loan as at June 30 this year from commercial banks for conversion to Federal Government bond bail-out package. Governor Amosun in his request to the Assembly had stated that the bailout would reduce the amount the state government would be spending from its monthly statutory allocation on servicing debt to banks since such a restructuring would allow for more period of repayment of the loan.
But many workers in the state are not happy with the governor over his inability to fully pay their cooperative deductions, especially now that he had collected the Federal Government bailout fund. Some of the workers who pleaded anonymity condemned the governor for allegedly putting the bailout fund in a fixed deposit account. This action, they alleged was detrimental to the well being of civil servants in the state. The state Chairman of Nigeria Labour Congress, Akeem Ambali, could not be reached as at the time of filing this report. Also, the Governor’s Senior Special Assistant on Media, Juwon Soyinka, in an sms reaction, said: “The Ogun State government is not under any pressure on this issue. We are not resting on our oars, we have returned to the drawing board and we will continue to prudently manage our resources, as we have always done, for the benefit of our people.”
Ekiti State Chairman Trade Union Congress, Comrade Odunayo Adesoye regretted that the bailout package could not address the problems facing the state “because already, the FG has started deducting the bailout from the allocation being released and that means in another two or three months, the government would still come back to owing salaries of workers. So, no problem has been solved by the bailout. He canvassed diversification of the economy by looking into other areas of generating funds and a review of the sharing formula of federal allocation to favour state and local governments. The Chairman, Nigerian Civil Service Union, Oyo State chapter, Mr. Kehinde Oparinde, said: “Our position is confidential. So I won’t tell you. But we want the state government to continue to pay workers’ salaries. We are looking for ways to increase the IGR. So, we have charged our members to be up to the task of generating revenues for the state.”
Immediate past Chairman of Trade Union Congress (TUC), Osun State branch Oladele Adetunji Francis told Saturday Sun that the dire economic plight of the state has been a harrowing experience for them. “The hardship is biting seriously. There is no worker that is finding the situation easy. Everybody is living from hand to mouth and trying to make ends meet. Everywhere is dry. It is so bad that people can’t even pay the school fees of their children and wards,” he lamented. On how government could overcome the challenges, Adetunji suggested that it should boost its Internally Generation Revenue (IGR) by bringing more people, especially private enterprises into the tax net. “Government should implement and enforce taxation among all categories of workers. This, however, depends on its ability to pay salaries steadily because if there is no income, there can’t be tax.” he said.
He also urged government to approach well-meaning indigenes of the state, especially business magnates and top government officials, to make personal sacrifices by contributing their quota in one way or the other to boost the economy of the state. “That was one of the issues discussed at the last Osun Stakeholders forum to proffer solutions to the financial crisis facing the state. There is no more manna from heaven. Let all of us join hands to save our dear state from the ongoing quagmire,”Adetunji said. -The Sun