RE — Osun flirts with insolvency: Osun is viable
By Adebayo Adedeji
I refer to the Business Day’s headline of 11 August, 2020, “Osun flirts with insolvency, spends 91% of FAAC Serving debt in Q1” co- written by Michael Ani and Favour Olarenwaju.
The authors have claimed, among other things, that Osun State is currently facing financial difficulty occasioned by heavy deduction from her federal allocation targeted at defraying her contractual obligation; that the state lacks economic viability to repay any loan, hence no financial institution would grant her fresh credit facility if she seeks it; that the state may not be able to discharge her statutory responsibilities now or in future; that the state’s IGR of N17.9 Billion in 2019 was nothing to write home about.
They also claimed that the $20 Million health grant extended to the state has not been judiciously appropriated. In fact, the duo of Ani and Olarenwaju turned the report to a pessimistic forecast for the state. In my piece, I would highlight why the authors’ prophecy lacks substance; and would equally state the realities about the state.
First, the claim that the state is not economically viable is false and not based on empirical data. An evidence that Osun is economically workable is the SFTAS status of the state. SFTAS is a World Bank- Assisted programme aimed at helping states strengthen their fiscal management so as to ensure effective mobilization and utilization of financial resources to the benefit of the citizens in a transparent, accountable and sustainable manner, thereby encouraging an outlined fiscal behaviours.
Osun State was a beneficiary of this grant, alongside a selected states. A state that lacks viability can not be considered for a financial grant of this nature. Money shared among the selected states was over N42 Billion!
Again, it is lacking in facts the authors’ claim that Osun’s IGR is not robust enough to support and sustain her economic plan. The state’s IGR drive is moving steadily and the results are there for everyone to see. Although the target is N36 Billion, what obtains at present is pretty encouraging and evidence that the N36 Billion is achievable.
For the year 2019, based on Nigerian Bureau of Statistics record, Osun’s IGR rose from N10.4 Billion in 2018 to N17.9 Billion in 2019, recording one of the highest positive growths in the country. A 72.6% IGR growth, by all standard, is commendable. No sincere analyst would play down on this huge leap in performance.
Similarly, the state governor, Gboyega Oyetola, has also taken measured steps in solving socioeconomic challenges in the state by convening an economic workshop. Following a three-day Economic Summit in Osogbo in November 2019 where the economy masterplan of the state was dissected by a team of 58 panelists, there have been some positive reactions from investors from various sectors.
One of them is the intention of a Canadian mineral exploration company with 25 years expertise in extensive ore and gold mining, Segilola Thor Explorations Limited, showing readiness to ply its trade in the state. By next month, the first gold bar is scheduled to be produced in the company’s gold fields located in Ijeshaland.
Segilola Limited has capacity to process 650,000 tons of ore and 80,000 oz gold on the average in the state. And the company has got in place a signed definitive documentation for the provision of $54 Million credit facility. Yes, mining is an exclusive preserve of the Federal Government: same as oil. But with the collaboration and partnership going on, it is going to be a win-win for every one: the FG, the state and the investors.
In fact, this particular exploration already has created more than 200 jobs for indigenes of Mogbara, Odo-Ijesha and Iperindo, communities where the gold fields are located. With time, as the business firms up and other investors come on board, many indigenes would be employed and the state’s tax net, importantly, would be expanded.
Is Osun State truly indebted? Yes, she is. She is indebted like any other state in the country. No state can be spared. The oil rich Bayelsa, for example, is owing about N150 Billion and its IGR covers just 10% of this debt profile. Akwa Ibom owes too.
In fact its debt is around N213 Billion and this debt stock against its IGR is 12%. Cross Rivers is indebted to the tune of N165 Billion, with IGR covering merely 10% of this debt. Every state is financially encumbered. Only Lagos can boast of firm record in IGR to debt.
Has Oyetola obtained any loan since he became governor some 20 months ago? No, he has not. This is a fact.
Notwithstanding the financial drawback, the governor and his team have not allowed the situation hamper their capacity to deliver their onerous tasks of seeing to the welfare of the people. Workers are happy with the governors because besides paying their salary as and when due, he has also shown serious commitment to defraying salary arrears left behind by previous governments.
Pensioners are happy with the governor because their pensions are not owed. In fact, he has offset part of the pension arrears inherited by his government. As at May 2020, the government of Oyetola has spent more than N10 Billion on Civil Pension, Gratuity and Contributory Pension alone.
Oyetola is prudent with meagre resources at his disposal. He appropriates intelligently. With slim federal allocation but unwavering IGR, and radical and ingenious financial engineering, the state has become a construction hub. Ada-Igbajo road, Ede- Ada-Ojo-Ejigbo road, Ilesha Garage-Testing Ground junction… are some of the testimonies of Oyetola’s infrastructural exploits.
These are the current realities about the state, not the gloomy picture some doomsday economic artists have painted.
Finally, on the $20 Million primary healthcare grant, a tangential issue but which the authors deftly padded into their report, I hold that canvassing an argument would be an utterly waste of time because the allegation is a mere strategy to spur up needless controversies.
The primary healthcare project is a profoundly massive one which only haters of good governance would repudiate. I would be on hand to show around representatives of this newspaper the over 250 fully refurbished health centres across the nooks and crannies of the state.
The PHC at Arowojobe, Atakumosa East, would be a sight to behold. The health centre, built in 1965, with no toilet, has suffered neglect for years but now been given a facelift courtesy the $20 Million health intervention.
Adebayo Adedeji writes from Ilesha, Osun State.