The global crash in international oil prices that began early 2014 no doubt left many governments with reduced oil revenues and also exposed what some believed were unsustainable spending levels by many countries. Had it not been this crash in oil prices, some of these revelations about how unsustainable some economies are would not have been visible to the general public. Nigeria, with the largest economy in Africa and whose major source of revenue comes from crude oil (over 80%), had her fair share in the fallen oil prices. Funds for Federal, states and local government depleted automatically as a result of this. Since Federal allocation to states have drastically reduced because of the fallen oil prices, delays in payment of salaries of workers (civil servants) in all the tiers of government became the result, and was more pronounced with the states and local governments with little IGR to support their Federal allocation.
As it appears today, the state of Osun under the leadership of Governor Rauf Aregbesola is not finding it easy trying to get through these hard times of harsh economic reality. The state government currently owes several months in unpaid workers’ salaries. Pensioners are finding it difficult to survive as the little amount they get as stipends from government is no longer forthcoming.
The state schools (primary and secondary) and some other government parastatals are currently under lock and keys. One would be tempted to ask, what about the bailout fund that was released to distress state governments recently and how was it spent. How much funds do we think the state of Osun would probably need to get out of this mess? The Osun civil service alone is estimated to be a little bit above 25,000 persons with a monthly wage bill of close to N3.5billion monthly. This alone is about N42billion annually. The state IGR is about N1.5billion per month (according to the official website of the state of Osun).
Apart from this, there are piles of creditors waiting to collect their funds back or the interest that have accrued on them. It would be unreasonable to think that majority of the developmental projects that has been executed under this administration of Rauf Aregbesola were being sourced from the Federal allocation or the IGR of the states. To think the governor has done wrong in making the state befitting for investment opportunities by embarking on some key infrastructural projects which were not adequate before he came on board would be unfair. No one would believe that the global oil prices would crash the way it did, maybe states like Osun would have exercised more caution while spending and borrowing lavishly to execute those projects.
Wise nations like Saudi Arabia and United Arab Emirates who are oil exporters also like Nigeria, have built up substantial foreign currency reserves, they can afford temporary falls in oil prices because they have substantial reserves. I doubt if Nigeria (the largest oil exporter in Africa) as of today, has anything left in her Excess Crude Account. This is how wise we are as a nation (the nation of spend it all), and the result of it is what you get when states like that of Osun and many others could not afford to pay workers at a time like this.
Way forward in Osun State.
It seems the current harsh economic atmosphere in the state of Osun is far from being over. Workers were paid some few month salaries from the bailout funds being received by the state governor, but I doubt if this was enough to offset the many month of debts some of these workers had incurred over the months. The various labour unions in the states vowed never to return to work until their demands are met. Schools are still not opened yet as students are everywhere roaming the streets in their hundreds.
There are few options available if the current administration in the state would want to move forward. As harsh as some of these options may appear, it may only be the short-run solution to the present harsh economic realities in the state. The pay cut in the salaries and allowances of political office holders as announced by the governor is the first step in the right direction. Political office holders across the Federation are known to collect bogus salaries and allowances at the expense of other pending projects in the states. This has been the trend over the years and the current economic situation in the nation cannot continue to favour this. States like Kaduna, Yobe also did same recently. The profligacy in government cannot continue, and it must starts from political office holders.
Another measure available to the government is to prune down her workforce by a considerable amount. As terrible as this may sound to the hearing, it is one of those harsh measures that could minimize the so many errors of this administration. This measure cannot even be effective until the government pays these workers their salaries and gratuities. An attempt to do this would even raise some eyebrows and the government may face some stiff resistance from the various labour unions in the state.
Reducing the workforce is not a new thing in the state of Osun. The Bisi Akande led administration reduced the states workforce by 10,000 in order to have enough money to develop the states infrastructure. Aregbesola may not have any choice than to toe this line of action also, especially with the state workforce that has blatantly rejected any proposal by the state government attempting to reduce their salaries and allowances. The idea of maintaining a bogus public service in Nigeria should be carefully examined. Government does not exist alone to pay salaries. The current trend around the world now is that government keeps a small and highly effective workforce to dispense her roles. Nigerian government (both at the state and federal level) must also be thinking in this direction.
Finally, while many may not fancy Aregbesola style of administering the state of Osun, I think the man should be commended for taken some bold steps in the development of the state. Though many of his critics, especially on social media have not been to Osun state to see things for themselves; I believe his political opponents would cover their faces before they even utter any word criticizing him. While his economic reasoning may not be that perfect and eventually landed the state in this present quagmire (according to him), Ogbeni as he is popularly called is not the type of politician that would want to enrich himself at the expense of the poor masses.