Truth about the State Of Osun
Ajibola Amzat’s piece in the Guardian on Sunday of March 13, 2016 titled ‘State Of The Living Springs Gasps For Breath’ left no one in doubt of his intention from the beginning when he opened the piece with a categorical allegation that Governor Rauf Aregbesola of Osun lied in his presentation to the State House of Assembly on the state’s finances on June 2, 2015. ‘The claim by the Governor of Osun State, Ogbeni Rauf Aregbesola, about the total revenue allocation to his state between November 2010 when he was first sworn-in and December 2014 may not be accurate after all, The Guardian has learnt’ he wrote. He also concluded on that same note.
He went ahead to compile the state’s revenues, obtained from dubious sources and came up with a damning conclusion that the governor concealed and did not account for N263.33 billion. These are made up of N3.8 billion revenue allocation funds, N1.32 billion from Internally Generated Revenue, N194.03 billion Revenue Allocation to the local governments, N61.44 billion Excess Crude Account Allocation and N2.75billion funds from Universal Basic Education Commission (UBEC). The insinuation and innuendo from this are that the governor misappropriated the amount. He then supported this claim with varying wild and totally false allegations of inflated projects costs, outright profligacy and unviable and abandoned white elephant projects.
The three-page special report in essence, is a special falsehood concocted by defeated opposition candidates in the last governorship election in the state, signed by Amzat and passed as investigative journalism. This is not a trivial statement. His sources mainly, Elder Segun Akinwusi, the immediate past Head of Service in Osun, was a defeated candidate who did not win his ward. Amzat’s data is a replica of the paper Akinwusi presented at a failed summit himself and other disgruntled elements attended last year. Another source he quoted, Justice Folahanmi Oloyede, a serving judge in the state’s judiciary, has never hidden her determination to pull down the governor. Amzat’s article is a rehash of her failed petition to the State House of Assembly, asking for the impeachment of the governor. Another of his sources, a two-man NGO called Civil Societies Coalition for Emancipation of Osun State, had sent a petition to the Economic and Financial Crimes Commission (EFCC), making the same allegations against the governor, using the same figures and data that Amzat published.
Governor Aregbesola on his own volition in the spirit of transparency and accountability laid bare the state of the state’s finances on June 2, 2015, at the State House of Assembly, while inaugurating the 6th Assembly. This was due to the prevailing circumstances arising from the financial challenges in the state at the time. He was there to inaugurate the Assembly, not to account for the state’s finances.
On a second note, even though the information given to the Assembly was materially correct in all aspects (we have checked and rechecked again and have confirmed its accuracy), it is not an audited report of the state’s account, which can only be given by the state’s Ministry of Finance and Office of the Accountant General of the State. Only an audit report can be quoted for reference and subjected to thorough analysis. The governor only attempted a summary of the state’s finances, in light of the financial challenge of the time. Even when auditors detect discrepancies, while going through an account, they first seek to clarify by issuing audit queries. This is done without any assumption until attempts have been made to close the gaps detected. This is because a noticed discrepancy may be due to unintended error.
I will point out below how all Amzat’s facts, argument and allegations are wrong and came from a malicious intent.
1. ‘If this claim were true, the IGR for the state in 2013 and 2014 alone should be hovering around N38.4 billion or thereabout. Added to 12.3 billion collected between 2011 and 2012, and N600 million generated in November and December 2010, the total IGR for the state should be around N51.3 billion, and not N27.5 billion disclosed by the governor’.
The IGR figure the governor gave, N27.5 billion, remains correct. The custodians of the state’s revenues remain the Office of the Accountant General and the state’s Ministry of Finance. No other body or organisation has access to the complete records or has operated on them. It is incomprehensible how any other person, group or agency could have spoken so authoritatively on a state’s IGR, other than the aforementioned.
2. ‘Governor Aregbesola said the use of Information and Communications Technology in all government transactions has increased his state’s IGR to N1.6 billion monthly. Therefore, it is either the governor presented to the public an exaggerated figure of N1.6 billion as monthly internal revenue since 2013, or a substantial part of the revenue was left unaccounted for’
State’s Internally Generated Revenue stream is not fixed. It comes everyday in bits and pieces through taxes, levies, rates, fines and dues. There cannot be any guarantee of regularity and this is why it is called recurrent revenue. When Ogbeni Aregbesola became Governor, the IGR was N300 million monthly average and it was ICT that was used to increase the IGR to N600 million average when the government began e-payment and directed that no individual or agency should henceforth collect cash on behalf of the state but all revenues due to the government should be paid directly into government accounts at the banks.
The fact is that the N1.6 billion collection was a peak figure and not an average and it occurred at a particular month as a “one-off” IGR, during the period. ICT application was used to collect the back-duty taxes and charges on the telecom right of ways related to past period but collected at this particular month. At the particular time the governor spoke, IGR was N1.6 billion. This was due mainly to the fact that a lot of accumulated debts were being aggressively pursued and many debtors were paying. ICT, the governor explained, only pushed IGR from N300 million to N600 million, not N1.6 billion.
How could it have been reasonably conjectured that because the governor claimed the state’s IGR peaked at N1.6 billion in a particular month, it then automatically meant that the state was realising this amount consistently every month and then allege that he under-disclosed any difference in the figure he made available after?
3. ‘In addition, according to Federal Ministry of Finance, Osun State received N61.4 billion from Excess Crude Account between 2011 and 2014, as well as grants worth of N2.7 billion from Universal Basic Education Commission (UBEC) between 2011 and 2013 and an unverified amount from the sure-p scheme’
The Excess Crude Allocation (ECA) due to the state within this period was N17.14 billion and not N61.4 billion. This is already included in the total figure of N176.5 billion revenues that accrued to the state from the federation account. Funds from the ECA are not shared separately. They are included in the distributable pool to be shared with the regular allocation in a particular month. Therefore, the ECA of N61.33 billion alleged to be undeclared is dubious, false and totally unfounded. It is, again, another case of dabbling into accounting matter by a dilettante. Also, mentioning it as a separate revenue line is another mischievous attempt to expand the fussy mathematics to get to a conclusion that N263.33 billion is missing.
While Amzat claimed that UBEC funds received by Osun is N2.75 billion, our records for the same period indicate N3.38billion. However, UBEC fund is even a different kettle of fish. It is a 50-50 joint contribution by the state and the Federal Government. To qualify for it, a state must have already made its own equal contribution available. This is why 22 states or thereabout cannot access their UBEC funds till date. It therefore, cannot be included in the recurrent revenues of the state because it is a capital receipt from the Federal Government that is tied to direct implementation of the FGN UBEC projects. The Governor cannot be blamed for not including this capital receipts in the revenue since he has not included its corresponding expenditure, when he was explaining that the recurrent revenue from federation account does not cover the recurrent expenditures.
4. ‘Further, the record of the Federal Ministry of Finance also revealed that the state government received a total of N194 billion on behalf of the 30 local government councils since governor Aregbesola assumed office in November 2010… But the governor also was silent on these earnings while giving an account of his stewardship to the representatives of the people of Osun State, and the latter let it slip’
State account is different from local governments’ accounts. It is therefore totally wrong for anybody to lump state government allocation with that of the local governments. Local government’s allocation is distinct and separate from state’s allocation, which means that both tiers of government run parallel accounts with different signatories. To be sure, it is on record that the total allocation to the Local Governments within the years in review (2010 – 2014) was N191billion; inclusive of N10.7 billion Excess Crude Allocation to local governments and not N194 billion as alleged by Amzat.
Would it have meant that because the governor did not mention the amount received for local governments, there were no separate budgets for local governments, no salaries were paid in the local governments; no projects were executed in four years and no capital or recurrent expenditure incurred in the local government in the period under consideration? So how N194billion belonging to local governments could have disappeared from the state as alleged by Amzat beats the imagination.
5. ‘though the debt profile of the state, which includes both external and domestic, now stands at N400 billion, most of the projects for which the loans were collected were never executed’
We have had to clarify this false allegation numberless times because those peddling it seem to be working on the Goebbelian notion that if you repeat a lie too often, it can assume the status of truth. It is not possible for any state (other than Lagos) to obtain a loan of N400 billion because the approving authorities – Federal Ministry of Finance, Debt Management Office (DMO), Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN) – have various restrictions on borrowing. Indeed, there is a strict CBN regulation that a bank cannot lend beyond its single obligor limit to a borrower. Therefore to get N400 billion loan, you require the 18 banks in Nigeria to give you an average of N25 billion each. The fact is that only five banks have such single obligor limits and, therefore N400 billion loan to any state is impossible. Also, DMO, a federal agency cannot allow any state to borrow under a structure or term that will require more than one third of its income as repayment. To be able to borrow N400 billion with a tenor of 36 months, you will need to pay back a minimum of N13 billion every month. How many states can afford that? The DMO has given Osun a clean bill of health, assuring the public that it is safe to do business with us. Other credit rating agencies have also given Osun a clean bill of health.
The borrowing capacity of any state, both national and subnational is a function of its Gross Domestic Product (GDP) and a range of 20 to 30 percent is acceptable global best practice. Osun’s GDP, according to Renaissance Capital Study is N1.2 trillion in 2012 and Osun on its own has limited its total debt ceiling to about 10 percent of its GDP. The N400 billion debt allegation is, therefore, outlandish and phantasmagoric. It is thus a lie from the pit of Hell that Osun borrowed N400 billion.
6. ‘Examples of such projects listed include; the road construction from Osogbo to Ila-Odo for which a sum of N17.5 billion was borrowed from the Bank of Infrastructure; a market project at Dagbolu, a suburb of Osogbo, for which N6 billion had been expended’
Osun did not borrow N17.5 billion from any bank to finance this road construction. If we got N17.5 billion, the road no doubt would have been completed. We were paying contractors with promissory notes and other revenues at our disposal. However, in Osogbo under the Aregbesola administration, 21 quality Osogbo township roads with concrete drainage stretching for 26.31 kilometres forming inner ring road were constructed and commissioned. Ditto in Ilesa, where 17 township roads totalling 29.7 kilometres were reconstructed and commissioned. In Ede, 13 township roads have been rehabilitated through direct labour. In the different Federal Constituencies in the state, 79 kilometres of intra-city roads were constructed and rehabilitated. In addition to the intra-city roads, 20 other roads traversing the cities, and covering a total of 294.27 kilometres, were completed.
This administration has also constructed six selected roads, covering more than 74.1 kilometres, in the six geo-political zones of Osun. We inherited eight road rehabilitation projects of 144.29 kilometres from the previous administration which we have completed. We encouraged the 30 local government areas including the Area Office, to initiate and complete (in record time) the construction of 238 kilometres of road with the savings from Excess Crude Accounts (ECA) to Local Governments. This has been accomplished to the admiration of all. In conjunction with the World Bank, Osun is working on 200km of rural roads to access farming communities for easy evacuation of commodities and produce, under the Rural Access Mobility Programme (RAMP) of the World Bank. It is unfortunate that Amzat closed his eyes to these roads that have beautified our communities and eased transportation in Osun.
No money has been spent on Dagbolu beyond the cost of clearing the bush and extending the rail sidings to Dagbolu station by the railway corporation. The total amount spent is definitely not more than N150 million. Once again, this is another case of jettisoning truth, logic and common sense to claim that N6 billion had been spent on a proposed mid-regional market for which we are yet to compensate the land owners for the economic trees on the land.
7. ‘At the proposed airport, there are only a couple of uncompleted buildings surrounded by bush. The structures provide habitation only for reptiles and rodents’
The consultant handling the airport took journalists on a facility tour of the airport in January 2016. There he showed them the level of work and told them that the runway, which is 60 per cent of the work, is almost ready. The earthwork is complete to 2.4 kilometres level, which is only waiting for crushed stone base and asphaltic overlay. That runway, at 3.5 kilometres, is the longest in West Africa. To reach that level, 12.3 metres of excavation and refilling with laterite was carried out. As it is, it can land any plane in an emergency. Other features already put in place at the airport include water pipes on both sides of the runway, to be deployed quickly in case there is fire outbreak, which is the first of its kind in any airport in Nigeria. Also, the four storey control tower has been constructed up to the third storey. This was well reported in the media and the pictures illustrating these facts were published with the stories. The MKO Abiola Airport, which is proposed for an aircraft maintenance and cargo hub, is a joint effort with the Federal Government. The contractor handling the project is the contracting arm of the Nigerian Airforce, Aeronautical Engineering and Technical Services Limited (AETSL). About N3 billion has been expended on the project and the state is waiting for the equity contribution of the Federal Government for it to be completed. The Minister of Aviation, Honourable Rotimi Amaechi, promised to expedite action on this during his visit to the site on February 4, 2016. Amzat’s malevolent report on the airport is another unmistakable evidence of his intention to misinform, deceive and portray the government in a bad light.
8. ‘Road construction and rehabilitation projects within the state such as the 29 km Gbongan Sekona Akoda road, 48.60 km Gbongan-Odeyinka-Orileowu Araromi Owu road and 16.35km Ikirun junction-Ila Odo-Kwara State road remain deserted at the time of The Guardian’s visit in August last year. The popular Osogbo-Iwo road is also undone as at the time of the visit. For these projects, the government of Osun State sought $692.3 million from Finance Group from Cyprus according to a “Letter of Request for Loan” dated June 7, 2013, which The Guardian obtained’
Amzat claimed he obtained a copy of the request we made to Finance Group, a Cyprus financial firm, for a loan of $692.3 million to develop some roads without telling the readers whether or not we got the loan, since the relevance of mentioning the loan would have been if we got it and never used it for the purpose for which it was obtained. For a piece called investigative report, Amzat is compelled morally to comment on the evidence sighted or obtained that confirmed the foreign loan was processed and disbursed to the state. The truth is that the firm approached us prior to our capital market issuance programme and told the state government that it could help her syndicate all the finances required to fund her budget deficits over the medium term period, claiming it had gone far with Ekiti and Ondo States. Yes, it is our work to always consider favourable alternative terms and structures to optimise our financing portfolio since it was not a crime to so do. We issued a non-committal letter of interest that is not worth more than the paper it was issued on and that was the last we heard from the firm. We later moved on with other alternatives to finance the budget deficits. It would have been interesting if Amzat had provided evidence that the government obtained the loan and/or diverted the loan. How could a non-committal letter of interest to commence discussion automatically amount to obtaining the loan? No doubt, he made this claim in order to deceive the public into thinking that the government took the loan for the road projects, when in fact, no such thing happened. This is done deliberately to set the people against the Government.
On the dualisation of Osogbo (Old Garage) – Ikirun – Ila Odo – Kwara state boundary, the writer got it all wrong when he wrote that N17.5 billion was borrowed for the Osogbo – Ila-odo road and N6 billion on Dagbolu market. The total proposed contract sum for the project running to 47 kilometres was N17.8billion. It is contractor financed. In a desperate move to give fillip to his predetermined objective of portraying the Aregbesola government in bad light, the writer turned his eyes away from the level of work done on the said road forgetting that aside from the physical road construction, the contractor has in stock, huge number of construction equipment and materials at its project camp. He was blindfolded by his mischievous mission to the extent that he could not see the renewal and transformation of the urban corridors along this road.
9. ‘DMO record did not capture other loans granted to the state by several commercial banks, such as N562 billion collected on 25 May 2012 from First Bank to fund “O” Uniform programme’
That Osun obtained N562 billion loan from First Bank to fund the Osun school uniform programme is a most unreasonable claim. How much could each uniform have cost for about 450,000 pupils of Osun in public schools? The truth is that the scheme led to a joint venture company (Omoluabi Garment Factory) established in Osun to employ about 3,000 workers at full capacity. The private investor, Sam and Sarah, brought its investment and the government injected shareholders loan (quasi equity) at an interest to the venture, backed by performance guarantee of a financial institution. This government contribution as its own shareholders loan of about N900 million to the venture was to be redeemed by delivering 750,000 uniforms out of which 450,000 were distributed freely to Osun pupils. The rest were sold in the subsequent years and the state recouped some of its money. But the job was given to the company on the condition that it establishes a factory in Osun. In doing so, the land on which the factory was built, provided by government and the interest on the principal shareholders loan were converted to about 25 per cent equity in the company. With the Omoluabi Garment Company Ltd now valued at over N3 billion, that investment is worth N750 million. In reality, considering this partnership and the value obtained, it is as if the state did not spend any cash on this project and it got uniforms worth N900 millionand asset worth N750 million in the final analysis.
10. ‘N98 billion loan collected on 25 July 2012 from Sterling Bank for the purchase of 36 Nissan Sunny (GLI Engine) vehicles and others’
Again, he alleges that Osun obtained a loan of N98 billion from Sterling Bank to purchase 36 Nissan Sunny (GLI Engine) vehicles. By implication, each of these vehicles must have been purchased at N2.72 billion! How more outrageous can this get! The real truth is that the State Government of Osun facilitated acquisition of standard vehicles for cab operation in Abuja for Osun indigenes based in that city, through the Sterling Bank, without committing a Kobo. The entire transaction was between the bank and the group of cab operators.
11. ‘N35 billion collected from Wema Bank for 2012 annual pilgrimage’
The claim that the government borrowed N35 billion from Wema Bank to sponsor an undisclosed number of pilgrims to Hajj in 2012 alone is completely unfounded. A total of 1,065 pilgrims, who registered with the Hajj Board, performed the 2012 Hajj. One hundred and fifty six (156) of them were sponsored by the government at a total cost of N180 million, while the rest sponsored themselves. This was done without any loan whatsoever from any source.
12. ‘Osun State has recently obtained another N34.9 billion through the recent bailout by CBN. With this intervention, workers’ salaries have been paid. The workers insisted only half of their salaries have been paid so far’
This is a lie. Of the N34.9 billion obtained, only N25.87 billion belongs to the state government. The rest belongs to the local governments. The CBN actually requested for outstanding wages up to May 2015, which all states submitted and got partial funding. That is, not all submission were funded by CBN and this presupposes May 2015 as the terminal period of payment under the bail out scheme. However, in Osun, workers and pensioners were paid in full for this period and government even extended it to June 2015. Labour and Government understand that the economic headwinds occasioned by the dwindling revenues from federation account will continue after the bailout and therefore agreed to work together and bring to the table, transparently, revenues from federation accounts and internally generated revenue to be apportioned to the salaries and critical expenditures of government by a labour/government committee. Since July 2015, Levels 1-7 officers and pensioners that do not earn above N20,000, who are clearly in the majority, have been receiving full salaries and pensions. Only level 8 and above officers and pensioners earning above N20,000, have been on modulated salaries and pensions, depending on the quantum of money available from federation accounts and internally generated revenues. Labour and the government also agreed to work together to increase the internally generated revenues to improve the apportionment to salaries. The workers deserve praises for this understanding and forbearing. Their sacrifices and labour of love will not go in vain.
13. ‘Everything considered, the conflicting statement of account presented by Governor Aregbesola in June questions the transparency of the state government, in a way louder than the strident voice of the governor’s “political detractors.”’
This is judgemental, a categorical affirmation of the jaundiced opinion of the writer that the allegations are true and that the state government is guilty. But we are consistent. What we said in June is still true today. It is Amzat that has published lies and falsehood which defy fairness, common-sense and rational thinking. The essence of the Governor’s speech was to present the state recurrent revenues for four years and the recurrent expenditures (personnel and overhead) and to elevate the issues of governance that have now dominated the public space; which is the dwindling revenues as a result of fall in price of crude oil and the cost of governance.
14. ‘And that the lawmakers are oblivious of this blunder raises doubt about credibility of the House’
This is clearly an incitement of the lawmakers against the governor, a puerile attempt at destabilisation and fomenting political crisis between the legislature and executive arms in the state.
No Single Project Has Failed Under Aregbesola
THE Rauf Aregbesola administration came to Osun focused on changing the fortunes of the state. After two decades of her creation, the state was referred to in a most derogatory manneras a civil service state, a way to illustrate the fact that its economy only survives on payment of salaries to workers with no expectations from the peasant farmers, artisans, traders, professionals, academics, merchants and MSMEs of a thriving commercial, cultural, tourism and industrial activities. This is what the administration sought to determinedly change.
Of course, it was obvious this could only be achieved with a direct “assault” on the parlous state of infrastructure, security, youth engagements, reformed education and revamping of agriculture.
Only if these were done could the state be investor friendly and benefit from investments inflow.
The Gbongan – Akoda – Osogbo Road, Osogbo-Ikirun-Ila Odo Kwara Boundary Road, urban renewal projects, intra-city roads in all local government areas of the state, massive investments in security, positive youth engagement and others were all directed towards achieving these objectives.
With a state lying prostrate before the coming of Ogbeni Aregbesola, one of the options open to the government was to seek financial helps from all corners of the world; get contractors who could deliver on projects through convenient payment arrangements and be ingenious in the application of the scarce funds.
Ajibola Amzat, while struggling to justify his bias, literally condemned almost all projects as failed. Does the fact that works have slowed down on some sites due to the crushing national economic situation translate to failure? Has national revenue not dropped by about 70 per cent?