State of the Living Springs gasps for breath

Osun airport

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.

While addressing the Sixth Assembly during its inauguration on June 2, 2015, the governor said the total revenue allocation from the federation account to the state since November 2010 to December 2014 is N176.5 billion.

This figure, according to the governor, comprises the net statutory allocation and other accruals such as exchange gains, the additional fund from NNPC and gross VAT allocation.

But as The Guardian’s investigation reveals, this statement contradicts the records published by the Federal Ministry of Finance, which shows that Osun State government has actually received a total of N180.3 billion within that period, therefore, showing a difference of N3.8 billion.

The disparity represents more than 10 percent of the first tranche of the N35 billion bailout fund the state received in September from Central bank of Nigeria (CBN). The amount also covers more than a month’s salary of the entire workforce of the state estimated at N3.6 billion by the state government.

The governor said further in his speech to the Assembly that, if Internally Generated Revenue (IGR) is added to the total allocation of N176.5 billion, the state was able to generate N204 billion. This addition presumes that the state was only able to internally generate N27.5 billion between November 2010 and December 2014.

Again, this figure appears suspect, considering the government’s claim in 2013 that it collected N1.6 billion as IGR per month.

Speaking in Lagos at Nigerian Telecoms Development Lecture (NITDEL) in September 2013, 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. That is a huge difference compared to N300m monthly IGR, which the previous administration had recorded, he said.

This performance was listed as part of Governor Aregbesola’s achievements during the last election campaign. 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 billons 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.

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.

In contrast, the records of the National Bureau of Statistics, (NBS), Joint Tax Board (JTB) and State Boards of Internal Revenue (SBIR) show that the IGR for Osun state between 2011 and 2014 are N7.39 billion, N5 billion, N7.28 billion and N8.51 billion, respectively, totaling N28.2 billion. Added to N600 million made between November and December 2010, the state’s IGR rises to N28.8 billion.

If this figure were to be considered as the actual total of the state’s IGR during the entire Aregbesola’s administration, still the figure shows that N1.3 billion of the state’s IGR is left unaccounted for.

In total, the governor may have failed to account for N5 billion in his presentation to the state Assembly. That amount can pay two months salaries of the workers who were owed for seven months before FG bailout was obtained. Watching the footage of the proceedings of the governor’s presentation on that day, the House did not detect the difference; if they did, no one raised the dust.

Aregbesola

Aregbesola

Other Revenues Missing In The Governor’s Report
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. These accruals added to the allocation and IGR raised the entire revenue for the state far above N273 billion. Again, this addition was not included in the talking points of the governor.

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. It is on record that elected officials do not administer the local government councils in most states in Nigeria, but governors handpicked caretaker committees to run the councils. Hence, state governments receive and administer allocations of the local councils. This addition put the total revenue in the control of Osun State government at N467 billion within the period under review. 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.

People React
MEANWHILE, an interest group in the state, Osun Stakeholders (OS), said the governor’s oversight is deliberate. According to the group, Aregbesola always has been economical with the truth concerning the state’s account because of his “financial recklessness, corruption, money laundering and fraudulent application of Osun States resources.”

With the volumes of revenue receipts during his tenure, the group believes that the government should not have had any problem paying workers’ salaries. According to them, the governor who has not paid workers’ salaries for more than seven months draws about N502 millions security vote monthly from the state coffers.

In a petition dated August 10, 2015, to Economic and Financial Crimes Commission (EFCC), a copy of which was made available to The Guardian, the group said the non-payment of workers salaries lasting for more than seven months is a “consequence of the corruption, fraud, hypocrisy, financial recklessness and impunity that has become synonymous with the administration of Ogbeni Aregbesola.”


Untitled-1Failed Projects

THE stakeholders stated that 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. 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 and the proposed MKO Abiola airport at Ido-Osun, and rehabilitation of Gbongon Sekona Akoda road.

The Guardian visited the locations of these projects and found out that major works are yet to begin two years after the loans were secured.

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 desolate condition of the airport project may have validated the argument of the critics of the Aregbesola administration who think it is a white elephant. But Governor Aregbesola thinks differently. In one of his speeches, he stressed the viability of the airport project. “It will not take a time to develop the airport to aircraft maintenance hub in Africa. We only have just three aircraft maintenance hangers in the whole of Africa. We need not go to Europe or America to get the aircraft in African maintained.” Two years after, the dream is yet to fly.

The proposed Osogbo-Dagbolu international market is still a deep forest. “We heard about it, but we don’t know when it will commence,” Mrs Karimotu, an indigene of the town told The Guardian. Road construction and rehabilitation projects within the state such as the 29 km Gbongon Sekona Akoda road, 48.60 km Gbongon-Odeyinka –OrilelowoAraromi Owu road and 16.35km Ikirun junction –IlaOdo –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 $692.3million from Finance Group from Cyprus according to a “Letter of Request for Loan” dated June 7, 2013, which The Guardian obtained.

Debt Profile
OTHER loans collected by the state government according to the petition submitted to EFCC are $65 million borrowed from Islamic Development Bank for water supply and sanitation project and N11.5 billion Bond (Sukuk) for the construction of 23 high schools at N450 million each and several others. The indebtedness to commercial banks by Osun State stands at N150 billion, the group added.

Meanwhile, the debt profile of the state as at 2014, according to the Debt Management Office (DMO) stands at N12 billion ($74million) for external debt and N41.4 billion for domestic debt, totalling 53.4 billion. This is far below the amount claimed by the petitioning group. But the OS insists that the debt profile is a lot higher. They argued that DMO record did not capture others 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; and another N3 billion taken on 25 June 2012 for supplying motor vehicles.

Other loans are: N65 billion from WEMA to buy property in Abuja, N35 billion collected from Sterling Bank for 2012 annual pilgrimage, N1 billion loan from Zenith Bank for ISDP counterpart fund on March 9, 2012; N98 billion loan collected on 25 July 2012 from Sterling Bank for the purchase of 36 Nissan Sunny (GLI Engine) vehicles and others.

The Guardian was unable to verify these claims from the mentioned banks before publication because of the reluctance of the bank officials to divulge information on their client. One of the members of OS and a former Head of Service under Governor Aregbesola’s administration, Elder Segun Akinwusi said the governor told half-truths when explaining the rationale for N11.5 Sukuk bond to the people of the state.

The governor said the loan obtained at 14.5 percent compound interest was interest-free, but this is not so, he said. “A monthly deduction of N164, 934,256 has been effected from August 2013 to July 2014, while N305, 678,787 is currently deducted monthly from July 2014 to July 2020, by which time the state government would have paid a total of N25.5 billion.” He said paying N25 billion over N11.5 billion loan, no matter how long, is not a reflection of sound economic judgment.

But one of the accusers of Governor Aregbesola is Justice Olamide Oloyede Folahanmi, a member of the bench at the state judiciary. The judge described the administration of Governor Aregbesola as “’O’ Scam”, a parody of the several projects initiated by the governor. Also, an Osogbo-based NGO, Civil Societies Coalition for Emancipation of Osun State has noted that the gross mismanagement of the state’s resources by the present administration has left education, health and commercial sector of the state comatose.
According to a former director in the Osun State of Ministry of Education, the N20 million spent to commission N750 million Wole Soyinka Government High School located in Ejigbo, does not represent a prudent spending for a government enmeshed in fiscal crisis.

Government’s Response
HOWEVER, the Director, Bureau of Communications and strategy, Osun State, Semiu Okanlawon, has dismissed the claims as unfounded. In a telephone conversation with The Guardian, Okanlawon said they have been advised to disregard the allegation by the stakeholders because “the people behind this campaign are politicians who failed in the last election.”

The Guardian further asked Okanlawan to respond to specific questions around the revenue, expenditure and debt profile and to the specific allegation of profligacy by the petitioners. He said he would need to get approval from the governor before he could respond. And that was the last word from him. He neither picked his call again nor responded to messages sent to him on phones or Facebook. Notwithstanding, in the previous press interview he granted, Okanlawon had said the people complaining about the spending of the government should “produce evidence other than merely mouthing it.”

On the N11.5 billion loan borrowed from the Islamic Bank, for instance, Okanlawon insisted the loan interests free. Islamic Development Bank on its website explains Sukuk as “Islamic equivalent of bonds. However, as opposed to conventional bonds, which merely confer ownership of a debt, Sukuk grants the investor a share of an asset, along with the commensurate cash flows and risk. As such, Sukuk securities adhere to Islamic laws sometimes referred to as Shari’ah principles, which prohibit the charging or payment of interest.”

In layman language, the cost for this kind of loan does not attract interest; but the issuer benefits from giving out the loan by sharing from the returns generated by the asset.

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. And the salary for October, November and December remain unpaid as at Christmas day. Osun stakeholders insist that the “recklessness” of the Argbesola-led government has put the state in fiscal crisis that may endure for a long time.

Part of the crisis was the strike by medical doctors in the state. The doctors began strike in September last year over unpaid salaries and demands for government’s intervention to enhance service delivery in the state hospitals. Since the two parties could not find a middle ground on the issue, the state government has pronounced the doctors technically sacked. And the government would not rescind his decision, said the Chairman, Osun Special Committee on Health, Dr. Simeon Afolayan while briefing journalists in Osogbo. “How can we reverse a decision accented to and agreed with by over 39,000 workers because about 100 people are dissatisfied,” he queried.

Though, the government has promised to replace the sacked doctors with new applicants, the strike has affected the welfare of the citizenry in a significant way.

BudgIT Report
BUDGIT, a civic organisation that monitors governments’ budgets and public spending, in its November report, has ranked Osun State as number one among the states that are unable to meet its monthly recurrent expenditure commitment between January and July 2015.

The report titled, The State of States, and published on its website (http://www.yourbudgit.com/) finds that ability of the state to meet monthly recurrent expenditure commitment in the periods under review has been weakened as a result of low federal allocation and Internally Generated Revenue (IGR) that accrued to the state.

Another factor mentioned in the report is the debt profile of the state. According to the report, the total average monthly revenue for the state is N4 billion while its average monthly recurrent expenditure stands at N7.5 billion, leaving a shortfall of N3.4 billion every month.

Therefore, in seven months Osun state has recorded a shortfall of N23.8 billion. The State also ranks the second lowest after Plateau State in the state sustainability index. The report states that: “Osun State’s sharp turn to insolvency has been preceded by a faulty economic plan.

“The State received {a total of} N123.5 billion in bailout fund – the biggest in contemporary Nigerian history. Osun’s spending plan over the years came with the borrowing of N18.3 billion to build six mini stadia to amuse, and at best make its youthful population active. “Also borrowed was N30 billion at a lending rate of 14.75 percent for roads and waterworks infrastructure which generate no income and therefore cannot provide for long-term sustainability repayment plans.

“Another N11.4 billion was borrowed at 14.75 percent lending rate to build schools which would also unfortunately bring no income into the State’s coffers. “Even more debilitating to Osun’s economic prospects was that the repayment for all these debts ran concurrently, and deduction were made out of whatever revenue was to accrue to Osun State. “Taking these loans which did nothing to improve IGR amid large overhead costs means the bulk of the State’s existing revenue is instead diverted into debt repayment.” “This loan and several other loans collected previously will put a heavier burden on our children in the future, that is why we are calling attention to what is going on in our state,” said Elder Akinwusi.

This shocking analysis notwithstanding, the reaction of the State government has remained constant, insisting that the agitation is politically instigated and specifically part of the preliminary struggle for 2018 governorship election.

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.”

And that the lawmakers are oblivious of this blunder raises doubt about credibility of the House.

• This investigation was conducted with support from Ford Foundation and the International Centre for Investigative Reporting. The investigation commenced in August 20, 2015.

Author: Test Test