The Sun News

Osun: Sustaining development in an era of recession (2)

By Ileowo Kikiowo

THE  government has so far deployed over N7 billion to 50,000 beneficiaries spread across 4,500 cooperatives and/or businesses targeted at marketwomen, small scale farmers, artisans and physically-challenged individuals. Through its welfare programme for critically poor citizens, the government has supported 16,250 widows and disadvantaged persons.

Through the State’s partnership with the World Bank, The Osun Agency for Community and Social Development Project (OSUN CSDP), has reached 1,073,129 beneficiaries in rural communities by committing at least N2 billion to several social developmental projects.

Every school day in Osun, 253,000 elementary school children receive nutritious meals produced largely by local farmers, to boost health and cognitive capability at their formative stage, as well as boost local food production. The Osun School feeding programme is the longest running of its kind in the country.

As many states became fiscally unstable and shortfall in federally collected revenues continued to challenge salaries payment, the government of President Muhammadu Buhari heeded Osun’s push for interventions by helping her and other states restructure commercial loans into FGN bond with reduced financial cost and freeing of cash-flow in August 2015. The FG also granted a concessionary loan to Osun and many other states to clear backlogs of salaries and to restore treasury and fiscal stability of these states.

The state government and the labour unions recognized that the current national challenge, resulting from dwindling revenues will continue to affect the payments of critical expenditure of government, which include salaries, wages and pension, after the exhaustion of the bailout funds. The labour unions agreed to accommodate the state government during this economic headwind, while the state government agreed to be transparent and carry the labour unions along.

The state government and the labour unions also agreed that whatever is available as net revenues accruing from Federation Accounts and Internally Generated Revenues (IGR) will be apportioned in such a way that will take care of critical expenditure, wages, pension, salaries and other expenditure required to run government. This milestone agreement gave birth to the apportionment of revenue, called modulated salary.

From August 2015 till now, the prudent management of concessionary loan (bailout) and its subsequent revenues by the administration of Ogbeni Rauf Aregbesola has ensured salaries are paid and workers keep their jobs, rather than embark on mass retrenchment; an alternate idea other state governments have toyed with.

Table 3. Ranking of State Salary Arrears. State Months Owed No. of Months Owed by Salary Indebted States in the South West Estimated Monthly Wage Bill Estimated Salary Owed Ondo May – October (2016) 6 3,900,000,000.00 23,400,000,000.00, Ekiti June – October (2016) 5 2,600,000,000.00 13,000,000,000.00, Oyo June – October (2016) 5 5,200,000,000.00 26,000,000,000.00, Osun August – October (2016) 3 2,000,000,000.00 6,000,000,000.00

Lagos Nil 0, Ogun Nil 0, Source: Budgit, Govt Sources  The salary regime ensures full salaries are paid to junior cadre in levels 1-7, while their senior counterparts are paid nothing less than 50 per cent or greater, depending on the level of income per month.

The government’s infrastructure development efforts have already started yielding results as investments and production have been on the rise in Osun: In 2009, the famous International Breweries, Ilesa, known for Trophy brand which serves the South West and beyond, doubled its production capacity to cater for the boost in local economy. Tuns Farms, an indigenous poultry company, in partnership with small holder farmers, ramped up broiler production to position the state as the second largest broiler producer in the country. Omoluabi Garment Factory, a Public-Private-Partnership between Sam and Sara Garments and the State Government of Osun emerged as the largest Garment Factory in West Africa. An indigenous computer assembly plant, RLG Adulawo also set shop in Osun as a result of the favourable infrastructure in the State. These and more are the direct and indirect investment results of the administration’s bet for a prosperous future and these efforts are paying off.

Consequently, Osun developmental programmes have also impacted on the socio-economic profile of the state as reported by reputable institutions. In 2015, The Oxford Poverty and Human Development Initiative (OPHI) rated Osun 2nd Highest in Human Development Index among the 36 states in the country. In 2014, Renaissance Capital (RENCAP) in its 36 Shades of Nigeria Economic Review of States ranked Osun as the 7th largest economy in Nigeria, while in 2013 the NBS rated Osun as the state with the lowest poverty rate in the country.

In conclusion, was there a dearth in critical physical infrastructure in Osun before 2010? The answer is yes. Was there an urgent need to build these infrastructures? The answer is a resounding yes. Was the decision to debt finance the construction of these infrastructures a rational one amongst other options available? Yes! Has the state government properly managed the resultant downside risks involved in taking these steps? Yes! Nobody argues with results. The impact of the decisions taken by the present administration in the state continues to yield positive results from all available indices.


Kikiowo writes from Osogbo


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