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Friday, 4 September 2015

CIRCUMSTANCES OF OYO STATE UNPAID WORKERS SALARIES AND THE ECONOMICS OF BAILOUT. By Tunji Sadiq

OPINION:

CIRCUMSTANCES OF OYO STATE UNPAID WORKERS SALARIES AND THE ECONOMICS OF BAILOUT
. By Tunji Sadiq

That salaries are being owed is no news again in Nigeria. For how long? Up to four or five months old salaries are being owed, by most states in Nigeria, except few ones. The circumstances of unpaid salaries in Oyo State dated back to February 2015 prior to re-election of Governor Abiola Ajimobi, as noted by the governor during his campaign tours across the state for acknowledging this position with promises of timely payments.
Civil servants have not been paid over for 5 months until recently the logs of arrears as of April salaries paid. The instances, very pertinent to most civil servants across Nigeria are similar: The civil servants have children that have not paid their school fees. The private school proprietors could not pay their staff. The market women could not find enough buyers for their wares. Foodstuff sellers have exhausted their capital in credit sales to the unpaid workers. Artisans did not get anyone to patronize them. Manufacturers are carrying high stock of unsold goods, and on.
And for few people that are working on their own or are in other employments, the demand for financial assistance is on the increase. Everyone is living in a cycle of poverty and of course, a number has met untimely death due to inability to eat well or procure drugs for their ailments.
 
A friend of mine told me of a woman-teacher who requested for an assistance of a bowl of rice for her and her children (the husband died years back). That was during the strike. On resumption, her colleague who gave her foodstuff during the strike noticed she did not come to school for some time. On enquiry, she was told the woman was admitted for diabetes and one of her leg was to be amputated. That was the kind of prices paid for the unpaid salaries. At least few of circumstances that we know of.

The implications of unpaid salaries were lost on our government. They forgot workers salaries is the lubricants for economic turnaround. It is the tonic for the well being of citizenry as against government priority on physical structure. Of course, most of the physical infrastructures were not genuinely conceived and executed for the benefit of the citizens. Rather more for what the people in government can make out of it.
At last, the succor came from the Government at the centre sharing $2.1 billion of NLNG fund and providing financial assistance in term of deferred debt repayment and access to loan at concessionary rate and terms. But before our State Chief Executive Officers dip their hands into the bailout funds, there is need to examine how we got to this peculiar mess.

What was responsible for the accumulated unpaid salaries of civil workers in Oyo State?

The culprit, we were told, was no other than the crash in international oil prices. Oil prices have fallen to between $50 and $60 per barrel. The prices are likely to remain at this low level for some time, if various analyses are to be reckoned with. Therefore, it behove the managers of our resources to put on their thinking cap for proactive measures to combat it.

I am one of the few professionals that belief no government in Nigeria have any excuse for not paying workers salaries. It is my strong belief that workers salaries should be a first line charge against revenue, whether allocated or internally generated. They were engaged. They worked. They should be paid. Did it ever cross their mind how the same workers that were not paid for months get themselves to offices daily?  How they maintain themselves, foods and clothing. How they perform their parental responsibility on their wards and family. And it is the same unpaid workers that are expected to monitor and manage project execution. What an irony!

The total allocation to Oyo State in 2012 averaged N66 billion directly and another 66 billion to the local governments. In 2013, it was N66 billion respectively. In 2014, it averaged N55 billion apiece. This totaled average monthly receipt of N10 billion. Government was paying salaries then and the Governor even prided himself in payment of 13th month salaries.

The allocation between January and May, 2015 totalled N27 billion directly to the State and N28 billion to the Local governments. No doubt the allocation reduced but it is not more than 20% reduction at the worst of time. This was not enough reason to justify nonpayment of salaries for almost four and five months. At best, the salary owing should not be more than 2 months in one year. That is one month for every 6 months of a year.
Reasonably, though unjustified to state that Oyo state would not have overspent if the governor had conducted local elections. Rather the Ajimobi-led government did not conduct elections into the Local Government throughout its first four years. As such, there were no elected political office holders that normally take a chunk of revenue at the local government level. Neither were any meaningful developments at the Local Government level. This money should have been prudently utilized.

At the state level, the financial burden of political office holders was enormous. As at the last count of the last 4 years, there were 19 Commissioners, 3 Executive Assistants, 25 Special Advisers, 45 Senior Special Advisers, 49 Special Assistants and 21 others not specified. This is a total of 162 political appointees not inclusive of Board members of various agencies. These political appointees surely gulped millions of naira in salaries and allowances.

Some people may still want to justify this number of appointees on the platform of political exigencies. Fine. But what are they advising on? What are they assisting on?  Out of the Special Advisers and Assistants, 12 are for media, 24 are for political while 7 are for special duties. Your judgement is as good as mine. Waste - with its attendance toll on workers’ salaries and general development.
Tunji Sadiq Esq - Fellow, Chartered Accountant

Also, we have a number of projects executed and being executed at astronomical cost. Is it the various road constructions in Ibadan, Oyo, Ogbomoso and Iseyin totaling not more than 36 kilometres at a staggering total cost in excess of N40 billion? This is at an average of N1 billion naira per kilometer. Or the conversion of just 6 secondary schools to model schools at a cost of over N622 million each? This will surely be enough to build 124 units of 2 bedroom flats at N5 million naira each. The total cost of 3.7 billion for the 6 schools would be enough to build 744 units of 2 bedroom flats. Just to mention few of the hippopotamus projects. More than N1 billion has been paid in mobilization and we are yet to see the take off of the project beyond foundation levels.

THE ECONOMICS OF BAILOUT.


I must commend the Federal Government of Nigeria for the bailout to States on account of unpaid salaries. The government at the centre did that with genuine realization of the implications of non-payment of salaries on the economy, an area where our governors failed. The economy was almost grounded.

Now, the bailout for Oyo state is a whooping N26.6billion. How much salary arrears are we referring to in the light of the fact that the reduction in allocation has not been more than 20%. It should impress on our consciousness that the loan is equivalent of Oyo State 7 months direct allocation from federal government. What were the allocations collected for between January and July, 2015 totalling N55 billion used for? In any case, the total of N55 billion translates to average of N8 billion naira allocation per month. Are we then certain that the 26.6 billion naira was actually meant for salary arrears payment?

It is incumbent on all genuine stakeholders in Oyo state to put the government to task on resource management. The house of assembly should scrutinize the finances very well before approving. Necessary amendment to the loan request should be made in the light of such scrutiny.

It is my hope that the governor in the new dispensation, would not burden the state with a retinue of political appointees as was witnessed in the previous four years. Rather, quality appointment with value added should be made. I look forward with hope that future projects to be executed would be properly analysed in terms of the problem-solving, alternative solutions, the timing of the project, the benefits and of course, the cost that should be competitive and realistic.

The governor should be proactive in terms of reducing the state wage bill without reduction in workers’ salaries nor layoff of workers. It is possible. In addition to this should be increase in employment with a view to increasing internally generated revenue. It is possible. It will be a daunting task trying to increase internally generated revenue (IGR) without expanding the base of IGR.

Oyo State government at this point in time needs financial engineering that will reduce the burden of heavy and increasing overheads with a view to be less dependent on federal allocation and become self-sustaining in the medium term.

While concerned stakeholders should take up the responsibility of holding the government accountable at all times, the journey to glorious pace setting should start now.

Tunji Sadiq (FCA) - a chartered accountant, is a financial and management consultant based in Ibadan.

 EMail: tunji.sadiq@gmail.com

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