Osun Commissioner for Finance and Budget Planning Dr Wale Bolorunduro speaks with ADESOJI ADENIYI on the finances of the state and sundry issues.
WHAT is the financial standing of Osun?
It will be good to talk of the financial status of the state from the view of what we met on ground and where we are now. We actually met a state that was nearly comatose. The state was not credible and banks were not ready to lend to the projects of the state. If your bankers or lenders are not ready to lend to you on a long term basis, that means you have credibility crisis. That was the situation we met. But because of the personal credibility of Governor Rauf Aregbesola, the situation has changed. You would have heard of the suffocating N18.3 billion loan taken from a bank by the immediate past administration. The repayment of the loan was huge because we must pay back on a monthly basis close to NI billion. When you are earning N2 billion and you are paying NI billion to service a loan every month, there is no way you can meet with the yearnings of the people. So, the state was under a heavy debt burden and what the new administration did was to first refinance the loan and get a moratorium to give us a breathing space so that we can prevent over-crowding in our expenditures.
What is the status now?
With the refinancing of the loan, the state is now credible, banks are now willing to give us loans to support our projects but that is not our priority now. Our priority is to compile a fist of our projects in a way that will make them revenue-driven and to see that whatever we put money into is successfully delivered. So, we are now better off in terms of finance. Since the existence of the state, Osun could not have boasted of any savings, given the kind of money we have saved. In the eight months of this administration, Aregbesola has saved N1O billion for the state and N5 billion for the local governments. What that kind of contradiction does is that it enhances your credit status. That is the result of the innovation of refinancing of the existing loan, which we inherited. We have just mobilised the contractor that is rehabilitating the township roads and the contractor gave us the commitment with the performance bond and it is because of that robust financial capability of the state.
The governor once put the savings of the state at N29 billion. How did you save this much within so short a time?
What I have told you was that about N10 billion for the state and N5 billion for local governments is the actual saving. In our head roll, if we want to do projects, we can draw NI8 billion because it is growing by the day as this saving is yielding interest. If you add N 15 billion to N 18 billion that is N33 billion. If the governor told you that we had N29 billion about a month ago, I am now saying that it has moved up to N33 billion. If we have N33 billion projects now we can do it because we have access to N33 billion in our savings. Also, our Internally Generated Revenue (IGR) is close to N600 million now as against the N300 million IGR that we met when we came in, despite that we have not gone to the streets to ask people to pay. What we have done on the IGR is basically to block the leakages in the system and the first thing we did was to first automate the process. We spoke to the banks that all revenue payment will now be going to the banks. This includes payment for fees, development levy and tax. So, we got the banks commitment to allow an their branches to be used as outlets for our revenue. We also put the banks under strict watch to ensure that they post the collections into our account immediately. So, that has brought increment to our revenue and we have used that exercise to focus on the formal sector in an accountable way. We have just told you that we inherited N18.3 billion debt and we have a saving because of the innovation of the governor to refinance the loan, but apart from the savings, we have brought several innovations into our financial management. We have just got two companies that will build roads for us and provide construction finance and most of the projects we have done now were done based on the goodwill of the governor. People are coming to assist the governor. We have used the innovation of project finance in the construction of drainage, in the area of road, and the beautification of our cities. Look, what Aregbesola has done is like a mystery because suddenly, people are now willing to give us flexible payment debt.
Osun is described as a civil service state and you are talking about how you have blocked some leakages to increase the revenue, but you have not talked about how you will involve the people on the streets to participate in your tax regime?
We don't have any plan to introduce fresh taxes. The governor is of the opinion that the people of this state have been abandoned for seven-and-a-half years; the government did not do anything for them. So, our governor believes that it will be grossly irresponsible for you to increase taxes now or overlabour the people. What we have done is to block leakages and look inwards to make the system efficient, accountable and transparent without bothering the informal sector, which is the average man on the street like the drivers, artisans and the rest of them. So, we are not looking at them, yet because the governor is of the opinion that we must keep faith in terms of supporting them through co-operative lending and social supports. You are aware that we are registering co-operative groups because we believe that in those seven-and-a-half years of the previous administration, if they had been encouraged through micro credit, they would have been able to do good business. We believe that we must do that first and create wealth before we begin to ask them of any tax. When we want to do it, we will engage the necessary stakeholders. We will go about it by allowing them pay the minimum taxes through their associations, unions and cooperative societies which will now bring it to us to issue revenue receipt to them. So, as to what we want to do, we want to first of all create wealth. We have introduced what we call local contents where our contractors wherever they are working, must use the people in those communities to work with them. Our fiscal thrust is to drive income into the hands of our people. You can see what we have done in our O'YES programme. We have even gone further now to look at the private sector that will take the O'YES, train them and give them capacities to do more. Very soon, you will see some of them engaged in the National ID card registration and that will bring more income to them and from there, we will begin to exit them from the scheme and bring in fresh people.
Apart from that, we have some intervention programme that will enhance financial activities. Osogbo used to be a commercial area but it has disappeared. What the governor has done is to recreate the commercial activities through what we call Osun Hub (O'HUB). People will be wondering where they will get money to finance all these projects, but if you look at the government's intervention in the O'HUB, it is very minimal but it is a major intervention in the sense that the government is creating an enabling environment. We have provided ground for bringing finished goods from Lagos to Osogbo so that they can begin to sell at Lagos prices and people will be coming from neighbouring states to buy goods at subsidised rates. The governor has secured foreign investors that will handle the locomotives. That will boost our commercial activities. Through these innovations too, agricultural produce from Osun will be taken to Lagos and sold at Osun prices. You can see that it is a double flow activity. It means that the centre will be a commercial centre and farmers would be able to take their produce to Lagos where they can get good prices and with that we would have solved the pricing problems for farmers, which is a major problem. Another problem that farmers have is land holding and that is being addressed. You are aware that we have just handed over some portions of virgin farmland to farmers in Mokore, which translate to five hectares per farmer. We are making an arrangement for tractorisation for the farmers. So, there is a lot of activities going on. Apart from that, if you look at the 2011 Budget, despite the fact that Aregbesola came in when the budget was almost being concluded, he was able to salvage it and for the first time in our history, this is when our revenue will be more than capital expenditure. Also, we are encouraging and retraining our civil servants and you can see that when some other states are still battling with the issue of N18,000 minimum wage Osun has even gone beyond N19,000 and we are now paying a minimum wage of N19,000.
How will you spread the commercial activities to Ilesa and other communities such as He and soon?
There is what we call urban renewal programme and that is going to focus on those towns. I will like us to look at the fact that in terms of urbanised towns, we have probably the highest urban cities. Each of these towns has an historic empire and they have substantial population. If you look at a town such as Ilesa, it has a dual carriage all the way from Lagos. We are working towards building a shopping mall to be called Rent Park where you will have something similar to what is being done by OndoState government at the Nigerian National Petroleum Corporation (NNPC) in are. We will not concentrate on Osogbo alone, we will concentrate on other towns' too~ Also;-under the urban renewal programme, the governor has ordered that everyone kilometre to the cities' centres should be dualised and all the affected villages and towns have been visited. This will begin to take those cities away from being rustic to commercial centres. Then, under our extended urban renewal programme, the other towns and villages will be taken care of. So, what we are going to be creating is a mini-commercial business district in those areas. We know that some of the towns will be self sustaining and others would have to be maintained by us.
What is the state government doing on the privatisation of the Machine Tools Company and the Steel Rolling Company, which have ceased to function?
Regarding those two industries that have been bought by Dangote, we are talking with Dangote on some other partnership. We are readiing out to Dangote to ensure that they begin operation as soon as pos5ible. Aside that, you may not know that the state has the location advantage. We are the only state that has the national grid that transports all power generated or substantial power generated from Kainji and Shiroro dams and this lands in Osogbo before it is distributed to all parts of the country. What this means is that there must always be electricity in Osogbo, except there is a total blackout or system failure. So, we are already looking at how we can engage the stakeholders to look at the kind of investment we can undertake to make electricity much more available. Not ·only to make electricity available to our Free Trade Zone here in Osogbo, we will also make it available for our Ede Water Works and industries that will be springing up here. The governor, may be because of his exposure and his background, is the only governor that can actually be articulate in all the technical opportunities and advantages that we can use here. I think that the future of the state in terms of socio-economic development is very robust.
Can you shed more light on the ongoing beautification project?
(Cuts in) If the plants can survive in Lagos, Saudi Arabia, Dubai, they can actually survive in this state. I don't think water will be a problem for these plants to survive. I believe that it must be well-coordinated. I am sure that by the time we conclude that beautification project, people will be begging that they want to come and experience what we are doing. So, that is to tell you that we know where we are going. We may be starting late, but we know where we are going, afterall, we had to wait for seven-and-a-half years that the last administration was in power, but now we have to do the right thing. There are two conflicting salary structures.
Shortly after the strike, workers alleged the government is using a salary structure different from the one they and the government initially agreed upon. How correct is this?
Let me give you some historical background into what happened during the strike. Currently, we don't have a payroll and I am saying this with all sense of responsibility because my understanding of payroll is that at every point in time, I should be able to sit at the centre and pay the salaries of workers, irrespective of the allocation. Whenever our people move from one day to another, we wou1d have to wait for each managing director to tell us the number of people on each grade level and we use that salary table to multiply the number of people that they claim they have without even checking and we will come up to say each ministry would have this amount. So I am relying on manual system and the people, and I am assuming that they will do the right thing. That was what we met and it takes average of two to three weeks to prepare salaries. So, at times, I might have done it and given them their release, but they cannot collect from the Accountant-General until they break it down. So, what happened was that they finished earning salaries in July and they went on strike and strike was called off on September 10. At the subsequent Executive Council meeting, the governor directed that we should use July salary table and we pay them arrears in September and we went ahead to do that as the money was released, only for the labour leaders to say no, they will not take it and that the government was trying to breach the agreement. We tried to convince them that their members have been waiting for more than 30 days, why don't they allow us pay it that way, but they insisted that no, our people will wait and we will persuade them.13y mistake, some ministries went ahead to pick the August salaries but the labour came back and said that they should return it because we did not honour the agreement. We had to go back and use the August table to pay and we were paying August salaries when they came back again that we must pay some peculiar allowances. This was not brought to the table during the negotiation, they kept it away and when we were about to pay the new salary structure, it came up and it became an issue again.
The governor said we should pay the allowances too, which amounted to N155 million in addition to the gross increase we have done because he wants to encourage them. In the process, we felt it will be good for us to know who we are paying and we now decided to pay them through cheque and the logistic was made available. I was surprised that we paid over 7,000 secondary school staff in just one day and we paid primary school teachers, for just one-and-a-half days. So, not only have we met with the minimum wage, we have done above minimum wage from N18,000 to N19,000 plus and we included peculiar allowance. We expect civil servants to respond in terms of service they are rendering to the people and government. Those increases that I have talked about do not include the increases for the medical workers because they have a. different salary scale, which the Olagunsoye Oyinlola administration did not implement and for whatever reason, they were able to play labour. So, we have to implement CONMESS and CONHESS from ground zero and that, on its own, is a salary increase of about N150 million. I just pray that our revenue increases and that our civil servants give us services for us to be able to meet that salary obligation.
What are you doing to collaborate with the Lebanese to make them site their factories and depots in Osun?
We have a plan for that because we are talking to some of the Lebanese. We are the only state and possibly with Ogun State that share what is called a tropical rain forest. You have heard us talking about opening up a road linking Ijebu-Igbo to stimulate commercial activities and encourage investors to come here. Now we are encouraging out-grower scheme. Not only that we have arable farmlands, we have much rainfall of about 1800mm in a year and in some areas we have 900mm. That makes our land fertile, but our main focus is food crops such as cassava, yam, maize and many others. We are not closing our minds to cash crops too. So, if we have any out grower, we are already encouraging them to come and manage our farmers and we expect those schemes to begin to yield results. In terms of commercial, we have some commitment from PZ and some other· companies. We know that if they site their factories or major distribution depots here, they can transport their goods to wherever they want. So, we are looking at agriculture, commerce and tourism to drive our economy. We are looking for out-grower not only in the area of agriculture, but also in the area of manufacturing. Where you manufacture, you have big key distributors here who will distribute it to the neighbouring states. We are also looking for rice out-grower that can grow highland and lowland rice and when they come, they will not only encourage our farmers, they will also provide jobs. Our logistic centre in the first phase can take 5,000 people because there will be chain of trailers coming in and out and there would be commercia1 activities everywhere.
What are your plans on the use of railway?
With what we are doing, it should interest you that Kano and Kaduna states have already done concession agreement with the Nigeria Railway Corporation. It depends on how you handle it and the content of the concession. As I said, the rail is moribund and if you want to use it, the Federal Government will not mind. Kaduna and Kano are using it to transport their people within their areas and they have gone further to inter-state collaboration. So, I don't think we will have any' problem doing it.
On the civil service again, what are your plans to train workers and enhance their performances at work?
What we are doing is to retrain our civil servants. We have been running a scheme now and it will run for the next five weeks, where in every weekend, I train the staff in the Ministry of Finance, Internal Revenue Service on how to become computer literate. Not only that, the governor is very conscious of the fact that he has mandated me to make sure that functional staff members have computer system to work with. So, we are upgrading their skills and we are motivating them In terms of remuneration. We are giving them the support that will make them organised.
Also, the governor has mandated that salaries must be paid latest 26h of every month. At times, it is workers themselves who delay the salaries. As I said, the business of government is to render social services and provide an enabling environment to encourage the private sector and provide capacity building for the public sector to be able to render services to the people.
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