News Column

'Omoluabi Fund Has Aided Osun's Financial Stability'

June 30, 2014

Gbenga Faturoti

As the race to occupy the Osun State Government House draws nearer, accusations and counter accusations have continues to trail political camps each passing day. The Chairman of Aregbesola Campaign Committee for Ijesa North Federal Constituency, who is also the State Commissioner for Finance, Budget and Economic Planning, Dr. Wale Bolorunduro addressed some journalists where he took a swipe at the Gubernatorial candidate of the Social Democratic Party, Mr. Segun Akinwusi who was also a former Head of Service in the State, especially at the inception of Aregbesola's administration. He took time to explain the management of state resources, dispelling alleged huge debt as well as other sundry issues.  Excerpts:

What is your take on the SDP governorship candidate's accusations of the present administration considering his involvement in it at inception?

An honest man would not pick information and intentionally misinterpret it for cheap political points. Neither Social Democratic Party (SDP) nor its gubernatorial flag bearer, Mr. Segun Akinwusi has good recognition within or outside the state to dissuade the good people of Osun about the need for continuity of good governance and excellent leadership of the current administration in the state. Though the recent comment of Mr. Akinwusi on the financial transactions in the state, as usual is mischievous, malicious, laughable and worthy of no attention, for the purpose of enlightenment however, I wish to re-emphasise that the guiding principle of the current administration in the state is transparency and accountability.

How has the state been able to cope with the prosecution of its programmes of activities in the face of economic downturn?

To start with, the Osun State government, like any other good administrator, leverages on present value of money, plans her cash flow and manages same efficiently for optimal financial benefits. In order to hedge against spiral inflationary trend in the country, and the cost implication on same, the government innovatively and intelligently leverages on its robust relationship with the financial institutions in the country. The unparalleled financial strategies of the current administration has been receiving lots of commendations with several awards and emulated by some other visionary leaders in and outside the country. Effective financial planning supported with ingenious financial management and leveraging is certainly the pillar of economic developments in advanced countries like Great Britain, Canada and other Western cities.

Are there any observable lapses in the previous administration's approach on the economy?

It is rather unfortunate that Mr. Akinwusi who had ample opportunity to counsel the PDP administration in the state during his time as Head of Service failed to advise the previous administration to save the extra revenues the state collected from Excess Crude Federation Account (amounting to over N40 billion). Instead, the fund was frittered away while Akinwusi was a prominent member of the Funds Allocation Committee of the state. It was learnt that Mr. Akinwusi couldn't have offered any sincere advice given that he also benefited through many proxy companies and projects (such as Staff Development Centres etc).

What do you see as a mark of difference in the two administrations?

In contrast, Ogbeni Rauf Adesoji Aregbesola denied himself and saved the excess crude funds for the state and encourages the local governments to also save theirs. The total savings built up to about N30 billion. The governor consequently created Omoluabi Conservation Fund to take care of future generation, infrastructure needs and shortfall in revenue. It was the saving edge that was used to create a deposit draw back facility that was used to finance the salary payments promptly on 26th of every month for three years, despite the delay of one or two months before receipt of federation revenue. This edge allows the state to swap and minimize the interest to three percent per annum. With this creative structure, the state was able to roll out its infrastructures without delay. Also, it was the savings that was used to augment the revenues, when allocations from federation accounts fell by 40 percent. This drop in revenue started in May 2013 and without the referenced savings, the state wouldn't have been able to keep its tradition of prompt salary payment till December 2013, at the same time pay end of year bonus.

How would you react to accusations of huge debt of about N350billion leveled by the oppositions, especially SDP and PDP?

The fabricated huge debt portfolio of N350billion always mentioned by Mr. Akinwusi is quite amusing. As I had mentioned earlier in several interviews and public addresses, the whole banks in the country put together cannot afford to lend such a colossal amount as loan to a single borrower, and neither can any state in the country be adjudged buoyant enough to access such huge amount from the country's capital market. This is so given the regulatory frameworks guiding borrowing from money and capital market, as well as state's financial transactions.

You were quoted as saying that all the monitoring agencies cleared the state from the highly indebted states?

For instance, the Central Bank of Nigeria prescribes certain limits known as "single obligor's limit" for commercial banks, benchmarking the total loan a single borrower can take as loan from commercial banks as a proportion of a bank's shareholder's funds. In the same direction, the volume of loan any state can access from the capital market is also tied to its total revenue and current indebtedness to commercial banks. Going by the above clarifications, and considering the state's current level of revenue both from the Federation account and internally generated revenue, it should be seen that Akinwusi's comments are mere guess work. For avoidance of doubts, details of each state's level of exposures to both local and foreign creditors can be accessed from the Federal Debt Management Office and Fiscal Responsibility commission.

How have the state being coping with pensioners' problems on arrears?

On the issue of the N1 billion loan accessed by the state for pension liabilities, aside from that the state's huge pension liabilities were product of the last administration under Akinwusi, it should be noted that this money was credited directly about five weeks ago to the savings accounts of the pensioners, as further payments to them. So it is quite laughable that some charlatans would call this provision for forthcoming polls.

Would you expatiate because you made some reference to the former Head of Service who is now the SDP governorship candidate on the issue of gratuity?

I am sure Akinwusi would have learnt the tenets of responsibility under Aregbesola, and this is why am surprised that a man, who collected his gratuity upfront and converted his outstanding leave to cash, could be this ungrateful to his master. All these benefits he processed before his last days in office despite his failure to run efficient, transparent pension scheme and follow contributory pension law of the state. He could not also save to take care of the surge in the pension despite his introduction of Contributory pension scheme. His intention for forcing many workers to leave the state's service without providing for the surge could better be imagined. Osun currently has the biggest pension bill that is next to Lagos as a result of lack of foresight and sense of responsibility.

A bank guarantee is proposed to be issued in favour of Federal Mortgage Bank of Nigeria (FMBN) to support Civil Servants that are willing to access Mortgage Loans directly from FMBN at incredible single digit interest rate. A financially sound mind should know that this is a contingent liability that would not involve any disbursement of funds into the State Government coffers but directly to the civil servants that applied independently for the Mortgage Loans from FMBN. The state government will only guarantee repayment to support the concerned Civil Servants. This is what the former "Head of Service" referred to as Mortgage loan! It is unfortunate to note that Osun is the only state in the country that has not for once accessed the FMBN mortgage loans due to the failure of the PDP-administration to support its workers with guarantee for the mortgage. An irresponsible Head of Service had allowed this opportunity to escape the good workers of Osun.

Federal Government of Nigeria provides financial support for primary basic education in a counterpart funding arrangement with the State Governments. This implies that the Federal and State Governments provide 50% each. Although the UBEC sum of N860.0million represents very negligible portion of the funds committed to education reforms in the State, it is not out of sense to leverage this. More so, that usage of the intervention fund under the arrangement is well guided by dynamics that make diversion practically impossible. Under Akinwusi, Osun was never up to date in providing its counterpart funds and therefore could not improve its educational infrastructure.

With the dwindling federal allocation, how have you been able to pay workers?

One also wonders why the state's concern and effort to pay salary before receipt of the monthly allocation from the Federation is being viewed as election financing. The usual delay in receipt, and unprecedented dwindling in the monthly allocation from the Federation account is a national issue and trivializing this issue for politics shows that SDP candidate is an unserious technocrat.

But Mr. Akinwusi made comments alleged that there is renegotiation of obligations?

On Akinwumi's comments on the purported renegotiation of existing obligations. Assuming there is need for renegotiation, the Nigerian money market is perhaps one of the most volatile, and efficient management of loan portfolio requires some very rare savvy and ingenuity, such that may not be comprehensible to Mr. Akinwusi. How is renegotiation for more favourable terms be interpreted as fresh loan for election financing?. I wish to use this medium to reemphasize that the current administration does not need to spend a fortune to facilitate re-election of Ogbeni Rauf Adesoji Aregbesola; his tremendous and unprecedented achievements over the last 42 months are convincing testimonies. It is very obvious that Mr. Segun Akinwusi who could not easily interpret simple financial indices and understand the rationale behind some financial strategy definitely lacks the mental capacity to administer the rapidly growing state of Osun.

All opponents certainly have realized by now that the PDP administration of seven and half years, is nothing but a siege against development and good governance. The veil of blindness has however been lifted and no amount of blackmail and campaign of calumny could any longer blindfold the citizens of the State of Osun. They see clearer and clearer by the day. Ofcourse, There is a clear difference between light and darkness. Rebirth of Social Democratic Party (SDP) in the State of Osun is a 'still birth'. Bye Bye forever to deceit, oppressions, killings, sabotage, recklessness and ineptitude. Rest in Peace, SDP, PDP, and all other oppositions to development and empowerment of the good people of Osun.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: AllAfrica

Story Tools Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters