How we overcame the challenges of paying workers —Adekanmbi, Oyo Finance Commissioner

Why was it difficult for the Oyo State government to meet its obligation of paying workers salary as and when due over a period of time?

I will give you a holistic explanation for that, from the macro to the micro. From the macro, I mean, at the Federal Government level, the problem first started with the drop in the price of oil. It affected the allocation that used to flow down to the state. What we saw was that where we had a wage bill of about N5.2 billion and allocations that were almost matching it and we were now dropping to allocations of N2 billion or thereabouts. Automatically, the arrears started to grow. We have a mono-economy, which is dependent on oil price. Then oil price came crashing and this impacted negatively on allocation to the state and the expenses became greater than the in-flow. That was how arrears of salaries statrted piling up.

 

What are the measures put in place to control that?

When this problem started, the labour unions embarked on strike. They said they were not going to call off the strike until the arrears of salaries were settled. We started negotiations and during each of these negotiations, we made all the data available, that is, the revenue and the  expenditure and, after a while, labour, too, faced the reality. They found out that there was no way the arrears could have been settled, based on the prevailing condition at that time. We were talking about N5.2billion wage bill and an average of about N2.4billion coming in at that time. It was very bad. So, we said let’s shave the wage bill. We paused some items. We didn’t remove them. We ‘paused’ items like car loans and housing loans. Then, we said let us look at the ones we can decrease by subvention. We started decreasing them to 50 per cent for tertiary institutions and, I think, the bill dropped to about N4.2billion.

So, every two months, at that period, we would get N2.4 billion and there was a wage bill of about N4.4 billion. We started paying off, every other month, a month and so we started going down on the arrears.

Other measures we put in place is that we keyed into the opportunity available at the federal level. For instance, we had a Budget Support Facility which the Federal Government introduced then and initially we were going to be given N1.39 billion for the first three months and N1.11 billion for 11 months after that. We keyed into that and we were now applying 100 per cent of what was coming from Abuja and 100 per cent of the fiscal support plans which was the bailout money. We now applied it towards the salary and the arrears swent down little by little.

Another area where we were able to manage the arrears and bring it down is that we started keying into the Paris Club refunds given by the Federal Government. What happened was that Oyo State was supposed to have been excluded; we were told that we were not eligible for the Paris Club refund in any way, shape or form. So, Governor Abiola Ajimobi went to Abuja and made a case. He was told that we had collected it through the past administrations in the state. However, the governor made a case for the state to be included. We did a lot of reconciliations and meetings which were passed through the Federal Ministry of Finance. Eventually, Oyo was placed on the list of states that were receiving the bailout. Soon, we started receiving the money.

Immediately the bailout was worked out, the first one we received, we spent 60 per cent of that, even as the Federal Government had stipulated that we should spend minimum of 50 per cent of it, on salaries. We started paying what we called ‘onibeji’. That was the response to the arrears.

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It is about a year before the end of this administration, how has it fared in the areas of development, growth and stability?

When the government came in, it had this tripod agenda, namely, restoration, transformation and repositioning. I can tell you gladly that those tripod arms have been achieved. How have they been achieved? Talking about restoration, you can see that security of life and property has improved. To a great extent, we have been able to make the state peaceful.

In terms of infrastructure, the state of roads and bridges had been made worse by the flooding of August 26, 2011. But the major bridges, especially those ones that were affected by the flooding, are now in top shape.

What the government did was to go to the World Bank and tell them we couldn’t do it by ourselves. We got a credit intervention from the World Bank and we started the project as a response to that flooding and, you can see that for the past six years, there has been no flooding. It is not automatic. It is because serious work went into that. For instance, every year all the rivers are dredged and all those bridges which had claimed a lot of lives were looked into. Look at the Restoration Bridge, Eleyele Road and all those major roads, exits and entries into our major towns — Ogbomoso, Iseyin. Everywhere has seen the touch of the government and this had never happened before.

 

Can you highlight other achievements recorded by the administration?

If we go into the soft achievements, you will notice the mindset in Oyo State. There is now a renewed urgency on the streets. Go to Ring Road in Ibadan, nightlife has been revived. Companies have started springing up. Look at the Lagos-Ibadan Expressway, even in real estates, things have started going up. Come to the public service, civil servants now take their work more seriously. They are now proud and you can see the results. It is not as if the government is there 100 per cent but a lot has changed.

Another area where you can see legacy changes is the emolument and pensions of civil servants, which had suffered neglect in the past. We had over N60 billion arrears in that area. When people are talking of Oyo State government and the debt profile they don’t go into some components, the major chunk being the arrears of pensions and gratuity. What the Ajimobi administration has done is to introduce the Contributory Pension Scheme which is aimed at stopping all these arrears from blowing up unnecessarily. We have made almost more than eight months of contribution, even while we are waiting for the labour to join and we have put in place all the technical requirements to support this. A lot has happened. This government is not one that blows its trumpet but a lot of things that are shaping the fabrics of the society in the state have been done.

 

What is the government doing to boost its IGR?

We have talked about IGR and the 2015 Revenue Law, which we have granted full autonomy. We have done the advertisement for the roles. We have done some interviews for the management cadre and the appointments will happen any time soon.

If you have been following news in recent times, you will notice that budget is predicated on two key areas: one is the Ministry of Lands. We are expecting that we will be making about N40 billion from there. The government has opened up six new GRAs and so we expect a lot of money to come in from those GRAs. It is not like the existing laws are actually bad, but the revenue is bad and what happened is that there are lots of gaps in enforcement. So, the government is addressing that aspect. The level of compliance in Oyo State is very low. The ratio of GDP to tax in the state is small. It is not even up to the minimum standard prescribed by all the economies in the world.

In terms of tax rate, we are not going to increase tax but we are going to widen it. One of the ways to do that is by enforcement. We have a board of internal revenue and the structure is better which, hopefully, should bring about efficiencies in the operations. It should bring about best practice and then we block leakages and widen enforcement. We will introduce tax cut and we are working with the informal sector, which is the much neglected area in terms of generating revenue.

 

The governor’s recent journey to Denmark to understudy cattle ranching drew some criticism. What are the gains of that trip?

Governor Ajimobi had been the chief executive of a multinational company. He is a savvy businessman. The best way by which you can make money is to capitalise on opportunities. I believe anybody who is sound should see what the governor is doing. Cattle will continue to be in demand in Nigeria. Dairy will continue to be in demand. The skirmishes and flashpoints are going to affect the delivery and supply of these to the South. The best monies are made in period of chaos and the governor is being industrious by saying let’s position ourselves. Cattle is a multibillion dollar business in Nigeria, so why don’t we position ourselves and have ranches because the cattle business is not going away? Why don’t we position Oyo State and have ranches and supply not only the state, but the Saharan West Africa region?

There is what we call the Oyo State Agric Initiative. Go and look at the mission statement. It says Oyo State is going to be the food basket of Africa. It is ambitious. So, somebody is now saying he wants to go and understudy the best practice in cattle ranching, I think people should be falling over themselves for this initiative. It is unbelievable that anybody would wake up and start thinking that the visit is empty.