It gives me great pleasure to declare open the Sixth State Assembly of Osun. Exactly four years ago, I had the privilege of inaugurating the Fifth Assembly. It has pleased God Almighty to entrust into my hand for the second time this sacred duty and I give Him all the praise.
I congratulate all the honourable members of this House for your election and the unique privilege to be of service to your people and the State of Osun.
But I must first thank the Speaker of the Fifth Assembly, Rt. Hon Najeem Salaam, the leadership and other distinguished and honourable members of the House for their understanding, diligence, cooperation and unalloyed service to their people and the State.
Before I proceed further, please permit me, as is my custom, to sing the first stanza of my old school anthem titled “Moment of Decision”, written by J. Russel Lowell (1819-91).
Once to every man and nation, comes the moment to decide in the strife of truth with falsehood, for the good or evil side: Some great cause, God’s new Messiah, offering each the bloom or blight: and the choice goes by forever ‘Twixt that darkness and that light.
Your inauguration comes at a very critical period in the annals of our state. This is a paradox of a sort. The General Elections of late March and early April were a revolution, as they, which for the first time saw a genuinely progressive government sweep through the country in most states and the Federal Government. This is a thing of great joy to us, but it also met our state in the condition of a very gripping financial challenge.
Here again, I must salute and thank our people for their unshakable faith in us and for giving us absolute majority in this house. Your election (and inauguration today) is a resounding vote of confidence in us that we will surmount our challenges and overcome our problems. You cannot disappoint them.
History will vindicate us. When our administration was inaugurated over four years ago, we met many daunting challenges, including a debt burden and infrastructure decay. We set to work, especially with the cooperation of the Fifth Assembly, and began to restore hope to our people, to make government meaningful and put the State on a sound and sure footing. You will recall that in less than 100 days, we engaged 20,000 youths in public works through Osun Youth Empowerment Scheme (OYES). Also, through financial engineering, we were able to restructure the debilitating loan we met and put the state on a sound financial traction. We then embarked on an aggressive infrastructure development drive never witnessed before in this state.
You will recall, again, that for nearly a year, we did not constitute a cabinet. This was to enable us make considerable savings. We set about our duty with uncommon vigour and courage. This saw us touching every area of life in education, agriculture, job creation, road construction, culture and tourism, environmental sanitation and beautification, flood control, rural development and so on.
We were also able to execute the most ambitious and biggest social welfare programme set in this country; programmes that impacted directly on every family and household in the state. We were able to integrate government’s spending into the local economy in a way that our spending reflates the economy – enhances productivity, creates jobs, sustains families and households and significantly boosts the GDP of the state. These social welfare programmes also constitute a sizeable portion of our recurrent expenditure as we put in place O’YES, O’UNIFORM, O’MEALS, Agba Osun, Destitute Rehabilitation, O’REAP, O’HUB, Cattle Ranch, School Construction, Flood Control and so on. We have invested in our people’s development and have sown good seeds into their today and tomorrow.
In the process, we not only lived within our means, we also made huge savings in two-and-a-half years. We fulfilled our financial obligations not just to workers and retirees, but to every person doing business with us. When it was time to raise the level of capital projects in the state, we approached financial institutions and within the bounds of best practices, we secured facilities at favourable terms. We never exposed the government unnecessarily. This is contrary to the claims of scoffers and traducers who maliciously painted us as financially reckless and profligate.
From the records, problems began in 2012 when our expenditure increased as a result of the spike in minimum wage. That was when we applied the increase to junior workers only. Then, our total emoluments rose to N2.7 billion from the N1.4 billion I met in November 2010. By December of that year, it hit N3.5 billion. During the same period, our statutory allocation (from where we are required to pay salaries) increased marginally from N2.1 billion in 2010 to N2.5 billion in December 2012. By July of 2013, our total emoluments hit N4 billion, while our statutory allocation was N2.1 billion. By then we had extended the increase to other workers.
The summary of five years reveal that in two months in 2010, we received a net allocation of N4.2 billion and paid a total emolument of N3.6 billion. This left us with a net gain of N573 million from our statutory allocation. In 2011 also, we got N29.9 billion net statutory allocation and spent N25.8 billion on emoluments, with a net gain of N4 billion. However, in 2012, we received N28.4 billion and expended N31.6 billion on emoluments. This left us, for the first time, with a deficit of N3.2 billion. The following year, 2013, our statutory allocation dropped to N26.4 billion while our emoluments rose to N36.9 billion. This gave us a whopping N10.4 billion deficit. In 2014, our statutory allocation fell further to N19.3 billion and by which time we were already defaulting on some of our obligations on emoluments, which had also dropped to N22.4 billion, but still left us with a deficit of N3 billion. In summary, between November 2010 and December 2014, we got a total statutory allocation of N108.3 billion, while our expenditure on emoluments was N120.4 billion. It left us with a total deficit of N12 billion.
The above scenario only covers our expenditure on salaries and other emoluments; if we are to include other recurrent expenditure, it will give us another scenario. In the period under review, our total recurrent expenditure was N206 billion while our statutory allocation was N108.3 billion. If we add other accruals from Abuja to our income, it will only add up to N176.5 billion and we will still be left with a deficit of almost N30 billion, which means that the state would not have been able to run a government. Even when we added our internally generated revenue, we were only able to muster N204 billion and were still short by N2 billion. It simply means that all our earning from all sources between 2010 and 2014 could not carry our recurrent expenditure.
The drop in statutory allocation in 2013 was attributed to the theft of over 400,000 barrels of crude daily, but later the fall in oil price from over $100 to about $50 per barrel only compounded the crisis.
In 2015, the net statutory allocation in January was N1.25 billion; in February, it was N1.12 billion; in March, it dropped scandalously to N624 million, while the April figure dropped further to N466 million.
As I said earlier, our statutory allocation began a precipitous fall in 2013, while our salaries and emoluments began a steady climb. The contrasting state of our allocation from the federation account is highlighted by the peak of our allocation of N5 billion received in February 2013, against the N466 million we just received for April. These details will put a lie to the accusation that we have been profligate. How could we have been profligate when our statutory allocation alone cannot meet our obligations on salaries and other emoluments? The financial challenge we faced was enormous and daunting and a disaster was mitigated by our prudent management and sheer financial wizardry, which made us to get so much from so little. It could have been worse. We should see the cup as half full, instead of half empty.
Another factor that raised our emoluments expenditure was our commitment to pensions. When we began in November 2010, we were paying N200 million pension monthly and so for 2010, we committed N400 million. However, in 2011, we increased our monthly pension obligation to N250 million and we had to pay N3 billion in that year. By March of 2012, our pension obligation had risen to N300 million monthly, which cost us N3.5 billion for that year. Yet in December 2012, about 5,000 retirees were added to the 9,000 strong army of pensioners in the state and in the following year, 2013, we increased our monthly pension bill to N520 million and paid out N5 billion in that year. That same year, another set of 3,500 workers retired at the local government to enlist in the local government pension brigade. By the time we started lagging behind on pension payment in 2014, we had already committed a total of N4.9 billion to pensions in the year.
It is on record that I was the first to raise the alarm in 2013 that the mysterious drop in allocation amounts to waging war against the states. I was vilified then by a section of the press and the Federal Government was not even ready to listen to our cry. No fiscal instrument of succour in stabilisation, augmentation and other assistance was extended to us, even as our allocation continued to drop. It was like they were mocking us by saying: ‘Good for them, their financial ruination will make us to easily defeat them in the coming elections’. But we survived this by the infinite grace of God and the unflinching support of our people to emerge triumphant in the governorship election of 2014 and the General Elections earlier this year.
Distinguished honourable members of the House, you are coming in at a time of great challenge, but with great challenge also comes the opportunity for greatness. While our capital expenditure for the period we are reviewing was N110 billion, our total recurrent expenditure was N206 billion, of which emoluments alone constituted N120.4 billion (58.5 percent). This makes capital expenditure only 33 percent of our total expenditure. Although this is above the national average, we consider it anomalous and it has called for creativity and astuteness in raising our revenue profile, balancing our books and reversing the capital-recurrent expenditure ratio, in order to bring development to our people and justify the mandate given to us.
We have been able to shock and awe our opponents, critics and traducers in the past four years with outstanding performance in all areas. We were able to do this partly because we are creative; we obtained long term funding from the capital market and deployed various derivative financing strategies but we still have outstanding liabilities.
Our outstanding mandatory expenditure in salaries and pensions for 2014 is N13.1 billion. Between January and May this year alone, we have accumulated mandatory expenditure of N16.5 billion in arrears. But we must run the government, provide infrastructure, develop our people through qualitative education, provide good healthcare services and recreation facilities, and bring prosperity through job creation and enabling entrepreneurs.
The parliament is the first refuge of the people because it is composed of lawmakers elected directly to represent their constituencies – to make good laws for their governance, secure their welfare and protect their interests. It is from the parliament, though under a parliamentary system, that the late Chief Obafemi Awolowo launched, on January 7, 1952, the welfarist and progressive government that kick-started the second stage of Yoruba civilisation, with the attendant prosperity and development of Yorubaland in all facets. This challenge is therefore your opportunity to be great and write your name in gold, irrespective of your political party.
The parliament is also noted as a symbol of the legitimacy of government, as expressed in its support by people who are paying taxes. James Otis, it was, who said that taxation without representation is tyranny. This was in protest of the British occupation of the Americas and forcible exaction of taxes from the subjects without political representation at the British Parliament. This led to the rebellion that culminated in the American independence in 1776. The converse of this principle is that if it is immoral to exact taxation without representation, by the same token, it will be inappropriate to have representation without the supporting taxation. The time has come for our people to brace up and support the government with their taxes.
Indeed, the only way we can survive, or any government for that matter, is to generate our own revenue and be self-sufficient. Long before this crisis came, I was the first to make the case for self-reliance and severance of our dependency on allocations from Abuja. We have abundant human and material resources and we can sustain ourselves if we look inwards. The difficult can be done at once; while the impossible only takes a little longer.
This is our finest hour. We will overcome this challenge. We will fulfil our mandate. We will serve our people. God, who was with us in our first term, will not desert us. We will emerge from this triumphant and stronger, and our people will have cause for singing and rejoicing.
Distinguished lawmakers, ladies and gentlemen, permit me once again, to close with the last stanza of my school anthem.
Finally, let me thank the honourable lawmakers – the returning members, the outgoing ones and new members. I wish you a successful tenure and good service to your people and the state.
To the distinguished audience, I thank you all for your kind attention.
This speech was delivered by the Governor of the State of Osun, Ogbeni Rauf Aregbesola at the Inauguration of the Sixth Osun State House of Assembly on June 2, 2015.