By Sarafa Ibrahim
On Friday, one of Nigeria’s leading newspapers, The PUNCH, provided a stark reality on the weight of debt on Osun’s finances. In the report authored by Damilola Aina, its business, investment, infrastructure, and property correspondent, the paper shared a grim picture of the future, indicating that Osun, like three other states, may have sunk into a financial situation that will possibly make shares of the federal allocation count for little or almost nothing.
“Most of the Federal Accounts Allocation Committee funds for Osun, Ondo, Kaduna, and Cross Rivers states will be used in servicing debts this year,” The PUNCH highlighted, explaining that “This is because these states currently have a deficit of N10.94 billion, N27.72 billion, N15.83 billion, N10 billion following debt servicing deductions by the Federal Allocations Account Committee.”
This looks terrifying and confusing, right? Well, take a pause and look at recent viral statistics which indicated that in February alone, a huge sum of N2.27 billion was deducted from Osun’s allocation to service debt. That is nearly about 30 percent of the gross earnings for the state in that month from the federation account.
And this trend will continue in 2024 as the budget estimate of the Osun state government indicated that it may use around N27.6 billion to service debt. In short, that amount will most certainly be deducted from Osun allocation this year, leaving the state in a quandary to meet certain obligations, which include the infrastructural needs of the people.
This is the reality faced by Governor Ademola Adeleke, which even the mischief makers cannot dispute. While there has been a noticeable increase in the revenue that accrues to governments across the three tiers, Osun is constrained to enjoy the full benefit because of obligations to creditors.
Beyond the deductions from the source, there are other incurred debts that Governor Adeleke is left to handle. They are the 30–month half salary debt and pension liabilities, which the Governor put at a princely sum of N76bn. Looking at the scenario, it is messy and difficult one to navigate.
Following the publication by The PUNCH newspaper, someone asked a question that left me ruminating for several hours. Upon observing the tough financial constraint that the disclosure of The PUNCH newspaper highlighted, he wondered how Governor Adeleke has been able to attend to the numerous financial commitments of the state and still execute landmark projects across the state.
The reason for his question isn’t far-fetched because Governor Adeleke’s predecessor, Alhaji Gboyega Oyetola, found the indebtedness of the state as a convenient excuse to explain away the glaring inadequacies that defined his term. Yet, facing a similar condition of using a considerable part of Osun’s earnings to service debts, Governor Adeleke has not only been attending to the basic needs of the people but also those considered impossible by his predecessor.
Let us not deceive ourselves, the Osun debt binge is huge and poses harsh financial constraints. Navigating it requires an unusual level of financial discipline, sacrifices, and a strong desire for the good of the people, which Governor Adeleke has demonstrated so far. As debt servicing significantly impacts the earnings of the state from federal allocation, offsetting wage–related debt, and pension liabilities eat into whatever accrues to Osun coffer.
This is a tough condition that no state will ever wish to be in, more else a less financially buoyant Osun state. In 2023 alone, Governor Adeleke paid four months out of the 30 months half salary debt incurred by the APC administration. In that same year, Governor Adeleke expended nearly N28 billion on pension liabilities, bringing to an end years of waiting for senior citizens to get their due entitlements.
This is a reflection of the huge burden, necessitated by past financial choices, that Governor Adeleke has had to contend with. If the amount that went into paying one creditor or the other in Osun last year is holistically examined, perhaps the extent of the burden of the past debt binge will resonate better with the people.
But wait, debt is not actually a bad thing. The problem has always been the reason for borrowing and how it was utilized. When you borrow, you draw from future funds to use today, hence, exposing your future income to shredding to repay the debt. The same thing applies to incurring payment commitment, which in the case of Osun, was huge.
This typically explains why the immediate past administration in the state struggled so hard, and as a result, left a lot of things undone. This includes the inability to implement the financial implication of a promotion he granted to workers and the uninspiring state of infrastructure when he left office. It was that bad.
Obviously, the past debt binge is taking a huge toll on the finances of Osun. But with Governor Adeleke carefully navigating the challenges posed by the debt binge and paying not just salaries but also wage awards, and currently executing multi-billion naira infrastructural projects across the state, it is therefore right to conclude that he meant well.
● Sarafa Ibrahim writes from Iwo, Osun state.
