A financial expert, Dr Tunji Ogunyemi has posited that Osun State could still manage its huge debt profile crisis if the current administration in the state could harness its natural resources and other significant economic opportunities.
Ogunyemi had revealed how the administrations of former Governors Olagunsoye Oyinlola and Rauf Aregbesola plunged Osun State into an unprecedented debt that he argued to be to the tune of N180billion.
Ogunyemi argued that the past governments in the state were in hurry to compete with states like Lagos and Delta and thus got huge loans that were not used to invest but only utilised in paying salaries.
He said Osun is currently in a “sorry” state because it lacked capacity to embark on capital projects without borrowing and that should the Federal Government defaults in paying the state its allocation for just two months, “Osun would go down on its knees.”
Speaking in Osogbo on Monday, on a radio programme monitored by our correspondent, Ogunyemi, a lecturer at the Obafemi Awolowo University, Ile-Ife, said that contrary to what the debt profile of Osun that was put at N134billion for domestic debts, while the external debts put at $107million as at December 31, 2020, the State is indebted to the tune of N180billion for domestic debts alone.
The expert argued that the DMO did not add unpaid pension and gratuities of retirees and that if those debts were to be factored in, then the state’s debt profile is N180billion.
He expressed worry that the Internally Generated Revenue of the state is so insignificant and that the state only generates from the salaries it pays to workers. He blamed the administrations of Oyinlola and Aregbesola for borrowing hugely without investing.
For Ogunyemi, who is also a governance and policy expert, the Genesis of Osun’s dilemma was that “Osun came out with the largest chunk, almost 58%, some say 70% of the civil service of the old Oyo State and the state went a borrowing from the beginning. And the debt got exacerbated during the administration of Olagunsoye Oyinlola whom of the N180billion debt profile, actually took a loan in excess of more than N90billion to add to Osun’s liabilities.
“During the time of Rauf Aregbesola, another lister of Osun liabilities was opened and that was the Islamic Development Bank loan called Sukuk. It’s true that Sukuk doesn’t carry with it any interest, it carries zero percent interest rate, which is also a liability and it’s a debt that has to be paid in some time in the future. So, it has been difficult. But I think that, with due respect to the planners of Osun economy in the last ten years, it appears as if they were in a hurry; they were in a hurry to catch up with Lagos, with Delta, who are about… Lagos for example is about 1,000 times better than Osun in terms of generating revenue. Such a hurry has brought about going for more loans,” he noted.
But the expert said all hope was not lost for the state to overcome its debt crisis. Consequently, he advised the present administration of Governor Gboyega Oyetola to set up factories and industries to harness its natural resources, especially in the area of gold mining.
He canvassed for the need for the state government to discover means of improving its Internally Generated Revenue through tax. He lamented the present IGR of the state and described it as very insignificant.
According to Ogunyemi, “there are significant opportunities to grow by deliberately setting up factories or industries to harness its natural resources in Ife/Ijesa corridor. All hope is not lost.
“My problem with Osun is why is the state, inspite of the fact that it has license to directly exploit gold, it will not, but be issuing licenses to non-indigenes and mauraders who are creating insecurities in the Ilesa-Ife corridor. .
“It’s not impossible for Osun State to buy back its debts, that is, to sell its debt to citizens by floating bonds. It’s another debt but at least, it will flow till the years that it will be able to have a breeder and during the breeder, it will be thinking of how to improve on its IGR. Rather than go directly to creditors for loan, it can do some bonds or look for alternative of imposing tax internally.
The problem with Nigeria’s Federalism is the latitude that the states have to increase taxes is so minimal; so low that they lack the capacity to use tax regime to shore up their income. For example, National Income Tax, it’s a federal law, and it’s the most fundamental law of the Income that accrued to a state. The national income tax is a federal law that Osun State cannot go and amend by itself and where it can get money is limited.
“Osun State cannot print money because it doesn’t have a central bank. It can’t even have it. So, there is a limited window of improvement in terms of revenue.so, except it does something urgent in terms of taxation. And how many luxury can you really tax? So, what people can do really is to look for property tax and the use of land because Osun has land and people are using its land. It can do something in that area. Land use charge. It can also look at its forestry and do something about plantation in terms of tree felling,” the expert disclosed.
Meanwhile, when asked to rate the administration of Oyetola on financial management, the university don scored it above average and added that it takes a miracle worker to be able to pay salaries in a state like Osun that its income is very decrepit.
“I will rate the current administration of management of Osun finances clearly above average. I will score it 6 out of every 10 because it takes a miracle worker to be able to pay salaries in a state like this that its income is so decrepit,” Ogunyemi remarked.
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