As Civil Servants continue to overwhelm their Governors as regards the inability to pay workers' salaries. A political analyst, Opeyemi Agbaje, explains why the governors should take the major chunk of the blame. He also proffers some solutions to the crisis.
Q: Sir, what is your take as regards the unpaid salaries of workers.
A: I am so curious about everything. We had a global recession in 2006 which resulted in a very sharp decline in revenues and oil prices. The only reason we got over it was because we had Foreign Reserve of $45 billion and Excess Crude Account of about $20 billion.
So we had about $55 billion in savings, which the (Umaru) Yar’Adua took from. That is ancient memory. The whole world has been talking about oil prices; everybody knows that Nigeria, federal and states, depend on oil.
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So this was inexplicable, it was not expected and there is nothing mysterious about it. It is just a failure of management, a failure of policy and economic management.
Quite frankly, as to whether we have the right people in the public sector and in charge of public finances, at the level of economic planning and budgeting and, in some cases, in governorship offices. Could you imagine a CEO of a bank lamenting his inability to pay salaries? If he does that, it would call to question his capability to head the position.
We recall then that some of the governors insisted on sharing the money in the Sovereign Wealth Fund. Is it that they did not envisage a situation like this?
That is exactly why it is a failure of leadership and management. Nigeria is a big oil nation. People at the policy stage argued over and over again that we needed the Sovereign Wealth Fund.
We finally got one established in 2011, i guess, but these same governors went to court to stop its operation.
They prevented further disbursement to the Sovereign Wealth Fund. The governors insisted all the time on the sharing of the Excess Crude Account.
Now, the National Assembly should share the responsibility for the failure. On the part of the National Assembly, anytime, for the last six years, indeed for the last 16 years because the battle started under Olusegun Obasanjo.
The former Minister of Finance, Ngozi Okonjo-Iweala, often said the Nigerian budget is planned on a slightly conservative oil price benchmark which would allow you accrue some savings into the Excess Crude Account so that on the rainy day, you would have some mercy.
That is the essence of choosing a conservative oil price benchmark. The National Assembly, every single year, would raise that benchmark such that it makes the possibility of saving more and more strenuous.
The only reason we got away with it then was that oil prices were consistently higher than was projected because the market was viable. So it was the National Assembly and the Executive which did not have the will because the essence of government is to ensure that the right thing is done.
We depleted the Excess Crude Account and shared it all, we didn’t allow a consideration of the conservative oil price benchmark. I think they are surprised that the oil prices could fall. The governors and the states have prioritised contractors’ obligation.
You cannot prioritise an issue you entered voluntarily over an obligation that will be there forever. So you have an Irrevocable Standing Payment Orders(ISPO) that have been signed to meet contractors’ obligations. So you have all of those factors that have led us into this quagmire which the states are.
In 2011, Governor Rauf Aregbesola said he had been able to increase the internally generated revenue of the state from N300 million to N600 million and that he had paid workers salaries. He said he didn’t have to wait for allocation before paying salaries. He also said any government that waits for revenue allocation before paying salaries is in trouble. Did the governor not have this figured out?
I read that statement too, but I don’t want to personalise it as Osun because this is bigger than Osun. Other states are involved.
Let me show you that this is not an inexplicable thing; in 2007 and 2008, we were advising a particular state government because there were already speculations and market analysis that the oil prices had peaked.
We were in July 2008 and it had risen to almost $147 per barrel; any enlightened person would know that oil prices would soon go down.
By January, 2009, the first full year of the global crisis, we again advised. So the point I am making is that this was not a mystery. It is just a failure of economic management, a failure of value, it involves issues of corruption.
Maybe there is even a link with the political campaign since people have invested in politics and all that.
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Don’t these governors have cabinet members who give them advice to prevent them from hard times?
There is uniformity about the political practice that has emerged in Nigeria today. The governor is an emperor. We even have managed to have some level of checks and balances at the federal level with the Senate and the House of Representatives, but in the states, the legislative functions on the cabinet, as in the strength of legislative activities, is non-existent.
The governor enters into obligations, the commissioners of Finance do not investigate or look into such obligations. With the exception of a few, I don’t think many of the states have allowed their commissioners to make inputs even if the persons are technically qualified because of the structure of power in these states that has allowed anybody to do what he wants.
That’s the political reality. So you would hear statements like: ‘you are a technocrat but you don’t know what we are doing there. When we are ready for you, we will call you. I don’t think those kinds of experts, except in the future, would have been allowed to do their jobs. We often think it is the technical skills that are lacking, but that is not it. The motives are wrong, the structures are wrong, the political environment is wrong.
You gave an analogy about a bank CEO not been able to pay salaries, and some people would think that analogy is not correct because banks are meant for profit making while the government is not a business.
In Nigeria, I would say that public employment is not just for the salary, it is a social function especially at the state level. Take Oshogbo, Makurdi, Calabar, Abeokuta, Ado-Ekiti, Sokoto, Kebbi as examples; all of these places have their economies dependent on the activities of the state government, particularly the salaries to the workers. Consumption, demand and supply in all these areas are shaped significantly by the payment the state government makes.
So in Nigeria, it is actually even worse than the state of a business because if a business CEO can’t pay salaries, he can sack the people, but in these states, you can’t sack the people.
Are you suggesting that government is run as businesses?
I won’t make that kind of blank statement. If I counsel government to run as business, it means I would be counselling the states that can’t pay salaries to sack workers. In Nigeria at this point in time, that would be a wrong solution. Like I said, the economies of these states are dependent on the public sector. Secondly, this is a period of downturn. You would compound the situation of the state by relieving these people of their jobs and create a social problem.
Several states in Nigeria are currently said to be broke and many are yet to pay workers' salaries for months. There have been calls on the president to intervene before the situation escalates.