Opinion

Rejoinder: Before Oyo Dives into Financial Collapse by Olamide Olorundare

Before Oyo Dives into Financial Collapse

When I learnt that Mr Seun Onigbinde wrote an article addressing the issue of loans taken by Oyo State, I was happy. I was glad because I believed the numbers guy from Ogbomoso, in Oyo State; a professional who crunches numbers for a living, would correct all the disinformation that has been going on regarding loans taken by Oyo State and this decision by the Oyo State Executive Council to back the issuance of a private company bond for the execution of priority projects. Unlike him, I make no claims to non-partisanship but I know that even the most analytical minds can get it wrong. For it is one thing to have access to the numbers, it is quite another to interpret them correctly and in the right context without any personal bias. Seun Onigbinde got it wrong this time.

Oyo State is in a conundrum. Seun Onigbinde himself explains it this way: “Oyo State’s revenue in 2018 was around N137bn, with also a recurrent expenditure as N107bn, that means that the state had only N30bn without borrowing for capital expenditure that year.” I do not know why he chose to use 2018 figures to show how bad things are. Governor Seyi Makinde does not even have the luxury of N30 billion a year.  In the last one year since he took over office, he has consistently made Oyo State’s earnings public. Oyo State gets about N4.5 billion in Federal Allocations and just over N2 billion in Internally Generated Revenue (IGR) which amounts to about N6.7 billion/month. At the same time, salaries accrue to over N6.2 billion a month. What this means is that Oyo State has just about N500 million/month or N6 billion a year for infrastructural projects. The difference is not even enough to pay for the Moniya-Iseyin road awarded at N9.9 billion.

From this analysis, it is clear that if Oyo State wants to make any progress in the short and long run, we must get the money for capital projects somewhere else. In fairness, Mr Onigbinde does not have a grouse with loans. He is just afraid that Oyo State is borrowing too much and may not be able to pay. He asks, “Is there anything in Oyo state’s borrowing plan that is either self-liquidating or tied to IGR growth in a concise manner?” If he had thought his question through, he would have known that he provided the answer himself. He wrote, “the National Bureau of Statistics records that the state [Oyo] has the highest level of consumption in Nigeria after Lagos state?” Oyo State has the population and the people have the spending power to support investments. If he is doubt, he may want to ask Safeboda who pulled out from Lagos how their investment is doing in Oyo.

Indeed, the BudgIT boss would have been excused if all he did was ask questions, but I think it’s a tad insulting to the collective intelligence of the people of Oyo State for him to position himself on this seat of ignorance and at the same time, accuse the entire state apparatus of going on “endless debt binges” and trying to plunge Oyo State into “fiscal ruin.” For the avoidance of doubt, His Excellency has always made it clear that every loan he is taking is both self-liquidating, that is, the projects will pay for themselves or are directly tied to the growth of IGR. In fact, during the signing of the revised budget, he said that the projects had the capacity in the short term to grow the state’s IGR by one billion a month and that whoever wanted further details should approach the authorities for same.

Had Mr Onigbinde approached the authorities for clarification or read the various releases and statements made available through Governor Seyi Makinde and Oyo State Government officials, he would have known better than to categorise the ‘Oyo State Prosperity Bond,’ a proposed private company bond as a government loan or a debt.

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His advice in his writeup shows he is ignorant about what is happening in the state. For example, how do you explain this advice: “the fundamental tasks for Oyo state are to position itself as an investment vehicle for talent and enterprise. Ideas such as the Akufo farm settlement are good and should be scaled. There is a need to look into the Oke-Ogun area with its huge agrarian culture and also the marble industry around Igbeti area?”

The driving force behind Governor Seyi Makinde’s Roadmap to Accelerated Development in Oyo State 2019-2023 has always been to position Oyo State as the number one destination for foreign and local investment in Nigeria. Is Mr Onigbinde unaware that His Excellency was in Tampa, Florida just before the outbreak of COVID-19 to woo investors? In his well-publicised pitch to investors, he said “We are planning our farm estates in nine locations scattered around Oyo State. The first two are set to kick off soon at Akufo and Eruwa.” These pilot farm estates will be built using the N7.6 billion repurposed loan originally taken by the last administration for the purchase of “farm equipment”.

Is Mr Onigbinde also unaware of the newly created Oyo State Agribusiness Development Agency (OYSADA) that replaces the former Oyo State Agriculture Development Programme (OYSADEP)? Is he unaware that the moribund OYSADEP headquarters in Oke-Ogun is currently being rehabilitated to serve as the headquarters of agribusiness in Oyo State? Has he not heard of the Oyo State Youth in Agribusiness Tomatoes Project targeted at youths in three zones including Tede in Oke-Ogun? Is he totally oblivious of the fact that Governor Makinde inaugurated the board of the Nigerian Marble Mining Company Limited, Igbeti on June 5, 2020?

Did he miss the news that investors are already showing interest in the marble industry in Igbeti and that it will spring back to life within the next few months?

Seun Onigbinde also suggested the government should “apply progression with immense efficiency prioritising the infrastructure that does two things; first, brings ease to people on development and social angles and second, expands Oyo state’s revenue profile in the near term.” What really does he think the 22.5 Billion Naira infrastructural loan is for?

I chuckled when I read his suggestion that “Ajia-Amuloko Road can be funded in a three-year cycle through the budget process.” Does Mr Onigbinde really believe that the people of Oyo State, who have been infrastructurally disadvantaged for decades, will sit around and clap for His Excellency while he takes three years to build a 21kms road? How would this “bring ease to people on development”? Does he know how much people complained over the Idi-Ape–Akobo Ojurin Road project which contract was recently revoked due to non-performance?

What people like Seun Onigbinde fail to understand is the magnitude of infrastructural deficit in Oyo State. When he writes “that roads, bridges, schools and hospitals are begging for attention,” all he probably has is an intellectual understanding of the problem. What TrackaNG monitors in Oyo State is just a tiny tip of the iceberg.  I invite him to visit the Board Chairman, Oyo State Community and Social Development Agency (OYCSDA), Dr Idowu Oyeleke, and let him show him some of the projects they have completed in the past year. One of the projects involves a school that was built under the Late Chief Bola Ige’s administration forty years ago and has fallen into disrepair since. Would this school have made Mr Onigbinde’s list of projects to be sponsored with “self-liquidating loans” or would it have needed to wait for another “budget cycle”?

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What practical solutions does Mr Onigbinde provide for solving the problem of infrastructural deficits in Oyo State? Did he really write that Oyo State’s plans should be woven around building an industrial base that taps into its proximity and economy of Lagos? Then, he should hear Governor Makinde on this, “Oyo State is strategically located. The largest seaport in Nigeria is just about one hundred kilometres away. With the completion of the Lagos-Ibadan Standard Gauge Railway, your materials can land at the Lagos Apapa Port and be cleared at the Ibadan Inland Dry Port just about two hours later.”

He asked, “What is Oyo state’s plan to leverage the ongoing Lagos-Ibadan rail project when it’s done? How will the state plug its resources into this infrastructure to accelerate its IGR growth?” Pray, why does he think the Ibadan Dry Port and rail corridor were named among the priority projects to be covered under the proposed N100 Billion Private Company Bond?

Indeed, I find it laughable that Mr Onigbinde wants Oyo State to leverage on “its connections to the globe through the ports,” but gives no suggestion as to how this can be done. This is why he should have asked the people who are working day and night to see that Oyo State is put on the path of prosperity. His statement that “the state has no business using debt to upgrade an airport that only lands two planes per day,” shows that Mr Onigbinde either has no idea how private bonds work or has chosen to be unaware.  

Let me put it this way; there is nothing in Mr Onigbinde’s entire write up that has not been considered or done already in Oyo State. I will advise him to take out time to get informed on the happenings in the state he claims to love so much. Or how do I explain that he was questioning the “pedigree of the contractor” who is handling the Airport-Ajia-New Ife Express Road based on the fact that they do “not have any strong online presence or perennial record for such stretch of road.” For a person that deals with figures, Mr Onigbinde does not seem to do a lot of research. A cursory search on Twitter would have shown that this company has worked with Akwa-Ibom State, Osun State and even Edo State.  And even if the company were green-horns, they are executing the project with their own money under the Alternate Project Funding Approach and will be paid over 29 months. Has Mr Onigbinde cared to find out the details of this arrangement?

Let me assure him that Governor Seyi Makinde has looked around him and he has learnt: The only way to take Oyo State out of the league of states with extremely low IGR is through massive investment in infrastructure. He is not borrowing simply because he can. He is not borrowing because he is a “moth that wants to pretend to be a bird.” He has assured the good people of Oyo State that every single loan taken by his administration will be paid before he leaves office. When you break down these loans you will see that N32.5 billion was taken by His Excellency’s administration while N7.6 billion taken by the previous administration was repurposed. He is already repaying parts of these loans even though the projects are just beginning.

This is 2020. Oyo State cannot proceed as if there is no urgent need for development. Of course, caution is necessary, but we cannot be held back by the same lack of ambitious thought that made us bring in “N26bn annually” in IGR when neighbouring states are making three, four and even ten times that amount. Oyo State has taken a bold step in backing the N100 billion private company bond which does not add to our debt profile. In the words of Governor Seyi Makinde, “Our administration means business. We will drastically reduce the infrastructure deficit in Oyo State in the shortest possible time. And this is how economies work: Investors will only go where they can be assured of profits.”

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OyoAffairs

OyoAffairs

Oyo Affairs is an independent news media with the main focus on Oyo state news, politics, current events, trending happenings within and around Oyo state, Nigeria

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