Dr. Wale Bolorunduro is a former Commissioner for Finance in the State of Osun. In this interview with ABIOLA ODUTOLA, he speaks on Nigeria’s penchant for borrowing from foreign financial institutions to revive the economy, how the country borrows often times for wrong purposes and how the practice may enslave the future generation.
How will you assess the Nigerian economy and what are your expectations from the Federal Government?
Over the years, we had an economy that had been in the woods. We have observed that we have excess Naira in circulation but what should be our concern is how we got there. Looking at the Naira on the Central Bank of Nigeria’s balance sheet between 1998 and 2015, it was a quantum lip. That means the government must have been financing the economy based on its power of sovereignty of currency. That is, the power to print money. That might have been utilised to fund the economy and at the same time created inflation.
When former President Olusegun Obasanjo left in 2007, internal debt was less than N1 trillion. How come it rose to over N4 trillion in 2015? What did we use the additional N3 trillion to fund? The infrastructure that were funded are not for economic but commercial purpose, which can be handled by the private sector.
How can we avoid a recurrence?
We need to sit down and agree on why we want to borrow. If we must borrow, it has to be for infrastructure that will improve our economy. We should get our revenue to go up while we get long term financing to fix our infrastructure but we must come to the table to identify the infrastructure and not that someone will take China EXIM loan to build airport. Things must be prioritised and properly marched because long term borrowing must bring optimal solution.
Why should we borrow to do commercial infrastructure when we can get the private sector to do it. Our problem is not borrowing but borrowing for wrong purposes and in the next 30 years, the future generation will be paying for that.
Also, the federal government should allow the states to determine their wages and salaries. They should be allowed to run their economies independently while government is saddled with the responsibility of security and external affairs, among other things.
It has been widely reported that Osun State is facing serious cash flow problem. What is responsible for this development?
The main factor is the decline in the federal allocation.
But what about the state’s internally Generated Revenue that should have cushioned the effect of the declining allocation?
We pushed our IGR from N300 million in 2010 to about N1 billion in 2012. We did a projection and that was based on the fact that we ought to be doing N2.5 billion by now. But we can’t do that because all our programmes that can boost economic activities and increase our revenue have not been implemented.
The airport here was supposed to have been built since 2007. Ogbeni Rauf Aregbesola started pursuing it by 2012 but it appeared that because the state was not controlled by the Peoples Democratic Party, such projects were not given necessary attention.
There was a federal executive council approval to build the airport, which was communicated to the state, and nothing was done. We had to start the project ourselves because we wanted to use the airport to transport agricultural produce across and outside the country.
Now, the project is dragging because our revenue fell. Due to that development, our IGR couldn’t go beyond the N1 billion level. Before we can drive our IGR, we must provide infrastructure. If we have been able to complete Osun Hub, many industries would have been attracted to the state and there won’t be much impact on the state.
For us, the federal allocation was a shock to our economic and financial plans because we couldn’t aggressively pursue economic development that will lead to the transformation of the state. We couldn’t support the farmers the way we would have loved to. We succeeded in doing some things, like roads and attracting Shoprite to the state capital, but we planned to do more than that based on the six integral action plan of the government. Also, the federal agencies in the state owe tax worth N2 billion because they do not remit tax of their staff.
Why are they not paying?
The federal government is supposed to have a platform for the payment to the state because of the residency law that says taxes must be paid to the state of residence. We are waiting for the government to pay the five years outstanding.
Some private firms also owe about N2 billion in 2012 alone by either under-deducting from staff salaries or underpaying. If we have all this, Osun will not be in this present state.
Before this administration, Osun State was regarded as one of the South west states with the highest level of unemployment. What has changed in the last six years?
A lot has changed. With the emergence of different government agencies, we have seen a sharp decrease in unemployment and crime. There was a publication by Renaissance Capital that we have the best Gross Domestic Product in the country. In terms of GDP per capital, we became second after Lagos as at 2014.
