Nigeria Nearly Bankrupt Under Okonjo’s Watch
July 05, 2015
By SIMON EBEGBULEM, Benin City
Nigerian Vanguard
Those who have followed the arguments of the governor of Edo State, Comrade Adams Oshiomhole, since early last year on the running of the nation’s economy and its future will understand why the governor is angry today about the parlous state of the economy.
When he declared recently that “this is the time for everybody to answer his or her father’s name”, the governor was not only directing the statement to the former Minister of Finance and Coordinating Minister of the Economy, Dr Ngozi Okonjo-Iweala, but also to the 18 local government chairmen in Edo, who he ordered to pay salaries owed to their workers or face the music.
Due to the dwindling allocation from the Federation Account to the state, Oshiomhole stopped over heads in the ministries and the state House of Assembly in the past six months, his office inclusive, and that is the secret his government has been able to pay its workers till date. And following the inability of the local government chairmen in the state to pay salaries, the governor met with them and directed that they should forfeit security vote and allowances so they can pay. He told them how he had forfeited his own in the past six months so as to pay civil servants and warned that he would not tolerate non-payment of salaries in the councils.
He achieved that with so much sacrifice but his anger is that Nigerians are suffering today due to what he described as alleged mismanagement of the economy under the watch of Okonjo-Iweala. The governor started echoing the economic crunch in the country since early last year when he predicted that the way the Excess Crude Account (ECA) and other oil revenue funds were being managed by the then PDP-led Federal Government will have dire consequences for the economy in future.
It is not surprising, therefore, that he, of late, engaged in war of words with the former minister, who he accused of spending $2.1billion from the ECA without authorization. But, Okonjo-Iweala yelled back at him, describing Oshiomhole’’s allegation as political witch hunt, saying it will fail. According to her, she started publishing monthly updates of allocations to different tiers of government in order to inform Nigerians on government revenues and expenditure.
She insisted that the claim that she spent the said money without approval was not credible given that, details of government receipts and expenditure were public knowledge. But Oshiomhole, a member of the National Economic Council (NEC) set up recently by President Muhammadu Buhari, accused the former minister of being economical with the truth and toying with figures as regards the state of the economy inherited Buhari. He spoke on a television programme, last week.
The governor, who said the Federal Government is broke, explained that it would have been in a worse shape than states if it had not resorted to borrowing to pay wages. He added that the economy under Okonjo-Iweala as Finance Minister was so mismanaged that waivers were granted to organizations running into several hundreds of millions of naira. Said he; “With all due respect to former Minister Okonjo-Iweala, she knows how to play around with statistics.
I have made the point; she keeps opening part of the pages and not the entire book. The logic of transparency is that every minister must publish in full what is accruing to the Federation Account month to month and what is distributed to them. What she has been publishing is that this is what went to the Federal Government, this is what went to state governments and this is what went to local governments.
“What she never published simultaneously is what accrued during the period out of which this was distributed. So we can now know what was collected to what was distributed so we can know what is left in the Excess Crude Account. You can see her changing the goal post. On the authority to spend, Okonjo-Iweala was a member of the National Economic Council, I was a member and I am on record as asking her, `don’t give us verbal reports on matters of the Federation Account, give us written report’, and the power to spend is not vested on Commissioners. Look at the Constitution and tell me which Section gives the Commissioners for Finance the power, all of them, they are unknown to ballot, they are not elected, but the membership of the NEC is clear, governors chaired by the Vice President representing the President, the CBN and other relevant ministries. How will she avoid this level of accountability?
“The decision to take money from the Excess Crude Account, that power is vested in the National Economic Council. The NEC is an institution created by the Constitution. What she is referring to is her own administrative arrangement. The $2 billion is her last sum because in her last report, she said we had $4.1 billion, she said so orally but it was captured in the minutes only for her to come around again at the last minute to say X figure is left. We asked her, `what did you pay for?”
On states which owe salary arrears to their workers, Oshiomhole said: “Every employer of labour has an obligation, a contractual obligation to pay those who work. The Bible says a labourer is entitled to his wage. Once you have laboured, it has to be paid for and you don’t pay wages because you are rich and you are able to afford it, you pay wages because the people have worked for it. It is not a gift from a kind-hearted employer, it is an obligation, it is a consequence for work.
I think what has happened is that at the peak of the oil boom, prices were high, people made projections about their expected expenditure and budget on the basis of those numbers. Along the line, there was a sharp drop and this sharp drop that people talk about is not just about a drop in terms of price of crude oil because prices have dropped below this level before. What is new is the level of the so-called crude oil theft, a situation in which certain persons, powerful in
the system, pretend not to know what was going on and simply excused the huge lapses in terms of the crude oil theft. So you have a double squeeze of drop in price and escalation in the volume of alleged theft of crude. The combined effect of this is that the total inflow into the Federation Account dropped sharply. This is also compounded by the fact that the Ministry of Finance and the Ministry of Petroleum Resources, the two of them working together, simply refused to transfer to the Federation Account a lot of the money that ought to have accrued. For example, over the past 4 to 5 years, the NLNG had, every year, made huge payment of between $1.5 to $2 billion, which ought to go to the Federation Account. This money was never transferred to the Federation Account, it was unilaterally expended by the Federal Government.
“We were not even informed of the fact that the money was paid and, each time we asked the then Hon. Minister of Finance and Coordinating Minister of the Economy what was happening to the proceeds from the NLNG, no explanation was offered, whether in black and white or orally and there are several other federal agencies that made huge sums of money which were illegally and unilaterally spent by the Federal Government, without being allowed to flow into the Federation Account. So when you draw up a budget on the basis of anticipated revenue and there is such a sharp drop in revenue arising from diversion and there is also a drop in price, obviously something will have to give. The federal finances are even worst hit. Over the past 9 months under the past government, the Federal Government could not and had not been able to pay salaries from her legitimate income. What she had been doing, which states could not do; was to borrow, uses the CBN through
various instruments termed security, etc and basically draw down the pension funds because they are the ones who have liquidity to patronize the bond market. So if we were to be able to stop the Federal Government from borrowing to pay salaries, it would have defaulted much earlier than states and the number of months the Federal Government would have been owing would be worse than the worst state in the federation.
“Just look at the budget of the Federal Government over the past four years and you will see the level of deficit finances that was built into it. So in trying to understand the financial crisis, you shouldn’t limit yourself to those who can pay. Even those who purport to pay, look at their source of funding the payment. If you do, you will find out that whereas the Federal Government frees itself to borrow quite recklessly, reckless in the sense that no serious manager goes month after month to borrow for the payment of salaries. I speak on my honor that the Federal Government is just as broke and that they are borrowing using CBN instruments in trillions of naira to pay salaries.
Now part of the problem is talking about taxes and this can be proved in black and white. The Federal Government illegally granted waivers to organizations running into hundreds of billions of naira that ought to flow into the Federation Account. Now those are taxes. When the minister granted waivers for you to bring cement into the country; granted waiver for you to bring vegetable oil into the country; grants waiver for you to bring vehicles into the country and, when you look at the total sum, sometimes, even VAT is illegally waived. So how do you get taxes? There are two kinds of taxes: Direct and indirect.
Personal Income Tax, which is deducted from our pay before your net gets to you and indirect tax, which is VAT, royalties, import tax where you spend quality of time looking at your tariff policies designed to protect your local industries and discourage importation. All of these are sources of funding for government. We must understand that in other climes, government does not live on rent from oil money. Governments worldwide are run on tax. Now this last government is the worst in terms of granting unexplained huge source of money in the name of waivers. Can you believe that even oil companies were granted so-called pioneer status? They will set up a small vehicle in the oil sector, give them certain transactions, give them so-called pioneer status so that they are excused from paying taxes.”
Speaking on the strike embarked on by members of the Judiciary Staff Union of Nigeria (JUSUN) in Edo, the governor said: “This is what I call power struggle. I had a meeting with JUSUN executives along with the members of the NBA and they said we are up-to-date with the payment of salaries and allowances and that they are on strike because the national body asked them to go on strike to press that the judiciary should enjoy what they call “First-Line Charge”. “If you ask the Chief Judge of Edo, he will tell you that the state has never defaulted and we will not default and, as we speak, if they work, they will get their pay. What I have refused to do is to pay them for the number of months that they have been on strike. For what? You stay at home, talking politics, you didn’t work and you want me to pay you. Because they are judicial workers, they are bound by law. They must be seen to respect the various trade dispute laws which say ‘if you don’t work, you don’t get paid’. They say they have a court judgment which says money should be transferred to the head of court. Is it the business of trade unions to fight for their employers? What they are doing is self-help, that the judgment is directing state governments to release money and that the state government, have refused to obey the order. I asked them, ‘when a court issues an order and the order is not obeyed, does the trade union law say the union shall become an agency for enforcement of court orders?’ We are in a democracy. I am a union man and I know the limits. Any other person can submit out of panic, I will do things out of conviction. I don’t reward blackmailers particularly when you choose to be a general purpose vehicle. So they should not expect to sit at home and expect to get paid. The law is very clear, it says ‘when you are on strike, particularly a frivolous strike like this, you don’t get paid.’ You are not
on strike because your allowances have been withheld, you are not on strike because your promotions are delayed, you are on strike because you are dealing with issues on how the three arms of government are supposed to relate. The law is clear, if you walk out of your work on your own, we cannot compel you to work. If you are at home, we cannot use tax-payers’ money, money paid by people who are laboring to work, market women, furniture owners and others in the public service who are doing hard work and I will go and use it to pay judicial workers who stay at home. The law is ‘no work, no pay’. We cannot compel you to work, you also cannot compel me to pay you for not working. If you decide to stay at home for 6months, you also will not be paid for 6 months but if they return to work today, they will be paid tomorrow.”
- See more at: http://www.vanguardngr.com/2015/07/nigeria-nearly-bankrupt-under-okonjos-watch/#sthash.HQ6Fs6Km.dpuf
By SIMON EBEGBULEM, Benin City
Nigerian Vanguard
Those who have followed the arguments of the governor of Edo State, Comrade Adams Oshiomhole, since early last year on the running of the nation’s economy and its future will understand why the governor is angry today about the parlous state of the economy.
When he declared recently that “this is the time for everybody to answer his or her father’s name”, the governor was not only directing the statement to the former Minister of Finance and Coordinating Minister of the Economy, Dr Ngozi Okonjo-Iweala, but also to the 18 local government chairmen in Edo, who he ordered to pay salaries owed to their workers or face the music.
Due to the dwindling allocation from the Federation Account to the state, Oshiomhole stopped over heads in the ministries and the state House of Assembly in the past six months, his office inclusive, and that is the secret his government has been able to pay its workers till date. And following the inability of the local government chairmen in the state to pay salaries, the governor met with them and directed that they should forfeit security vote and allowances so they can pay. He told them how he had forfeited his own in the past six months so as to pay civil servants and warned that he would not tolerate non-payment of salaries in the councils.
He achieved that with so much sacrifice but his anger is that Nigerians are suffering today due to what he described as alleged mismanagement of the economy under the watch of Okonjo-Iweala. The governor started echoing the economic crunch in the country since early last year when he predicted that the way the Excess Crude Account (ECA) and other oil revenue funds were being managed by the then PDP-led Federal Government will have dire consequences for the economy in future.
It is not surprising, therefore, that he, of late, engaged in war of words with the former minister, who he accused of spending $2.1billion from the ECA without authorization. But, Okonjo-Iweala yelled back at him, describing Oshiomhole’’s allegation as political witch hunt, saying it will fail. According to her, she started publishing monthly updates of allocations to different tiers of government in order to inform Nigerians on government revenues and expenditure.
She insisted that the claim that she spent the said money without approval was not credible given that, details of government receipts and expenditure were public knowledge. But Oshiomhole, a member of the National Economic Council (NEC) set up recently by President Muhammadu Buhari, accused the former minister of being economical with the truth and toying with figures as regards the state of the economy inherited Buhari. He spoke on a television programme, last week.
The governor, who said the Federal Government is broke, explained that it would have been in a worse shape than states if it had not resorted to borrowing to pay wages. He added that the economy under Okonjo-Iweala as Finance Minister was so mismanaged that waivers were granted to organizations running into several hundreds of millions of naira. Said he; “With all due respect to former Minister Okonjo-Iweala, she knows how to play around with statistics.
I have made the point; she keeps opening part of the pages and not the entire book. The logic of transparency is that every minister must publish in full what is accruing to the Federation Account month to month and what is distributed to them. What she has been publishing is that this is what went to the Federal Government, this is what went to state governments and this is what went to local governments.
“What she never published simultaneously is what accrued during the period out of which this was distributed. So we can now know what was collected to what was distributed so we can know what is left in the Excess Crude Account. You can see her changing the goal post. On the authority to spend, Okonjo-Iweala was a member of the National Economic Council, I was a member and I am on record as asking her, `don’t give us verbal reports on matters of the Federation Account, give us written report’, and the power to spend is not vested on Commissioners. Look at the Constitution and tell me which Section gives the Commissioners for Finance the power, all of them, they are unknown to ballot, they are not elected, but the membership of the NEC is clear, governors chaired by the Vice President representing the President, the CBN and other relevant ministries. How will she avoid this level of accountability?
“The decision to take money from the Excess Crude Account, that power is vested in the National Economic Council. The NEC is an institution created by the Constitution. What she is referring to is her own administrative arrangement. The $2 billion is her last sum because in her last report, she said we had $4.1 billion, she said so orally but it was captured in the minutes only for her to come around again at the last minute to say X figure is left. We asked her, `what did you pay for?”
On states which owe salary arrears to their workers, Oshiomhole said: “Every employer of labour has an obligation, a contractual obligation to pay those who work. The Bible says a labourer is entitled to his wage. Once you have laboured, it has to be paid for and you don’t pay wages because you are rich and you are able to afford it, you pay wages because the people have worked for it. It is not a gift from a kind-hearted employer, it is an obligation, it is a consequence for work.
I think what has happened is that at the peak of the oil boom, prices were high, people made projections about their expected expenditure and budget on the basis of those numbers. Along the line, there was a sharp drop and this sharp drop that people talk about is not just about a drop in terms of price of crude oil because prices have dropped below this level before. What is new is the level of the so-called crude oil theft, a situation in which certain persons, powerful in
the system, pretend not to know what was going on and simply excused the huge lapses in terms of the crude oil theft. So you have a double squeeze of drop in price and escalation in the volume of alleged theft of crude. The combined effect of this is that the total inflow into the Federation Account dropped sharply. This is also compounded by the fact that the Ministry of Finance and the Ministry of Petroleum Resources, the two of them working together, simply refused to transfer to the Federation Account a lot of the money that ought to have accrued. For example, over the past 4 to 5 years, the NLNG had, every year, made huge payment of between $1.5 to $2 billion, which ought to go to the Federation Account. This money was never transferred to the Federation Account, it was unilaterally expended by the Federal Government.
“We were not even informed of the fact that the money was paid and, each time we asked the then Hon. Minister of Finance and Coordinating Minister of the Economy what was happening to the proceeds from the NLNG, no explanation was offered, whether in black and white or orally and there are several other federal agencies that made huge sums of money which were illegally and unilaterally spent by the Federal Government, without being allowed to flow into the Federation Account. So when you draw up a budget on the basis of anticipated revenue and there is such a sharp drop in revenue arising from diversion and there is also a drop in price, obviously something will have to give. The federal finances are even worst hit. Over the past 9 months under the past government, the Federal Government could not and had not been able to pay salaries from her legitimate income. What she had been doing, which states could not do; was to borrow, uses the CBN through
various instruments termed security, etc and basically draw down the pension funds because they are the ones who have liquidity to patronize the bond market. So if we were to be able to stop the Federal Government from borrowing to pay salaries, it would have defaulted much earlier than states and the number of months the Federal Government would have been owing would be worse than the worst state in the federation.
“Just look at the budget of the Federal Government over the past four years and you will see the level of deficit finances that was built into it. So in trying to understand the financial crisis, you shouldn’t limit yourself to those who can pay. Even those who purport to pay, look at their source of funding the payment. If you do, you will find out that whereas the Federal Government frees itself to borrow quite recklessly, reckless in the sense that no serious manager goes month after month to borrow for the payment of salaries. I speak on my honor that the Federal Government is just as broke and that they are borrowing using CBN instruments in trillions of naira to pay salaries.
Now part of the problem is talking about taxes and this can be proved in black and white. The Federal Government illegally granted waivers to organizations running into hundreds of billions of naira that ought to flow into the Federation Account. Now those are taxes. When the minister granted waivers for you to bring cement into the country; granted waiver for you to bring vegetable oil into the country; grants waiver for you to bring vehicles into the country and, when you look at the total sum, sometimes, even VAT is illegally waived. So how do you get taxes? There are two kinds of taxes: Direct and indirect.
Personal Income Tax, which is deducted from our pay before your net gets to you and indirect tax, which is VAT, royalties, import tax where you spend quality of time looking at your tariff policies designed to protect your local industries and discourage importation. All of these are sources of funding for government. We must understand that in other climes, government does not live on rent from oil money. Governments worldwide are run on tax. Now this last government is the worst in terms of granting unexplained huge source of money in the name of waivers. Can you believe that even oil companies were granted so-called pioneer status? They will set up a small vehicle in the oil sector, give them certain transactions, give them so-called pioneer status so that they are excused from paying taxes.”
Speaking on the strike embarked on by members of the Judiciary Staff Union of Nigeria (JUSUN) in Edo, the governor said: “This is what I call power struggle. I had a meeting with JUSUN executives along with the members of the NBA and they said we are up-to-date with the payment of salaries and allowances and that they are on strike because the national body asked them to go on strike to press that the judiciary should enjoy what they call “First-Line Charge”. “If you ask the Chief Judge of Edo, he will tell you that the state has never defaulted and we will not default and, as we speak, if they work, they will get their pay. What I have refused to do is to pay them for the number of months that they have been on strike. For what? You stay at home, talking politics, you didn’t work and you want me to pay you. Because they are judicial workers, they are bound by law. They must be seen to respect the various trade dispute laws which say ‘if you don’t work, you don’t get paid’. They say they have a court judgment which says money should be transferred to the head of court. Is it the business of trade unions to fight for their employers? What they are doing is self-help, that the judgment is directing state governments to release money and that the state government, have refused to obey the order. I asked them, ‘when a court issues an order and the order is not obeyed, does the trade union law say the union shall become an agency for enforcement of court orders?’ We are in a democracy. I am a union man and I know the limits. Any other person can submit out of panic, I will do things out of conviction. I don’t reward blackmailers particularly when you choose to be a general purpose vehicle. So they should not expect to sit at home and expect to get paid. The law is very clear, it says ‘when you are on strike, particularly a frivolous strike like this, you don’t get paid.’ You are not
on strike because your allowances have been withheld, you are not on strike because your promotions are delayed, you are on strike because you are dealing with issues on how the three arms of government are supposed to relate. The law is clear, if you walk out of your work on your own, we cannot compel you to work. If you are at home, we cannot use tax-payers’ money, money paid by people who are laboring to work, market women, furniture owners and others in the public service who are doing hard work and I will go and use it to pay judicial workers who stay at home. The law is ‘no work, no pay’. We cannot compel you to work, you also cannot compel me to pay you for not working. If you decide to stay at home for 6months, you also will not be paid for 6 months but if they return to work today, they will be paid tomorrow.”
- See more at: http://www.vanguardngr.com/2015/07/nigeria-nearly-bankrupt-under-okonjos-watch/#sthash.HQ6Fs6Km.dpuf
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