By Sodiq Lawal
Loans and governance are inter-related. Both advanced and developing countries borrow monies to fund specific projects, address emergencies or run their affairs. Most countries borrow to finance projects, create enabling environment for businesses to boost internal revenue not only to repay loans but to drive the economies of these countries to good fortunes and prosperity.
Experts say when loans are not spent frivolously on merriments or largely on expenditures but channelled to specific projects for advancement, it brings good fortune and positively change the economic narration of its beneficiary.
Processes of loans must be transparent smartly managed and refinanced at every given opportunity. But if loans are mismanaged, it does not only frustrate workings of government but would ultimately served as clog in the wheel of progress and development of the state or nation. For Osun – ‘state of virtue’, the case is not different.
According to Domestic and Foreign Debt Report 2021 from the National Bureau of Statistics as at June 2021, Osun is the 10th most debted state in Nigeria with ‘N133,924,122,386.17’ and Lagos sat comfortabily at the first position with N507,377,449,198.76.
Besides the government running an ‘opaque financial framework’ – which means only top government officials know ‘true’ details of state finances such as debts, revenues and costs in the state, there is a greater challenge. Until the ongoing political war between former governor and Minister of Interior, Rauf Aregbesola and Governor Gboyega Oyetola heightened, most citizens had no knowledge of the accumulated debts. Now aides of both predecessor and successor have engaged and still engaging in numerous verbal confrontations with all sort of damning allegations especially on claims of debt responsibility.
Eventhough arguments on debt profile only escalated and become tensed in 2021 but findings by WITHIN NIGERIA revealed that the origin of ‘Osun debt crisis’ started in 2010 and it was the beginning of Osun journey into ‘opaque finances’.
How it all started
In May 29, 1999, Chief Bisi Akande led-administration inherited the sum of N2, 137, 622, 600.38 from Colonel Bamigboye and other military governors which includes Bola Ige’s foreign loans and Isiaka Adeleke’s debts.
WITHIN NIGERIA also gathered that Chief Bisi Akande left a debt of N5,459,216,087.07 which Olagunsoye Oyinlola met on May 29, 2003. A check by WITHIN NIGERIA revealed that N3 billion out of the N5, 459,216,087.07 was for salaries and gratuities and N2.137 on projects.
According to informations available to WITHIN NIGERIA, Prince Olagunsoye Oyinlola did not clear all debts. He only cleared outstanding salary arrears he inherited from Akande.
On the 17th of May, 2010, Osun state government under the leadership of his excellency, Olagunsoye Oyinlola received a loan of N18.3 billion from the United Bank of Africa.
In a document seen by WITHIN NIGERIA, it was clearly stated that the purpose of the loan was part finance completion of key projects in the state, road construction, free trade zones, technical education projects and others.
A check by WITHIN NIGERIA revealed that the N18.3 billion loan was scheduled to be paid within 36 months at the rate of N619 million per month (N22,284,000,000).
Barely 6 months after receiving the N18.3 billion loan, a court of appeal sitting in Ibadan sacked Prince Olagunsoye Oyinlola and installed his opposition rival, Rauf Aregbesola as the governor of the state on the 26th of November, 2010.
The administration of Prince Olagunsoye Oyinlola had spent N10 billion out of the N18.3 billion loan. A source told WITHIN NIGERIA that Olagunsoye Oyinlola paid the sum of N2.4 billion out of the N10 billion he spent. A claim WITHIN NIGERIA could not ascertain as at the time of reportage. When sworn-in as a governor, Rauf Aregbesola met a balance of N8.3 billion unspent. When it was time to refinance, Aregbesola returned the yet-to-be utilised fund and refinanced the balance.
When contacted, a former aide to Olagunsoye Oyinlola told WITHIN NIGERIA that the N10 billion was spent on the completion of the state university project, renovation of Osogbo city stadium and five others among others.
How Aregbesola led-administration borrowed N25bn within two months in office
Aregbesola was sworn in as a governor on 27th November, 2010 after Oyinlola was sacked. Aregbesola appointed Adegboyega Oyetola as the Chief of Staff and Moshood Adeoti as the Secretary to the State Government on January 7, 2011.
Findings by WITHIN NIGERIA revealed that the first loan Aregbesola-led administration acquired was on 27th January, 2011. Aregbesola acquired a loan of N25bn from First Bank Plc which was used to refinance the N18.3bn loan Oyinlola borrowed from United Bank of Africa (UBA) but only N8.3 bn had been utilised by Oyinlola led-administration.
In simpler terms, First Bank Plc cleared the remaining debts of United Bank of Africa (UBA) and entered a fresh agreement with Osun state government.
The loan period was pegged at 60months and 12 months moratorium on principal drawn. A check by WITHIN NIGERIA revealed that only Aregbesola, his appointed Chief of Staff, Adegboyega Oyetola and secretary to the state government, Moshood Adeoti were public officers in charge of running the affairs of the state.
How Tinubu’s ex-aide, Wale Edun facilitated N50bn bond for Aregbesola led-administration in first 6 months
Former Lagos commissioner for finance and chairman of Chapel Hill Denham Group, Wale Edun was employed by the Osun state government as the lead financial adviser on bond programmes. Wale Edun worked alongside other financial advisers to facilitate the N50bn and their major responsibilites was to process the scope and size of the bond. They started the processing of N50 billion bond in March, 2011.
Findings revealed that there were two major parties to the bond i.e Financial advisers led by Wale Edun and Lead Issuing Houses (Nigerian Stock Exchange and Securities Exchange Commission).
A check by WITHIN NIGERIA revealed that Securities Exchange Commission (SEC) approved N60bn but only N30 billion and N11.4 billion respectively were eventually released to Osun state government because of shortfall in crude oil price by 2014 and 2015. Aregbesola had a shortfall from this of about 20billion naira, which had to be sought outside capital market”.
Findings by WITHIN NIGERIA revealed that Aregbesola-led administration did not pay the N8.6bn to United Bank of Africa (UBA) rather it was refinanced into the N30bn bond. The first tranche of the bond which was issued in December, 2012 was used to pay down the N8.6 billion and the balance N21.4b was used for new projects.
In another document seen by WITHIN NIGERIA, the balance of N21.4 billion was reportedly spent on infrastructures.
The breakdown of N21.4 billion are as follows; N2 billion was spent on Ede water works rehabilitation and its overhauling. N2 billion was spent on Urban renewals of Osogbo, renewal of rail terminal, freedom park and other commercial infrastructures and part funding of ilesa and Osogbo road networks. N10 billion was spent Bisi Akande Trumpet Bridge at Gbongan Junction; part payments of Gbongan- Odeomu dual carriage road; funding of Ijebu jesa -iloko – iwaraja road, ijebu jesa – ijeda – iloko ijesa road; ijeda – Erinmo ijesa road; Igbajo-Okerun-Iresi road; Gbongan – Odeyinka road; Odeyinka – Orile Owu- Araromi Owu road and other linkage roads between urban and agrarian towns.
“The sum of 6.3 billion was reportedly used to jump start the educational infrastructures because of the anticipatory delay of Sukuk Bond (2nd tranche) and to provide counterpart funding of the state, required for some elementary and middle schools construction and furnishings under the Universal Basic Education”, the top official added.
How popular columnist, Sam Omatseye interviewed ex-Osun finance commissioner in Tinubu’s Ikoyi house
An insider told WITHIN NIGERIA that three persons were nominated for the position of Osun finance commissioner in 2011. Two out of the three nominated persons were bankers and natives of Ijesaland while the other is a native of Osogbo. One out of the two nominees from Ijesaland was promoted to the position of Executive Director in the banks he works for and opted out of the race, the insider added.
According to the insider, the two nominees were interviewed by Rauf Aregbesola in one of the houses of ex-Lagos governor and APC national leader, Bola Ahmed Tinubu.
The insider further revealed that ex-Lagos finance commissioner, Wale Edun, one of Aregbesola’s friends who is also a banker and indigene of Ede, Wale Bolunduro and Bade Adesina, Oyetola’s nominee who is a native of Osogbo but works with Premium Pension and now a chieftain of Peoples Democratic Party were present at the interview.
When contacted, another insider told WITHIN NIGERIA that Aregbesola asked one of the nominees to meet him at Tinubu’s house in Ikoyi, Lagos state where they met Bola Ahmed Tinubu and an editor of THE NATION newspaper, Sam Omatseye.
According to the insider, Rauf Aregbesola and Bola Ahmed Tinubu left the sitting room after all parties exchanged pleasantries. Sam Omatseye interviewed the nominee Aregbesola brought to Tinubu’s house in Ikoyi.
The insider further disclosed that the interview session lasted for more than one hour. Sam Omatseye asked questions on ideology, governance, finance especially on project finance and later forwarded all details to Rauf Aregbesola and Bola Ahmed Tinubu with a note of satisfactory and competency, the insider added.
How Aregbesola created another office for Oyetola’s nominee who was not appointed as finance commissioner
The state house of assembly received the cabinet’s list on 12th August, 2011 but they were sworn in by Rauf Aregbesola on 12th August, 2011. A check by WITHIN NIGERIA revealed that Bade Adesina who was Oyetola’s nominee did not make the list.
An insider who spoke with WITHIN NIGERIA said Adegboyega Oyetola who was the Chief of Staff was not happy about the development which reportedly caused a friction
According to the insider, Aregbesola asked Oyetola to bring his nominee, Bade Adesina to come and serve as special adviser on budget and economic planning.
A check by WITHIN NIGERIA revealed that Bade Adesina was appointed as special adviser on budget and economic planning in 2013 and Aregbesola appointed two permanent secretaries in the ministry of finance, budget and economic planning, technically divided it into two ministries namely; (Ministry of finance and Ministry of budget and economic planning).
Current debt profile of the state
As at the end of Aregbesola’s tenure which was 27th of November, 2014; the total debt profile of Osun state was about N100 billion which comprises of two bonds and construction finance loan (restructured into FGN bond in 2015). The N25 billion loan and the N50bn bond were already under processing before the inauguration of cabinet on 12th August, 2011.
Recall that Aregbesola appointed his second cabinet on 30th of May, 2017. Aregbesola, his chief of staff, Adegboyega Oyetola and secretary to the state government, Moshood Adeoti were in charge of running the affairs of the state from November 27, 2014 till 30th of May, 2017.
Aregbesola led-administration in his second tenure before the appointment of cabinet members received a salary bailout of N25 billion for state, N10 billion for local government, infrastructural loan worth of N10 billion from sterling bank, a budget support facility loan among others.
According to Debt Management Office, the domestic loan of Osun state was N148 billion as at 2018. Some sources claimed that besides the official loans known to DMOs and BudgIT, there are some commercial loans and debts owed by contractors including local government loans taken and spent on their behalf by the state government.
The above statement is in conflict with the positions of the immediate administration and the current administration of the state. Sola Fasure, a media spokesperson of former governor of the state and minister of interior, Rauf Aregbesola in 2018 disclosed in a statement that the domestic loans of Osun was N141 billion. The current governor of the state, Adegboyega Oyetola during a gubernatorial debate organised by Channels TV in 2018 also revealed that the domestic loans of the state was N141 billion.
The loan can be sub-divided into two; Domestic loans is N141 billion, external and subsidiary loan is N29.5bn. A check by WITHIN NIGERIA revealed that the external loan has been in existence since old western state and Oyo days but witnessed a sharp increase during Aregbesola’s administration owing to water and environment sanitation projects such as Ilesa water projects among others it involved in. Officially, the balance of first term loan and new fresh loans secured in second term was N141 billion with external loan of N29.5 billion which was handed over to Oyetola’s administration and confirmed by Governor Gboyega Oyetola.
WITHIN NIGERIA also gathered that the principal balances on debt portfolios of capital market bonds as at the beginning of Governor Oyetola’s administration (November 27, 2018) were; Bond (#30billion): #5,867,925,993.00 and Sukuk loan (#11.4billion): #3,834,016,505.18. Total: #9,701,942,498.18.
A check by WITHIN NIGERIA revealed that at the first six months of Oyetola led-administration, the sum of N2.4bn was deducted for loan repayment which later reduced after the first tranche of N30 billion was completed in July, 2019 and the Sukuk bond was completed too in March, 2020 respectively, leaving the state with subsidiary loans and construction finance loans.
WITHIN NIGERIA can not confirm if the Oyetola led-administration has received any loan or engaged in any known bond programme considering the current debt profile of the state which is N132.64 billion despite repayment of loans via deductions from state allocations as at June, 2021.
But a check by WITHIN NIGERIA revealed that the National Economic Council (NEC) on November 18, 2021 stated that President Muhammadu Buhari has approved a fresh N656 billion Bridge Financing Facility for the 36 states. Zainab Ahmed, Nigeria’s finance minister added that each state will receive N18.2 billion. WITHIN NIGERIA gathered that Osun state is a beneficiary of the budget support loan but we can not confirm any bond programme Oyetola led-administration allegedly involved in.
Some sources who spoke with WITHIN NIGERIA claimed that there is possibility that Oyetola led-administration is secretly engaging in bonds programmes. “If Aregbesola handed over domestic loans of N141 billion and external loan of N29.6 billion to Oyetola led-administration and after three years, the debt profile stands at N132 billion as released by Debt Management Office despite monthly deduction of N1.5 billion, it shows that the current administration is secretly engaging in bond programmes which has probably increased the loan”, a source expressed concern.
Can Osun state survive despite monthly deduction of N1.5 billion?
Recall that WITHIN NIGERIA revealed that at the first six months of Oyetola led-administration, the sum of N2.4bn was deducted for loan repayment which later reduced after the first tranche of N30 billion was completed in July, 2019 and the Sukuk bond was completed too in March, 2020 respectively, leaving the state with subsidiary loans and construction finance loans.
Findings by WITHIN NIGERIA revealed that after six months, the monthly payment on the domestic loans of N141 billion Aregbesola reportedly handed over to Oyetola’s administration reduced to N1.5 billion which comprises of N960m of first term and N540m of second term. The annual repayment of loan is N18 billion.
Recall that on 22nd September, 2021, the Auditor-General of the state Folorunso Adesina while presenting the report of audited accounts at Leisure Spring Hotel in Osogbo said the state internally generated revenue from 2018 to 2020 as a total sum of N13,805,843,339.25 was generated in 2018; N17,720,122,360.44 in 2019 and N19,642,333,010.68 in 2020 respectively.
He further stated that the summary of the audited financial statements as presented puts the total revenue (inflows) at N99,048,740,967.00 and total recurrent and capital expenditure (outflows) at N86,470,726,806.86 respectively. A check by WITHIN NIGERIA also revealed that Osun state receives N4.5 billion as monthly federal allocation, totalling N54 billion per annum.
Ex-aides of Aregbesola once raised an alarm that the Oyetola led-administration received a total of N17.5 billion as refund on federal roads which was countered by Osun commissioner for works and transport, Remi Omowaiye and commissioner for finance, Bola Oyebamiji who cited N13 billion and N11 billion respectively as refund on federal roads.
Oyetola’s aides also claimed that the refund which was released by the federal government has been redirected to the uncompleted federal roads. There are allegations that the current administration also sold some state assets such as 60% of Omoluabi savings and received N2 billion from LAUTECH sales.
The annual repayment of loan via deduction is N18 billion. The annual IGR of the state is N19. 6 billion. The annual federal allocation to the state is N54 billion. Despite the alleged sale of state assets such as 60 percent of Omoluabi saving loans and N2 billion received from LAUTECH’s ownership negotiation with Oyo state, can Osun state still survive despite monthly deduction of N1.5 billion?
Efforts to speak with the current commissioner for finance in Osun, Bola Oyebamiji were futile. He declined a telephone interview and asked WITHIN NIGERIA reporter to come down to his office at the state secretariat. Attempts to fix a physical meeting were futile as he refused to pick up WITHIN NIGERIA reporter calls.
WITHIN NIGERIA also contacted the Chief Press Secretary to the State Governor, Ismail Ompidian via telephone. He asked WITHIN NIGERIA reporter to forward questions to his whatsapp page and promised to get back to the firm. As at the time of publication, Omipidan has not responded to questions forwarded to his whatsapp page and all attempts to get in touch with him were futile.
When contacted, a former commissioner of finance in Osun state, Dr. Wale Bolorunduro challenged the Osun government to publish debt figures certified by the accountant general of the state. He added that the people are wondering why Oyetola has refused to publish the debt figure, the debts he inherited and the current profile.
The former finance commissioner told WITHIN NIGERIA that Oyetola has been in the knowing of osun financing and refinancing right from when he was appointed in January 7th 2011 and when the refinancing of the Oyinlola’s loan was done in March 2011 and when the Bond’s financial adviser, ChapelHill (headed by Wale Edun) was appointed before the appointment of commissioner in August, 2011 with the responsibility to fast track the borrowing plan. He ought to know what to be done.
“We know they are doing contract finance and federal govt through its debt management office is compelling states to be reporting that now. Also we know the debt market is deeper now and much more available through FGN assisted 20 or 30 years budget support facilities and CBN windows of 20 years single digit loans. All these were not available until 2015, so which of them has Osun taken and for what purpose?”, the ex-finance commissioner queried.
When asked by WITHIN NIGERIA reporter if Osun state can survive with the monthly repayment of loans, Dr. Wale Bolorunduro nodded affirmatively.
According to Dr. Wale Bolorunduro, the IGR of Osun at 19b naira annually as quoted by NBS and Osun govt published account covers the debt servicing. This revenue is separate from the allocations from federation accounts which gross 4.3billion naira monthly.
“The state is also realizing some investments and selling assets that are now contributing to its general revenues. With refunds and capital receipts from federal govt boosting the revenues”.
“The annual revenue of 99b naira published in 2020 (year of Covid) can only increase. Also among the least recipient of FAAC, Osun has one of the highest JAAC so it is sustainable at local governments level equally”, he added.
To be continued…..
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