The Discourse: “Hafsa: Salary Crisis”

The Discourse: “Hafsa: Salary Crisis”
  • PublishedJune 21, 2024

Below is an excerpt from Chapter 7 of a book titled “Ogbeni: The Osun Renaissance Years”, written by a prominent Nigerian columnist, Olakunle Abimbola. The book details the administration of former Governor of Osun State, Ogbeni Rauf Aregbesola, and the ideological leanings that shaped his approach to governance.

RAUF Aregbesola’s first term as Governor was sheer bliss on the salary front.  Before trouble came, his government even paid Osun workers the “13th month’s salary” in December of each year – for four years’ running.  As Action Congress (AC) Candidate, Aregbesola had promised, at the 2007 campaign stumps, to pay Osun public workers “13th month salary”. 

“Everything was all right,” Aregbesola affirmed. “We were paying salaries as and when due.  Up to four or five years, we paid every Osun worker their 13th month’s salary.  The only state that did that before us, to some extent, was Lagos. Nobody,” he insisted, “was paid irregular salary: workers or pensioners – until the Nigerian economy went down, no thanks to the local huge theft of crude, up to one million barrels-a-day; and international oil glut, caused by the ISIS  crisis in the Middle East.” 

That was from February 2014 – and it was Ogbeni Aregbesola of all the 36 Nigerian governors, that first sensed the danger; and pronto warned that trouble was coming to paradise!  Yet, he ended up as the ultimate scapegoat of a crippling national salary crisis, which better secured Nigerian oil fields could have averted.  The soulless steal of Nigeria’s crude oil under President Goodluck Jonathan would have been avoided, thus reducing the intensity of the crisis.  However, Nigeria could do little about the international oil glut which the ISIS crisis triggered, following the ISIS occupation of parts of Iraq and Syria.  That glut crippled the earnings of the oil-producing countries.  The treasuries of these countries, most of them members of the Organization of Oil Producing Countries (OPEC), took a hit.  

BudgiT, Nigeria’s NGO budget tracker, duly recorded the fiscal meltdown of that period: “The total FAAC allocation received by states have significantly reduced from N2.9 trillion and N2.5 trillion in 2013 and 2014 to N1.2 trillion and N1.7 trillion in 2016 and 2017.”   When that crisis bit hard, Aregbesola himself said the net-cash shared by states, from the federal till, plunged from an average of N600 billion a month (at times even topping N700 billion) to an average of N150 billion a month (some 75 per cent dip) – and that crisis ran for no less than a year, or even more.  Osun’s share thus crashed from an average of N4.1 billion to N1.025 billion!

In February 2014 when Aregbesola first raised the alarm – not about the oil glut but about the horrendous heists from Nigeria’s oil fields – the issue became the subject of media brickbats between the Governor and aides to President Jonathan.  Not a few of these aides and their media confederates pounced on the Governor for allegedly raising false alarm.  But the actual reality dawned by June 2014, when many Nigerian states found out, the hard way, that they received too little from the Federation Account to pay workers’ salaries and retirees’ pensions; and still have enough left to service other contractual commitments in ongoing projects and sundry obligations. 

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A June 2015 report, published by Vanguard newspaper, quoting the Nigeria Labour Congress (NLC), claimed half of Nigeria’s 36 states could not pay salaries:

Eighteen of the thirty-six states of the federation are technically bankrupt.  This is because they have mortgaged their federation account allocations to contractors by signing irrevocable payment orders with various banks.  As a result, payment to contractors and other debt instruments are deducted at source and have become the first-line charge on their lean resources.  The internally generated revenues of these states are also not enough to meet their obligations so they owe workers several months of unpaid salaries. 

The newspaper listed the defaulting states, quoting NLC, as “Abia, Akwa Ibom, Bauchi, Benue, Cross River, Ekiti, Imo, Jigawa, Kano, Katsina, Kogi, Ogun, Ondo, Osun, Oyo, Plateau, Rivers and Zamfara.”   This list paints the picture of a national salary meltdown, cutting across geo-political zones and other state demographics: the oil-rich Akwa Ibom and Rivers, not excluding the marginal oil players as Abia and Imo; the South West belt of Ogun, Ondo (itself a marginal oil-producing state), Osun and Oyo (regarded, as a bloc, as Nigeria’s most economically stable); and northern states: Kano (the commercial hub of the North), Jigawa, Kogi and Katsina. 

Indeed, that chronic shortfall propelled President Muhammadu Buhari, after he assumed office on 29 May 2015, to roll out a salary-support package for distressed states to pay their workers.  A BBC News report of 7 July 2015 – less than two months after the president took power – framed the salary package thus, though in its own report it claimed 12 states (compared with Vanguard’s 16) were distressed:

Nigeria’s President Muhammadu Buhari has approved a $2.1bn (1.4 billion British Pound sterling) intervention package to help bankrupt states pay salaries, a statement says.

At least 12 of Nigeria’s 36 states are said to owe their workers more than $550 million in salaries and allowances.

Some workers have not been paid for seven months.

The government revenue, which depends largely on crude oil exports, has fallen sharply in recent months because of a fall in global oil prices.  

Now, if Osun was not the only state caught in the salary warp, why did Governor Aregbesola become the media scapegoat and national whipping boy?  The Governor might have been victim of his own financial innovations, his audacious social and physical infrastructure programmes, his creative attempt to navigate the salary crisis without sacking Osun public sector workers, and the normally brutish, nasty, bitter and rumour-spewing Osun local politics.  Indeed, that brutish politics of free-wheeling lies and gripping half-truths would birth that nasty Osun street lingo, Hafsa – for “half salary” – to deride the Governor’s hard-wrought efforts at solving the salary crisis.

Osun before Aregbesola was fiscally conservative.  All the previous military governors never ventured beyond conventional facilities: from local banks; and tapping into sovereign loans from international agencies and foreign governments, which the Federal Government then guaranteed for states to obtain.  Neither did the late Alhaji Isiaka Adeleke, aka Serubawon, Osun’s first-ever elected Governor: he governed from January 1992 to November 1993 during the still-born Third Republic.  For Governor Adebisi Akande, Osun’s first elected Governor in the Fourth Republic (which started on 29 May 1999), fiscal ultra-conservatism (read: absolutely no appetite for loans) was a golden virtue – and just as well. Governor Akande, though with an accounting background, was lauded to have not taken a kobo as loan, despite his well-acknowledged strides in infrastructure, which included the delivery of Osun’s first befitting Government Secretariat; and the Bola Ige “White House”, the Osun Governor’s Office complex.  

Yet, fiscal liberalism couldn’t have been a vice, particularly for a zesty Governor, racing against time to executive his slew of extensive programmes to develop humans and modernize the state’s economy, but having too little cash in the till to pay the bill.  In such a challenging solution, financial leveraging made eminent and strategic sense: to expand the state’s access to more funding to execute the many programmes and projects.  That would explain the Aregbesola government’s decision to enter the bond market.  But that in itself could have been because Ogbeni Aregbesola was a cabinet member, for eight years, in the Bola Tinubu government in Lagos State.  That government was the first, among Nigerian states, to enter the bond market.  When it did, there was media uproar, despite the cosmopolitan nature of Lagos as Nigeria’s economic and banking capital.  

So, Aregbesola’s foray into that same market, in a fiscally and politically conservative upcountry state like Osun, was destined to provoke some wild excitement – and the media growled like demented hyenas! Yet, in many cases, the hysteric media only echoed the ill-ease of Osun’s local politicians.  To those, such fiscal strategy was so strange that it must be reckless.  Since they never shared the Governor’s vast developmental dreams, less so his fiscal strategies to consummate it, they were convinced all would end in a fiasco.  So, when the salary crisis came, many of them gloated “we told you so!”  To celebrate the ruin foretold, a section of the Osun opposition came with the refrain, “O-Gbese!”  The Aregbesola government had used the “O” slogan to mass-market, to popular acclaim, its programmes: OYES, O-Meals, O’School, O’Ambulance, etc.  So, branding the salary crisis as O’Failure, on account of “reckless” borrowing (which suggested that the state had gone bankrupt) was a satanic piece of pun that must have upset the administration. 

Yet, years later, Aregbesola would maintain that such a conclusion was faulty. “Even if I had not done any capital projects at all, by 2014 when the nation experienced this major decline in its revenue,” he explained, “I would still not be able to pay salaries.  Why is that so?  Because Osun inherited a huge proportion of the old Western State/Oyo State civil servants that were Osun people.  While the retired ones were still receiving pension, those still serving were still receiving salaries.” 

“There was no reckless borrowing,” he insisted. “What happened was that Nigerian revenue, both federal and states, went south because of the challenge of oil theft and the glut in the international oil market.” 

Before that crunch, Osun was credit-worthy. That was why the state could even play in the bond market.  As a pre-condition, Osun under Aregbesola, for the first time in the state’s history, did a five-year audit and proper accounting of the state’s books.   That proved the state’s credit-worthiness, for it demonstrated its regular cash flow.  That was why, Aregbesola explained, Osun could move from its initial vanilla bond (from the Nigerian Stock Exchange: to build the first set of roads and sundry public works), to pioneer the Sukuk (used to build and furnish the 11 high-capacity high schools). Although that Islamic financial instrument attracted ferocious media flak when Osun first obtained it, it would become routine and commonplace later. The Federal Government, under President Muhammadu Buhari, would use the Sukuk to build different sections of federal roads throughout the country.  So, as the Tinubu government in Lagos was the first to enter the stock market for funding, the Aregbesola government in Osun was the first in Nigeria to take the Sukuk.

“We were credit-worthy,” he insisted.  “That was why the loans were approved.  That’s one fact I want to register.  Whoever has any contrary view can challenge it – but with facts; not conjectures; not half-truths; not fabricated fiction.” 

Still, Ogbeni Aregbesola admitted the sheer scope of his administration’s projects.  “We were too eager,” he conceded, “to overcome the infrastructural deficits, both on roads and in education; and in several other areas.”  

Those projects, when compared to the state’s puny resources, led many people to wrong conclusions, by linking the salary challenge to project overload.  But he was adamant that was a simplistic and faulty conclusion.

“We structured all payment of contracts on receipts.  We didn’t use the traditional methods of paying in advance.  Use your money to do our projects.  You get paid as you go.  Were the Federation Account to sustain Osun’s monthly N4.1 billion receipt, there would have been no problem at all.  Yes,” he admitted, “by the enormity of what I was doing, people thought that it was because of the projects. But no,” he flatly returned, “they were not.  So, trying to link my salary challenge with project funding would be incorrect.”    

In any case, the financial inter-mediation that bonds and other loans offer was to broaden a state’s access to funding for critical projects, as long as its cash flow could sustain a re-payment schedule with the interests that come with the loan.  So, when Osun was grossing an average of N4.1 billion from the Federation Account, it was easy and seamless.  But it became near-impossible when those monthly receipts plunged to an average N1.025 billion.   

“What would have prevented the salary challenge we had could have been mass sack – and should we even sack people,” he queried, “won’t we still be tied down to paying gratuities and pensions”? 

That thinking produced the salary modulation solution – a policy that the Aregbesola government had thought would tide the state over the salary crisis.  The suggestion first came from the workers themselves – Labour wouldn’t be averse to “pay when able” , so long as no one was retrenched.  Then, the formal Government-Labour blueprint, on salary modulation, under the chair of Alhaji Hassan Sunmonu, former president of the Nigeria Labour Congress (NLC); with Gboyega Oyetola, who would succeed Aregbesola as Governor but was then Aregbesola’s Chief of Staff, heading the government side of the committee as co-vice chair. But with fast-approaching elections, even salary modulation would become a brutal tool of political blame game, for which the outgoing Governor would be mercilessly hanged. 

Workers: “Pay when able”

It was September 2014.  After rallying to pay salaries between February and July, the crunch had finally come.

“When it became apparent that our receipt from all revenue sources might not cope with our salary and pension obligations,” Aregbesola recalled, “we invited all the leaders of Labour.  We asked them to go and look at all our books and financial transactions, and advise us on how best we could go.” 

The union leaders obliged.  But the situation struck them as well and truly grim.  They admitted, based on the revenue inflow, that it would be difficult to pay every worker and every pensioner, given the money available, and the size of the Osun civil and public services.  Yet, they were adamant that retrenchment was no option.  As the Governor had earlier mentioned, the clinical solution might well have been to retrench half of the Osun workforce.  But even if that was done, the government would still source for funds to settle their terminal benefits.  So, the workers decided that barring any retrenchment, the only way to keep the entire workers and maintain some modicum of meeting salary/pension obligations was to “pay when able”.  In a macabre hyperbole, the union leaders even suggested that even if it took owing for four months, so as to pay a month’s salary, their workers would bear with it.   That, of course, was easier said than done – and both sides knew it.  The only proviso was that every owed salary/pension would be repaid, immediately after the situation improved.  

“They wrote it down,” Aregbesola stressed.  “But my response was that what they suggested was possible but very difficult.  But that was the only thing they could think of.  So, we let them have their way, even though I had my doubts.”

Sensing the Governor’s unease, the union leaders reassured him that they would prevail on their members to endure.  Still, it is only fair to note that everyone – union leaders, workers and the Governor himself – was hoping against hope that the financial crunch would not last much long, that the leaking oil fields would be plugged, that the international oil glut would soon ease.  But that was not to be.

Meanwhile, the Osun government put things in place to implement the union leaders’ suggestion – and that began the era of irregular payment of salaries.  Between September 2014 and February 2015, the workers entered a regime of waiting for two months to collect the salary of one month.  It was a very difficult time for everyone.  By that time in 2013, the workers by the ember months were looking forward to receiving their “13th month’s” pay to celebrate Yuletide.  But this time, the anxiety was if they would even collect any salary by Christmas, given the payment regime!  

Besides, the arrangement wreaked so much havoc on the lives and homes of the lowest earning civil servants – those from salary grade levels 7 and below.  From the initial whispering campaigns, the state started seething with endless droning and grumbling: Osun workers were dying of hunger, while Ogbeni, their Governor, sat pretty!  The Osun opposition, ever so nasty, went on that lamentation binge.  So, did their media friends, ever with bones to pick with the Ogbeni and how he ran his government. 

The Governor himself was alarmed, if not surprised, at how nasty things had turned.  He quietly agonized at how the delayed payment regime had steadily and painfully pauperized the lowest earners in the civil service.  Though the senior civil servants could somewhat better cope, they had their pains too.  The political bureaucracy – regime non-civil service appointees that had no pensions – was quietly grumbling too, even if they tried to be at their best behaviours at the Governor’s presence.  The Governor, therefore, decided it was time to re-visit the paying formula.  Enter, the Revenue Apportionment Committee (RAC), headed on the government’s side by Alhaji Gboyega Oyetola, then Aregbesola’s Chief of Staff, under the overall chairmanship of Comrade Hassan Sunmonu, former president, Nigeria Labour Congress (NLC).

Hassan Sunmonu Committee

Comrade Hassan Sunmonu was sitting in his house, in the Akede-Iyalode area of Osogbo, when he was told he had a visitor.  It was Alhaji Gboyega Oyetola, Chief of Staff to Governor Rauf Aregbesola.  He was bearing a letter, requesting the former NLC president to chair a Labour-Government Revenue Apportionment Committee (RAC), on the Osun salary crisis.  By the letter’s proposal, Sunmonu would chair the RAC, obviously to secure workers’ respect and buy-in.  The first president of the Nigeria Labour Congress (NLC) remained a highly revered and iconic figure in Nigerian Labour circles.  Oyetola too would head the government’s side of the committee – under Sunmonu’s overall chairmanship, of course.  That also made perfect sense.  In all the Aregbesola government’s interface with Labour, especially on the salary issue, Chief of Staff Oyetola was the recurring face and contact.   

Comrade Sunmonu clearly remembered: “The letter was brought to me in my house by the current Governor, then the Chief of Staff, Adegboyega Oyetola.  When he brought the letter inviting me to come and chair the committee, I told him I would have to consult with my own constituency first.  So,” he added, “I informed the executive of both the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) about the information.”   

From Abuja’s NLC headquarters, Ayuba Wabba, then the NLC president, nudged the Labour patriarch to accept the invitation, reasoning that it would be in “the interest of our members” if he did that.  Other consultations in TUC circles returned pretty much the same verdict: accept to help Osun workers and save them from the present salary quandary.  While NLC took charge of the interest of the mass of the Osun Labour, TUC was responsible for the senior civil servants.

The Sunmonu Committee had 16 members: eight from Labour (excluding Sunmonu himself) and eight from the Government.  The Labour side had Osun NLC Chairman, Comrade Babatunde Adekomi, the Osun TUC Chairman, Comrade Adekola Adebowale and Chairman of the Joint Negotiation Council, Comrade Bayo Adejumo.  On the Government side, under the headship of Oyetola, were Wale Bolorunduro (former Commissioner for Finance, but who stayed back as the Governor’s informal finance advisor, after the dissolution of Aregbesola’s first term cabinet), Permanent Secretary in the Osun Ministry of Finance, the Accountant-General of the state and other routine officials.  But also on the Government side was Alhaji Bayo Jimoh, an Osogbo indigene and former managing director of the Oodua Group of Companies (2005-2014), the private sector conglomerate owned by the six South West governments of Lagos, Ogun, Oyo, Osun, Ondo and Ekiti states.  Jimoh and Oyetola served as joint deputy chairs to Sunmonu.   The Sunmonu RAC birthed the Osun salary modulation, which the local opposition dubbed Hafsa – half salary – even if only the highest crust of civil servants and all the political appointees got half salary under that emergency scheme.

Salary modulation

Comrade Sunmonu explained how the salary modulation concept was agreed upon; and how its implementation panned out.  Only the top layer-workers and political appointees received half salary.  The lowest group of workers (from Salary Level 1-7) got their full salary.  The mid-cadre workers (Grade Level 8-12) got 75 per cent.

“It was agreed that the salaries of those on Levels 1 to 7 should not be touched.  This was because even a deduction of one naira could, for many of them, mean life or death,” Sunmonu explained.  The government accepted and implemented that recommendation.  “So if you say the government owed any money, it was not from workers within that bracket.  Also, payment to pensioners receiving N20, 000 and below was also paid in full.”   

Even then, mid-level workers whose salaries were pegged at 75 per cent (Levels 8-12), had their full salary restored after the refund of the Paris Club deductions.   Essentially, therefore, it was only the highest earning civil servants and political appointees that really earned Hafsa.   Yet, the impression out there was that everyone was earning half-salary: a situation the Aregbesola government shouted itself hoarse to debunk but which the opposition and the hostile media spread with gusto.

Still, it was a generally sad phase for everyone.  Although the workers resigned themselves to fate, it was, in Comrade Sunmonu’s words, choosing between “two evils”: either mass retrenchment or painful salary cuts, even if temporary.  The quiet but palpable fears, among the workers, were that the government would never refund the salaries, despite assurances from the Labour leaders and guarantees from the Osun government.  Still, that no one was sacked offered some relief in the generally tense atmosphere.  Comrade Sunmonu felt things could have been much worse.

“Looking back,” he insisted, “I think it was a good idea, in the sense that none of the workers lost their jobs.  If you retrench 100 workers, you probably would put 700 people in hunger – since the wives, the children and the relatives of the sacked workers would be adversely affected.  So, our committee was able to avert that.” 

Besides, the Sumonu RAC, by preventing a Labour-Government meltdown and paralysis, grabbed the attention of other states, which sent delegates to Osun to find out how the government was able to manage the situation.

“The proof of success of this thing was that several states came to Osun to learn how Osun did it to make it effective.  If the state had turned into utter chaos, and everything had been paralyzed, it would have been to the detriment of everyone.”  

That, however, was not the impression that the political opposition and the hostile media gave.  On the contrary, with the frenzied booming of “Hafsa” all over the place, it was as if some economic Armageddon had seized the state; with no means of escape or survival.  But as it turned out, even before Aregbesola left the government, the situation had become much improved, from Sunmonu’s own record and observation.

“Before Aregbesola’s tenure expired, the government was able to pay two months back- arrears of the salary modulation,” he asserted.  “Pensioners receiving N80, 000 and below per month were also restored to their full pensions, up from the initial pensioners that earned N20, 000 and below.” 

This corroborated Aregbesola’s claim that from July 2018, the salary situation was already back to normal, with no career civil servant owed any salaries.  Indeed, by BudgiT’s tracking, the distributable pool from the Federation Account had risen from N1.2 trillion in 2016 to N1.7 trillion in 2017.  So, the government also began clearing the backlog of owed salary percentages, by the modulation plans.  The only class that did not receive full refunds was political appointees, who gave up 50 per cent of their pay.  Part of the rally for regime continuation was that a succeeding APC government to Aregbesola’s would find ways and means to defray this class of workers’ benefits, more so when they had no pensions or any terminal benefits.  

But that proved a mirage.  The succeeding Oyetola government did nothing to that effect, although the Governor’s Commissioner for Finance, Bola Oyebamiji still pledged the government to defraying the salaries, if and when the revenue situation improved.   As at April 2022 – one year after Oyebamiji’s pledge – the money had still not been paid.  So, this cadre might just regard the unpaid salaries as financial scar they would bear, as painful reminder of the salary crisis.  But it probably would not be all pains.  Indeed, their hearts could throb with pride and glow with pleasure, as they also recall the stellar achievements of that administration (of which they were part), in all areas of Osun life: physical infrastructure, education, youth empowerment and general human development.

The opinions expressed in this publication are those of the author. They do not represent the opinions or views of OSUN DEFENDER.

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