Abia State Has About N40 Billion Outstanding Salaries, Pensions – Obinna Oriaku
Abia State Has About N40 Billion Outstanding Salaries, Pensions – Obinna Oriaku
Obinna Oriaku is a former commissioner for finance in Abia State, in this interview with Emenike Iroegbu, he gives insight on the state of things in the state, especially in the area of finance and government indebtedness.
Please note that this interview was conducted before May 29 inauguration.
How would you evaluate Abia State’s financial status as of now? Healthy or not?
Abia State financial situation is in a mess and this is not far from the financial decisions taken by the state, though most states of the federation are also in financial mess.
Considering your experience as Commissioner for Finance, do we have a finance inflow problem or management issues?
We have both issues mentioned above. The inflow you referred above could be called revenue which includes the federal allocation and internally generated revenue. We have problem of growing our IGR due to many issues but principal amongst them is leadership. Abia State has potentials of generating about N3b monthly conservatively; the management angle is another major problem. Cost of governance is very high. If you go to our financials in 2020, about N1.7b was spent on ticketing and travels which averages about N150m monthly.
Comparatively, in same 2020, Ebonyi state spent only N135m on ticketing and travels. You don’t need to go far to know why Ebonyi State did well during the period under review. Leadership is also key in financial management hence they say that “fish rots from the head.” These can be likened to controllable expense in accounting.
As a Finance Chief of the state during your tenure, what measures did you apply to help resolve Abia State financial issues?
We were greeted with the first recession and Okonjo Iweala even warned about the economic outlook of the then outgoing government; Abia got an all-time low of N1.8b in the month of September 2016 as FAAC and JAAC of N1.6b, it was a very turbulent period. We introduced a lot of reforms geared towards repositioning the state. These reforms include: Civil service reform. Judiciary reform, Parastatals reforms (Health Management Board, Abia State Polytechnic, Aba, Abia State University Teaching Hospital, Aba, Abia State College of Education Technical, Arochukwu, School of Health Aba, Abia State University, Uturu etc.) – Salary and pension reform, Local Government reform and IGR reform amongst others. Many of these reform documents are still in the shelves unimplemented.
However, on assumption, I started by practicing what we preached then which was “sacrificial leadership” we reduced the cost of most overhead though most people never loved us for such decisions. We reduced overhead to Secretary to the office of State Government (SSG) from N14m to N7m, Exco allowance for Commissioners from N1million down to N500,000. We reduced what was being paid to Local Government Service Commission from about 20m to N6m etc. I personally reduced the cost of going to Abuja for FAAC meeting from N1.6 million down to N500,000 though it was jacked back to N1.6m when I left office. Maybe I was most stupid from what I later discovered.
We made savings in automation and centralisation of salary payment for the MDAs. Parastatals as HMB, BCA, and ABSUTH were included in the centralized payment model for proper management. This brought savings of over N300 Million monthly from what was the general wage bill before Okezie’s administration. We also centralized and automated the pension payment system and closed the 19 sub- treasuries that served as conduit for fraud on payment of pensioners which was manually done as they were paid cash prior to June 2015.
All these hard decisions assisted the young administration in solving most of the problems we met but not without a push back. The bailout assisted too as the application was adjudged among the best in the federation. The state won award from Governor’s forum on this project.
That is why first tenure of Dr Okezie administration 2015 / 2019 is referred as the glorious era of his entire administration especially when Late Chijioke Nwakodo was around.
Can you estimate how much Abia State Government owes workers?
The last gratuity of N100 Million was paid while I was serving as Commissioner and the last set of retirees that have been paid gratuity are those that left service in 2003. We have about N46 Billion outstanding in gratuity as of September 2022; I’m sure it has further increased since workers retire almost every month. We still need to investigate the claims as some of the gratuity documents were being recycled by some civil servants.
The outstanding wage bill of workers and pensions as of April 2023 is about N40 billion. These figures are scary but like Okonjo Iweala said “I don’t envy anybody entering government now” and it’s very challenging and demanding.
It has been done in other locations and can also be done here in Abia. What is required is focus and leadership. Like I said, these figures must be investigated as most civil servants have travelled outside the country. The government will start with those here and are willing to work while those outside the country or that changed jobs will also be paid with another arrangement.
How do you think this new government can resolve this unpaid wage bill brouhaha?
The outstanding wage issue is very challenging. Dr Alex Otti said he is determined to clear the backlog of salaries and pensions; a lot will be deployed to achieve this. The administration will deploy cost cutting measures in all spheres, the pension and wage bill data will also need to be reviewed, the IGR must be overhauled immediately and the government must engage the workers in transparent manner. I am convinced that workers will appreciate any effort geared towards clearing the arrears of salaries and pension
The government will demonstrate that ability, and I don’t have any doubt about Dr Alex’s ability to cut off those frivolities and unnecessary cost that have defined successive administrations. The major expense head used to be Government House overhead and I believe he has seen it all before coming to governance. Dr Alex Otti can effectively work on cost reduction being former MD of a bank; he knows what and how to go about it.
How can Abia State Government increase her IGR?
The IGR can be improved by developing the political will to restructure the Board of Internal Revenue like other states have done. We have many who don’t understand what the times are and they are still with that agency. The IGR of the state can never be used as political patronage for the boys, every 1 Naira counts. Abians are not usually willing to pay tax but with the re-orientation agency fully engaged in changing the mind set of our people about government business, I’m sure we will see growth in that area but a lot needs to be done.
Mass mobilization of the critical mass of the informal sector and automation are key today in the industry and current automation should be reviewed for effectiveness and efficiency.
Which of the reforms do you cherish most, especially as you left government in 2019 and did not see through most of these reforms you highlighted?
Disarticulation of JSS 1 to 3 from Abia State Government and handing them back to the local government administration.
As Commissioner for finance payment of teachers was a huge problem considering our receipt as allocation that period. We needed about N490m to pay teachers in a month during that time.
I later discovered that Abia State did not domesticate the UBEC Act fully as Abia State local governments were supposed to administer and manage the JSS 1 to 3 as done by other states of the federation.
A committee headed by the current chairman of ASUBEB reviewed the process that saw to the transfer of management and teachers of JSS 1 to 3 back to the Abia State local government system.
This resulted in the transfer of wage bill of JSS 1 to 3 teachers amounting to about N280m back to the local government management system. I get excited when I hear how primary school teachers and those in JSS 1 to 3 are being paid regularly compared to their secondary school counterpart; SSS1 to SSS3 after the reform implementation. These are the benefits of reforms as it provides solutions to some of the hydra headed problems of most institutions in the state.