It was originally derived from the 14th century Old French word, “prudence.” That French word, in itself also derives from the Latin word, “prudential” meaning “foresight, sagacity.”
Indeed, the word prudence is usually associated with wisdom, insight, and knowledge. Little wonder, therefore, that it was considered by the ancient Greeks and later on by Christian philosophers, most notably Thomas Aquinas, as “the cause, measure and form of all virtues.”
In other words, prudence is the mother of all virtues. It also refers to the exercise of good judgment, informed by intelligence and good character. Prudence requires the consideration of long term choices and implications of decisions, and the avoidance of biases that make us focus on instant gratification.
This, perhaps explain why, economists would describe a consumer as prudent if he or she saves more when faced with riskier future income. This additional saving is called precautionary saving.
Judging from this premise therefore, one can then logically come to the conclusion that no other word can better describe the decision of the Ogun State Governor, Senator Ibikunle Amosun, to opt for a 10-year repayment schedule for the bailout fund provided to states of the federation by the federal government.
Whereas the federal government had offered to the states a 20-year repayment schedule, Amosun, a chartered accountant and prudent manager of resources, chose to repay the bailout fund in 10 years.
Of course, that decision placed Ogun State in a class of its own. Ogun State is the only state in the federation to choose that path. If Ogun State had played along with the 20-year repayment plan, the current monthly deductions from its allocations would have been reduced by an amount in excess of N400m.
But that would have been a short-sighted decision. Governor Amosun, being prudent, knew that what was required of him is a consideration of long term choices in a manner that avoid biases that often make the average person to focus on short-term rewards while ignoring the long-term implications.
So by choosing a 10-year repayment plan, the governor is in the long run saving the good people of Ogun State over N80bn in debt service costs that would have been incurred over the period of the loan.
He is in fact not stopping there. The governor is also working very hard to ensure that he saves more for Ogun State by exercising the option of making lump sum repayments of the principal whenever the state has the capacity to do so. By so doing, Governor Amosun intends to fully repay the bailout loan before the end of his tenure of office.
“We don’t intend to leave any debt to the administration that will succeed us. Despite the apparent squeeze that this incremental repayment places on our finances in the short-term, we think it is the best decision for the people of Ogun State to have a much lower cost of debt overall, allowing financial resources to instead be directed towards the further development of our state,” the Governor said.
So, where is this confidence coming from in an era where resources are dwindling and some have started calling for a reduction of the national minimum wage?
Well, the answer again, lies in the meaning of the word prudence. “We took this decision because we are confident that the efforts we have made to date to diversify our revenue sources and strengthen our Internally Generated Revenue (IGR) base will continue to bear fruit as we proceed through our second term.
“Indeed it is the fruit of these efforts that has enabled Ogun State to continue to pay salaries and pensions as and when due, despite the notable reduction of funds from the federation account,” Governor Amosun said. This also explains why the Ogun State governor was able to pay the December 2015 salaries of all civil servants in Ogun State before Christmas Day and also paid 10 per cent bonus.
The Senator Amosun-led administration has repeatedly made it clear that it is not considering a reduction of the minimum wage or staff retrenchment as a result of the dwindling federal allocation.
And he sure has good reasons for this confidence. Even before the current economic downturn, Governor Amosun had been forward looking by embarking on efforts that led to a quantum leap in the IGR profile of the state.
Moving forward, the governor is not relenting in his administration’s drive towards further raising IGR through the provision of services to the people. Ogun State has a multi-pronged strategy to drive its revenues and cover recurrent expenditure. For instance, the Governor Amosun administration has been hugely successful in attracting major industries to Ogun State and this has had the effect of creating jobs for the people and increasing government revenues from taxes.
The governor has also repeatedly stated his administration’s resolve to make agricultural production and industrialisation, which is one of the five cardinal programmes of his administration, a major source of job creation and invariably a source of revenue for the government.
With the advantage of proximity to Lagos, the biggest market in Nigeria; being the gateway to the rest of Nigeria as well as proximity to the markets of the West African sub-region, Ogun State in fact holds the potential of seeing its revenue base grow steadily over the years.
This growth is even further guaranteed by prudent and effective management of resources which is one of the major hallmarks of the Governor Amosun-led administration.
- Soyinka, is Senior Special Assistant, Media, to Governor Amosun.
