Minimum Wage: The total amount allocated for personnel costs, including salaries and allowances for state civil servants, has surged from N2.036 trillion in 2024 to N3.87 trillion in the approved 2025 budget.
Despite an initial allocation of N2.8 trillion for salaries in 2024, only N2.036 trillion was ultimately disbursed within the year, marking a shortfall of N764 billion, as revealed in the budget implementation report.
The nearly 90.23% increase in personnel costs is attributed to the implementation of the new N70,000 minimum wage and a rise in political appointments across states.
27 States Unable to Pay Salaries Without Federal Support
Minimum Wage: An alarming revelation from the 2025 budget indicates that at least 27 states will be unable to meet their payroll obligations without relying on federal allocations or borrowing. This marks an increase from 24 states in 2024.
In July 2024, President Bola Tinubu approved a hike in the minimum wage from N30,000 to N70,000, following extensive negotiations with labor unions. However, several states have been slow to implement the new wage structure, prompting the Nigerian Labour Congress (NLC) to issue an ultimatum for full compliance by December 1, 2024.
Breakdown of Personnel Cost Increases Across States
An analysis of state budgets shows that:
- 20 states experienced personnel cost increases exceeding 50%, while 16 states had a rise below this threshold.
- Cross River recorded the highest percentage increase at 202%, from N35.02bn to N106.12bn.
- Niger State saw a staggering 311.5% jump, from N25.36bn to N104.3bn.
- Lagos State topped the list in absolute figures, more than doubling from N225.1bn to N401.12bn.
Other notable increases include:
- Abia: 134% (N33.04bn to N77.34bn)
- Rivers: 105.6% (N167.05bn to N343.2bn)
- Taraba: 162% (N36.3bn to N95.23bn)
- Kano: 67.8% (N89.97bn to N150.99bn)
- Ogun: 83.9% (N75.96bn to N139.73bn)
Economic Concerns Over Rising Wage Bills
Minimum Wage: Experts warn that the rising cost of salaries and allowances could cripple state finances. Economist Muda Yusuf pointed out that many states have a bloated workforce, including ghost workers, while lacking sustainable internal revenue sources.
“The cost of governance is excessive. Many ministries have unnecessary staff who barely contribute to productivity,” he stated.
Similarly, Professor Segun Ajibola of Babcock University emphasized the need for states to boost internally generated revenue (IGR) while cutting governance costs.
Former Zenith Bank chief economist Marcel Okeke criticized governors for politically motivated appointments, saying, “Some states have hundreds of unnecessary aides, which adds to the wage burden.”
A Call for Fiscal Responsibility
Governance watchdogs have also slammed Nigerian leaders for their extravagant spending habits. Okechukwu Nwagunma, Executive Director of the Rule of Law and Accountability Advocacy Centre, accused government officials of insincerity.
“They talk about cutting costs, yet they create new ministries and appoint more aides than ever before. Meanwhile, ordinary citizens are suffering due to rising inflation and economic hardship.”
As states struggle to balance their books, experts and labor unions continue to push for reforms that ensure fair wages without plunging states deeper into financial crises.