Some governors are claiming that their states cannot afford to pay the minimum wage of N30,000. So, for example, The Nation on Sunday, 18th April ran with the headline “States in panic mode as revenues tumble”. The problem is that this is just not true!
All states are now receiving massively higher incomes than when the minimum wage was previously increased, especially in terms of naira. In addition, states are collecting much higher levels of their own revenue (IGR). In contrast, because of inflation, the minimum wage now buys much less than before. Finally every time the naira is devalued the government receives more naira for each dollar it receives from selling crude oil.
FAAC Allocations Increasing
In 1998 crude oil sold for less than $12 a barrel, it is now selling for more than five times as much. In 1998, the minimum wage of N3,000 was worth about $137, by 2011 the then minimum wage of N18,000 was worth only $112. N30,000 is now worth only $79.
Since 2011, when the N18,000 minimum wage was introduced, officially inflation has been 300%. Most prices are now at least three times higher than they were a decade ago. So we need a minimum wage of at least N54,000 just to be able to afford to buy the same as we could in 2011.
During 2020 the states received oil income of 93% of the amount for the previous year, despite Covid-19, and now they are getting even more. This year the monthly FAAC allocations to the states have been higher each month and this trend is expected to continue as the international price of crude oil is now back to its pre-Covid levels. The price is now well over $60 a barrel or over 50% higher than the bench-mark oil price included in the 2021 Federal budget of only $40.
Increases in Own Revenue
In 2020 the 36 states collected their own revenues (Internally Generated Revenue – IGR) of almost N1,220 billion this compares to only just over N500 billion in 2011. So over the last decade these revenues have increased by almost two and a half times. OK, because of the lockdowns associated with Covid-19, this revenue did dip slightly in 2020 compared to the previous year – by less than 2%. But these revenues have increased by nearly 250% on average over the last decade when the minimum wage increased from N18,000 to N30,000. An increase of only just over 65%.
Federal Government owed massive funds
In addition, ASCAB has shown that the Federal Government is owed massive amounts of money. Enough to fund total Federal spending for at least five years as the following table shows:
| Organisation | Explanation | Amount (N billion) |
| Government Owned Enterprises | Unremitted operating surpluses as at August 2018. Worst offender is Petroleum Products Pricing Regulatory Agency https://www.premiumtimesng.com/business/business-news/301820-cbn-pppra-other-nigerian-agencies-fail-to-remit-n10-trillion-surplus-official.html | 10, 000 |
| Asset Management Corporation of Nigeria (AMCON) | The Asset Management Corporation of Nigeria (AMCON) seeking special tribunals to try those owing it N5.4 trillion (April 2021). https://thenigerialawyer.com/n5-4tr-debt-amcon-seeks-special-tribunals-to-try-debtors/ | 5, 400 |
| International Oil Companies in Nigeria | Attorney General is seeking $62 billion from oil companies under regulations that allow the government to revisit revenue-sharing deals on petroleum sales if crude prices exceed $20 a barrel. Converted at N380 to the dollar. https://mobile.reuters.com/article/amp/idUSKBN1WP21H | 23, 560 |
| International Oil Companies in Nigeria | Nigeria is suing several major oil companies for $12.7 billion of oil allegedly exported illegally to the United States between 2011 and 2014. Converted at N380 to the dollar. https://www.arabnews.pk/node/987276/economy | 4,826 |
| Theft of funds for arms purchases | The Minister of Information and Culture, Alhaji Lai Mohammed, has disclosed that the real amount misappropriated in the arms purchase is $15 billion. https://www.thisdaylive.com/index.php/2016/05/11/real-amount-diverted-in-arms-purchase-was-15bn-says-information-minister/amp/ | 5,700 |
| Department of Petroleum Resources | Unremitted revenue of N1. 9tn in 2019. Projected total revenue of N4.3tn in 2021. https://www.vanguardngr.com/2020/08/dpr-under-fire-in-senate-over-n44-5bn-remittance-out-of-n2-4trn-generated/ | 1, 900 |
| NLNG owned by Federal Government and oil companies | In November 2020, The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) reported to the House of Representatives Public Accounts Committee that, “$21.686 billion revenue that accrued into the NLNG dividend account from 1999 to 2020”. Converted at N380 to the dollar. https://businesstraffic.com.ng/rmafc-accuses-nnpc-of-failing-to-remit-21-billion-to-federation-account/ | 8,360 |
| NNPC remittance of crude sales | The 2015/2016 audited accounts of the Nigeria National Petroleum Corporation (NNPC) shows it failed to remit N4.07trillion revenue from domestic crude oil sales. https://m.guardian.ng/business-services/nnpc-yet-to-remit-n4-07-trillion-from-2015-2016-crude-sales/amp/ Another N3.2 trillion not remitted to the Federal Government in 2014. https://mobile.reuters.com/article/amp/idUSL5N16M4TQ | 7,270 |
| 14 Nigerian banks | There is no confirmation that the 14 banks have repaid the $7bn given to them in October 2006 by the CBN. Converted at N380 to the dollar. https://www.tori.ng/amp/42602/wheres-the-7billion-placed-in-14-banks-by-soludo-b.html | 2,660 |
| TOTAL (N billion) | 69,676 |
Workers cannot afford to live
It is workers that cannot afford to do without the full minimum wage. Legally, it should have been increased every five years – unlike electricity prices that are reviewed twice a year. So after the 2011 increase there should have been further increases in 2016 and another this year. With inflation at over 10% a year and we need the minimum wage to be increased each year just to keep pace with inflation.
We need to go further and increase the real level of the minimum wage. This is needed to move away from the high levels of poverty and associated corruption and insecurity. Before the Covid-19 pandemic started, in 2019, the National Bureau of Statistics found that 40% of the population were existing below the poverty line. The lock-downs, dip in oil prices and so FAAC allocations made this much worse. Surveys by the Centre for Economic Policy Research in 2020 found that 60% of the adult population were suffering from moderate or severe food insecurity. This fantastic level of abject poverty almost certainly explains the significant rise in insecurity of various forms over the last year and more.
This is why all workers in all states need to be paid a minimum wage of at least N30,000 with another large increase this year. This would still only enable them to buy the same amount of food as they used to be able to afford a decade ago.
Any governors that say that they cannot afford to pay a paltry minimum wage of N30,000 are clearly lying. They cannot be allowed to get away with such an outrageous level of dishonesty. We need a major fight back and concerted trade union activity to reduce poverty and the associated corruption and insecurity.
