There should be no room for evasion by any tier of government now that President Bola Tinubu has enacted the new minimum wage law. The payment of the newly established N70,000 minimum wage was supposed to commence in April, following the expiration of the previous N30,000 minimum wage signed into law by Muhammadu Buhari in 2019.
Although wages in Nigeria are notoriously low, addressing this issue is complex. During the 2010 negotiations to raise the minimum wage from N12,000 to N18,000, governors argued that they could not afford it. Eventually, they persuaded President Goodluck Jonathan to draw from the Excess Crude Account before agreeing to the increase.
Many states still insist they cannot afford the new wage without facing bankruptcy. However, with the removal of petrol subsidies in May 2023, all three tiers of government now have more financial resources.
According to a report by the Nigeria Governors’ Forum, a 50 percent wage increase would bankrupt 13 states. Data Services and Resources analysts also identified several states as incapable of sustaining a new minimum wage.
The Nigeria Labour Congress reported that 15 states have yet to implement the N30,000 minimum wage of 2019, which is astonishing.
In fact, to meet the N30,000 payment, the Federal Government had to resort to borrowing. The private sector, meanwhile, faces challenges from multiple taxes, high energy costs, and poor infrastructure.
For state governments, it’s time to match their spending with their financial reality. Public officials often display wealth, giving the impression of abundant resources.
Between 2021 and 2023, despite spending at least N21.04 billion on overseas trips, 14 state governments failed to attract any foreign investments. These states saw none of the $14.85 billion in foreign investments that flowed into Nigeria between 2021 and the third quarter of 2023.
Governors are spending money their states don’t have, creating debt for future generations. This systemic problem is fueled by reliance on Federal Accounts Allocation Committee funds, making governors complacent about generating revenue.
In contrast, California, USA, had a GDP of $3.6 trillion in 2022, making it the fifth-largest economy in the world.
In the Second Republic, the late Adekunle Ajasin of the old Ondo State only traveled abroad once, to Sierra Leone. The late Lateef Jakande managed to stay in his own house as governor of Lagos, developing major infrastructure and housing estates that still stand. Bisi Akande, although mocked for his frugality, laid a strong foundation for Osun’s development.
Thus, there must be accountability at the state level. Instead of funding non-viable projects like airports and other white elephants, governors should reduce the cost of governance, address insecurity, and eliminate the excessive pensions paid to former governors. Legislators, who are complicit in this issue, must hold governors accountable.
States should invest in human capital and infrastructure, explore their internal resources, and focus on agriculture and tourism to generate income. The electorate must be empowered to hold wasteful governors accountable during elections.
Nigeria is rich in 44 identified mineral types spread across the 36 states and the Federal Capital Territory. These include gold, bitumen, limestone, iron ore, coal, columbite, and gemstones. Kogi, for example, has a wide variety of minerals.
According to the Ministry of Mines and Steel Development, Nigeria’s bitumen deposits are the second largest in the world, mostly found in Ondo, followed by Lagos, Ogun, and Edo states, with 42.47 billion tonnes in proven reserves.
States should harness these minerals to generate income.
When states can generate sufficient revenue, the issues surrounding the payment of minimum wage will be resolved.
