Nigeria’s concerning rising debt amid minimum wage crisis
The Nigeria’s public debt stock which includes external and domestic debt stood at N121.67 trillion ($91.46 billion) in Q1, 2024, rising from N97.34 trillion ($108.23 billion) in Q4 2023, indicating a growth rate of 24.99 percent on a quarter-on-quarter basis.
Figures by the National Bureau of Statistics(NBS) on Monday said total external debt stood at N56.02 trillion (US$42.12 billion) in Q1 2024, while total domestic debt was N65.65 trillion (US$49.35 billion).
The figure by the NBS came on the heels of the disclosure last week by the Debt Management Office (DMO) that Nigeria’s total public debt has reached N121.67tn, increasing by N24.33tn or 24.99 per cent within three months.
In its publication titled “Nigerian Domestic & Foreign Debt Q1 2024,” the NBS said, “The share of external debt (in naira value) to total public debt was 46.05 percent in Q1 2024, while the share of domestic debt (in naira value) to total public debt was 53.95 percent.”
According to the NBS figures, “Lagos state recorded the highest domestic debt in Q1 2024 with N929.41 billion, followed by Delta with N334.90 billion while Jigawa state recorded the lowest domestic debt with N2.07 billion, followed by Ondo with N16.40 billion.”
The outcome of the Federal Executive Council Meeting led by President Tinubu pertaining to the issue of new Minimum Wage Memo is a setback to the scramble by the Organised labour Unions. The President has decided to step down consideration and deliberation on the memo on the new minimum wage to allow President Bola Tinubu engage in more consultation with stakeholders.
The Minister of Information and National Orientation, Mohammed Idris, disclosed this on Tuesday while briefing State House correspondents emphasising that the President has studied the report submitted by the Tripartite Committee on Minimum Wage and would consult further before a final submission on a new national minimum wage to the National Assembly.
President Bola Tinubu in January set up a Tripartite Committee to negotiate a new minimum wage for workers. The committee comprises the Organised Labour, representatives of federal and state governments as well as the Organised Private Sector.
However, the committee members failed to reach an agreement on a new realistic minimum wage for workers, forcing labour to declare an indefinite industrial action on Monday, June 3, 2024. Businesses were paralysed as labour shut down airports, hospitals, national grid, banks, National Assembly and state assemblies’ complexes. The labour unions said the current minimum wage of N30,000 can no longer cater to the wellbeing of an average Nigerian worker, saying government should offer workers something economically realistic in tandem with current inflationary pressures, attendant effects of the twin policies of petrol subsidy removal and unification of the forex windows of the current administration.
Labour ‘relaxed’ its strike on June 4, 2024 following assurances from the President that he was committed to a wage above N60,000.Both the Trade Union Congress (TUC) and Nigeria Labour Congress (NLC) leadership subsequently resumed talks with the representatives of the Federal Government, states, and the Organised Private Sector.
There is no agreement thus far on a new national minimum wage, barely a month after a Tripartite Committee set up for it began to deliberate seriously on the matter. It raises a spectre of uncertainty. This is further worsened by the governors’ rejection of the Federal Government’s N62,000 offer, amid the 7 June meeting of the committee with organised labour, which was deadlocked, yet again.
Such dissonance is undoubtedly unsettling. It is also distressing that the authorities in Abuja have remained silent over it. An insipid assurance by President Bola Tinubu that an executive bill will be forwarded to the National Assembly on the new national minimum wage without a consensual amount, does not soothe the nerves of either the organised labour or the governors. From its high horse, labour finally came down to N250,000 from its original N615,000 demand. On the contrary, the Federal Government had moved from N48,000 to N54,000, then N58,000, and later N60,000, until it tacked at N62,000.
The argument of the governors is that even N60,000 as a minimum wage is not sustainable and therefore will not fly, citing the lean financial resources of their states, competing demands and the indebtedness of many of them.
“It will simply mean that many states will spend all their allocations on just paying salaries, with nothing left for development purposes,” the NGF emphasised in its media statement. Some have argued that if a wage figure is forced on states, over 40 per cent of the workforce in many of them will be laid off.
One of the governors, Chukwuma Soludo, a former governor of Central Bank of Nigeria (CBN), who has a full grasp of the issues involved, in a subtle dissent at a recent public forum, said he pitied the President if he approved a minimum wage that was not sustainable. When the consequences begin to cascade, he stressed, “it will all be on his head.” Clearly, some states in the country still struggle to pay the two previous national minimum wages of N18,000 and N30,000.
These leakages and misplacement of fiscal priorities, typified in the recently inaugurated N21 billion official quarters of the Vice-President, amidst mass hunger and poverty in the land; the $12 billion official admission of annual loss of solid minerals revenue to rogue operators; and the ostentatious lifestyle of public officials, if not addressed will conflate with inflation to erode whatever gains workers might benefit from the wage review. President Tinubu has spent a year in office without the refineries and Compressed Natural Gas (CNG) buses functioning, as he had promised. There is a limit to propaganda as a tool of governance. Getting these facilities to work will add value to the minimum wage and reduce suffering in the land.
The state governments can lessen their financial burdens by aggressively weaning their payrolls of ghost workers. Dealing with a bloated workforce to remove personnel without any work schedule, office space or tables is inevitable now. It is unthinkable that in one of the South-west states, a commissioner recently appointed 273 advisers. Some governors have about 1,000 aides – an overreach in impudence, which the administrations of Ben Ayade and Isah Yuguda of Cross River and Bauchi states, respectively, were notorious for.
An overhaul of the internally generated revenue mechanism is crucial in the emergent fiscal regime with the new minimum wage, to ramp up the revenue base. Many of the states have suspect revenue accounting or returns systems that undermine their treasuries, which should not be condoned. If all the states can increase their IGR by 100 per cent the way Governor Siminalayi Fubara of Rivers State has done, under one year in office, from N13 billion monthly to N27 billion, it would boost their fiscal profiles and mitigate the challenges to be posed by an enlarged payroll. Other Governors must also wake from their slumber considering the fact most of the states are blessed with mineral resources that can cater for the needs of the people.
It is very critical that the Federal Government proffers lasting solutions by pencilling down a reality minimum wage for the workers and introduce incentives, palliatives that will capture the informal sectors as a means of cushioning the suffering by Nigerians.
