FG spent N9.39tn on wage hike, allowances in 31 months — Oyedele

The Nigerian Federal Government allocated N9.39 trillion to minimum wage hikes, salary adjustments, and other allowances for public workers from June 2023 to December 2025, according to the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele. This substantial spending on wages surpassed the Federal Government's portion of savings derived from the removal of the petrol subsidy within the same 31-month timeframe.

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That money did not sit idle. It partly funded incremental expenses. For that same period, the incremental expenses of the Federal Government alone, not the Federation, was N30.64tn. Of these, N9.39tn went to wage adjustments, minimum wage increases, and allowances for public salaries.

Oyedele revealed these figures during a media conference on Nigeria's reform scorecard, explaining that the government generated N20.4 trillion in incremental resources from subsidy savings, increased independent revenue, and additional borrowing. However, he noted that these funds were largely directed towards meeting rising government obligations. The N9.39 trillion spent on wage adjustments represents the largest single expenditure item, exceeding the N5.4 trillion the Federal Government received as its share from the N15.8 trillion mobilized through subsidy removal and foreign exchange reforms.

This disclosure provides clarity on the allocation of funds following the petrol subsidy removal in May 2023. Oyedele emphasized that the money did not remain idle, partly funding incremental expenses. He pointed out that the Federal Government's incremental expenses alone amounted to N30.64 trillion during the period, with wage adjustments constituting a significant portion. The minister also highlighted that N9.37 trillion was spent on servicing external debt, largely due to the naira's depreciation which increased the cost of dollar-denominated obligations in local currency.

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I think this is a point that should be of interest to everyone. The incremental amount that the Federal Government spends paying higher wages is more than the entire savings that the Federal Government earned from subsidy removal.

The figures underscore the financial pressures on the government and come at a time when fresh negotiations for a new minimum wage are anticipated with the Nigeria Labour Congress next year. The substantial expenditure on public sector wages, exceeding subsidy savings, offers a new perspective on the government's fiscal priorities and the challenges of managing national finances amidst economic reforms.

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So, if we’re paying 1bn, but instead of N460, it’s now N1,415. That’s more naira than we need to incur. When you have debt service to pay, you don’t negotiate, you don’t delay, you pay, because delay or default has consequences.