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Capital projects crumble as states cut spending

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Procurement delays, worsening insecurity, and rising costs of goods and services have emerged as major reasons several state governments failed to meet their capital expenditure targets in the first six months of 2025.

Findings from states’ second-quarter Budget Implementation Reports revealed that capital spending across many states remained significantly below expectations, despite ambitious budgetary provisions designed to accelerate infrastructure growth.

A fresh breakdown of state government expenditure between January and June 2025 showed that 31 states collectively disbursed N2.75tn for capital projects.

However, this figure represents only a fraction of the N17.51tn they had budgeted for capital expenditure in the 2025 fiscal year.

The budget performance of those figures is about 15.7 per cent, meaning the 31 states achieved less than one-fifth of their capital expenditure target in the first half of 2025.

The underperformance has delayed critical infrastructure projects and deepened hardship for citizens who rely on improved roads, schools, hospitals, and water systems.

This is also coming on the heels of the fact that the states earmarked N11.34tn to finance capital projects but eventually recorded a funding gap of N3.98tn in 2024, as revenue shortfalls, rising wage bills, and heavy debt servicing weakened their fiscal capacity.

This year’s half-year performance suggests that the same structural challenges remain unresolved.

According to experts, capital spending is the fund disbursed by the state on long-term investments aimed at improving infrastructure, services, or the economy.

These expenditures are typically used for projects that have a lasting benefit, such as building roads, bridges, schools, hospitals, public transport systems, and other essential infrastructure to foster economic growth, improve quality of life, and ensure better public services for citizens.

The clamour for improved infrastructure has grown louder in the aftermath of the fuel subsidy removal and foreign exchange devaluation, which have significantly boosted revenue inflows to the federal, state, and local governments, raising public expectations for visible development outcomes.

Last month, President Bola Tinubu urged state governors to prioritise Nigerians’ welfare by investing more in their future, putting more money into rural electrification, agricultural mechanisation, poverty eradication, and improved infrastructure investment.

Tinubu implored the governors to do more to positively impact the lives of Nigerians in the grassroots, saying, “I want to appeal to you; let us change the story of our people in the rural areas.

“The economy is working. We are on the path of recovery, but we need to stimulate growth in the rural areas. We know the situation in the rural areas, let us collaborate and do what will benefit the people,” he added.

President Tinubu urged state governors to collaborate with the Federal Government to drive economic development in rural areas nationwide. “We have to embrace mechanisation in agriculture, fight insecurity, and improve school enrolment through feeding,” the President said.

Despite the revenue windfall, many states have failed to meet their mandate of delivering key infrastructure for citizens, with governors attributing the shortfall to persistent insecurity, cumbersome procurement processes, and other long-standing challenges.

An analysis of the fiscal performance of each state, utilising data from the Q1 to Q2 budget performance reports obtained from each state’s website, revealed the scale of the challenges.

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The breakdown showed sharp contrasts in budget performance across the country, with 31 states collectively spending N2.75tn on capital projects and N2.35tn on recurrent expenditure between January and June 2025.

An analysis of states’ second-quarter Budget Implementation Reports revealed that while some states channelled the bulk of their resources into infrastructure and development projects, others leaned heavily on recurrent costs such as salaries, allowances, and overheads.

Enugu State recorded the highest capital-to-recurrent ratio, with 81.9 per cent of its total expenditure (N99.59bn) going into capital projects, compared to N22.06bn for recuThe 27.1 per cent performance is indeed), Bayelsa (69 per cent), and Kebbi (68 per cent) followed closely, ranking among the most capital-focused states in the first half of the year.

Imo State led the pack on infrastructure development with N188.1bn channelled into capital expenditure, compared to just N50.29bn on recurrent. Enugu followed closely, committing N99.59bn to capital projects against N22.06bn for recurrent, making it the most capital-focused state in terms of percentage allocation.

Bayelsa also posted a strong capital bias, spending N238.29bn on capital against N107.26bn recurrent, while Abia disbursed N133.1bn on capital compared to N39.73bn recurrent. Edo and Akwa Ibom both crossed the N170bn mark in capital expenditure, allocating N179.56bn and N179.76bn respectively.

Other states that leaned more towards capital included Borno (N92.99bn vs N61.59bn recurrent), Gombe (N93.99bn vs N52.25bn), Jigawa (N82.99bn vs N56.63bn), Kebbi (N78.86bn vs N36.81bn) and Zamfara (N51.1bn vs N37.57bn).

At the other extreme, several states recorded higher recurrent spending than capital, raising concerns about long-term development priorities. Kogi was the most recurrent-heavy, spending N133.22bn on recurrent compared to N73.16bn on capital.

Ekiti followed, with N101.1bn on recurrent against N56.1bn capital, while Osun allocated N89.37bn to recurrent and only N57.13bn to capital. Oyo also tilted towards consumption, disbursing N129.06bn recurrent against N110.64bn for capital projects.

Ogun balanced closely, spending N157.15bn on recurrent and N155.64bn on capital. Similarly, Bauchi (N97.29bn recurrent vs N91.69bn capital), Kano (N115.24bn recurrent vs N90.79bn capital), Kwara (N71.59bn recurrent vs N62.68bn capital), Nasarawa (N68.3bn recurrent vs N48.49bn capital), Ondo (N84.37bn recurrent vs N61.88bn capital), Sokoto (N72.18bn recurrent vs N69.01bn capital) and Taraba (N57.88bn recurrent vs N24.17bn capital) all leaned more towards recurrent expenditure.

A few states maintained near parity between the two categories. Kaduna disbursed N108.45bn on capital and N100.31bn recurrent, while Ebonyi’s spending was almost evenly split at N36.89bn capital and N38.38bn recurrent.

The overall capital share of 53.9 per cent across the 31 states indicates that subnationals are still devoting nearly half of their budgets to recurrent obligations, despite revenue windfalls from subsidy removal and foreign exchange reforms.

The poor performance has tangible effects. In Benue, where only N23.32bn was spent on capital projects compared to N44.5bn on recurrent, key roads and agricultural projects have stalled due to insecurity. Similarly, Cross River allocated just N30.53bn for capital against N84.8bn for recurrent, limiting its capacity to address infrastructural deficits in education and healthcare.

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Commenting on this, Governor Hyacinth Alia of Benue State blamed the state’s poor performance on widespread insecurity.

“The poor recorded performance is largely due to the overwhelming insecurity challenges faced by the state during this reporting period,” the budget report said.

In June, no fewer than 200 people were killed when gunmen attacked Yelwata community in Guma Local Government Area of Benue State.

Although the state raised its 2025 capital budget by over N100bn to stimulate “aggressive urban and rural infrastructural development,” authorities admitted that implementation, particularly in the second quarter, “was significantly slowed down” as contractors were unable to mobilise.

Jigawa State also struggled, with officials describing capital performance as “below average.”

According to the report, “Procurement plans of most capital-intensive projects of most MDAs primarily target beyond the first quarter, which are to ensure providing adequate time to deal with all the necessary contract procedures. During the second quarter, many of these projects entered the implementation phase, with several undergoing tender approvals and vetting processes.”

The government, however, expressed optimism that performance “will improve significantly by the third quarter.”

Imo State reported capital expenditure performance of just 27.1 per cent as against the expected 50 per cent by mid-year.

“The 27.1 per cent performance is indeed much less than expected, however capital expenditure does not strictly follow that format of equally splitting the total amount across the four quarters,” the government said.

It cited recent funding gap analysis in primary education and health that slowed releases, coupled with insurgency in parts of the state.

“The current spate of insurgency in and around the state has also affected the mobilisation of contractors whose procurement processes have been completed to commence work,” the report noted.

Borno State attributed its weak capital performance to “low capital inflows from budgeted sources and other peculiarities of the state.”

The government disclosed that an amendment was made in the revised 2025 budget “to cater for overspending on both recurrent and capital expenditure in Q1 and Q2.”

In Ebonyi, officials said capital budget utilisation stood at just 11.3 per cent.

“The relatively low performance is primarily attributed to the budget profiling approach, which scheduled the implementation of several large-scale capital projects for the third quarter and beyond,” the report stated.

Authorities added that some expenditures in health and education were not captured in the approved budget.

“To address these issues, the state plans to undertake a budget review in the third quarter to incorporate these expenditures and realign budget provisions to support timely and efficient project execution,” the report added.

In Sokoto State, capital performance stood at 19.7 per cent as of Q2, which government admitted was “below expectations.”

“This is largely due to the procurement process attached to capital projects that takes time as well as slow performance on the part of some contractors,” the budget report said.

They added that the government had set up a Projects Monitoring Committee “to change the trend in subsequent quarters.”

Yobe blamed delays in approvals and soaring costs for its underwhelming execution.

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“Delays in the commencement of certain key projects, particularly those that required memo approvals, were primarily due to bureaucratic bottlenecks,” the report stated.

The government, however, noted progress in road, market and flyover projects, but said external factors hurt delivery timelines.

“The rainy season and the general rising costs of goods and services significantly impacted the timelines for project execution,” it said.

Governor Abdullahi Sule of Nasarawa State pointed to front-loading difficulties typical of large infrastructure projects.

“This slow pace reflects the challenge common in infrastructure projects, where initial disbursements are slower as project planning, procurement, and mobilisation processes are finalised,” the government explained.

It admitted overspending in certain areas such as “purchase of motor vehicles, rehabilitation of equipment, and anniversaries/celebrations,” but pledged to correct this in its budget review.

Zamfara said its low capital performance was mainly because “many capital projects were still undergoing procurement processes.”

“Payments for mobilisations commenced in the second quarter, while disbursements for ongoing projects will mainly occur in the third quarter after achieving significant milestones,” the government noted.

In Kebbi State, officials blamed the decline in capital spending on the “gradual re-evaluation of all capital projects to ensure proper procurement practices are followed.”

The government also prioritised the payment of outstanding contract arrears.

“The State Government continues to prioritise major infrastructural projects while ensuring a keen focus on education, health and other social sectors,” the report said, adding that MDAs have been urged to “intensify fund requests for completion of projects.”

Adamawa reported capital expenditure of N52.4bn out of a N348.9bn allocation, representing just 15 per cent performance.

“While this performance may appear low, the state is making efforts to improve investment in long-term projects,” the government explained.

Across the board, state governments blamed insecurity, procurement delays, bureaucracy, weak capital inflows, and high project costs for their poor performance. While most expressed optimism that execution will improve in the third quarter, analysts warn that persistent underperformance in capital expenditure could stall infrastructure delivery and economic growth at the subnational level.

A Professor of Economics at Babcock University, Segun Ajibola, stated that the enduring problem of high governance expenses had persisted at the state level, with inadequate oversight and accountability resulting in minimal economic benefits for grassroots citizens.

Meanwhile, Nigeria’s 31 states spent a combined N2.36tn on recurrent expenditure between January and June 2025, surpassing by 18.3 per cent or N364bn, the N1.994tn governors personally racked up on refreshments, sitting allowances, travel and utilities in the first nine months of 2024.

A breakdown of the states’ recurrent bills, obtained from official budget performance reports, shows that Ogun (N157.15bn), Kogi (N133.22bn), Oyo (N129.06bn), Kano (N115.24bn) and Akwa Ibom (N113.44bn) topped the chart as the biggest recurrent spenders in the first half of this year.

On the other hand, Enugu (N22.06bn), Katsina (N26.39bn), Zamfara (N37.57bn), Ebonyi (N38.38bn) and Abia (N39.73bn) reported the lowest recurrent allocations in the period.

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Nigerians spend N50bn on US visa applications

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Nigerians spent more than N50bn on US visa applications between 2023 and 2024, despite a sharp decline in approvals as Washington tightened immigration controls and increased scrutiny of applicants.

An analysis of the Intelpoint report, using data from the US Department of State, shows that 201,200 non-immigrant visas were issued to Nigerians between 2023 and 2024. At a standard application fee of $185 per applicant, Nigerians spent approximately $37.2m, equivalent to N50.7bn at an average exchange rate of N1,360 to the dollar.

Visa issuances declined by about 23 per cent, falling to 87,300 in 2024 from 113,900 in 2023, a reduction of 26,600 visas. The PUNCH could not obtain comparable figures for 2025 at the time of reporting.

Business and tourism travel dominated approvals in 2024, with B1/B2 visas accounting for 83 per cent of total issuances, while student visas (F1) represented about seven per cent. Exchange visitor visas (J1) and other temporary categories made up the remainder.

Africa’s most populous nation remained a significant source market for the United States, accounting for about 0.8 per cent of global non-immigrant visa issuances in 2024, the data showed.

Former President of the National Association of Nigeria Travel Agencies, Susan Akporiaye, said Nigerians’ travel behaviour is driven by more than economic conditions, noting a strong cultural inclination toward mobility.

“People would say it’s because of the economy, but I share a different view. Nigerians are generally migrants; they love travelling.

We are like the Chinese of Africa,” Akporiaye told The PUNCH.

The executive argued that most Nigerians who travel abroad return home, and only a small proportion remain outside the country permanently. “There is so much noise of Nigerians staying back. The ones who travel and return are far more than those who stay back. It’s not up to 10 per cent that don’t return,” she stated.

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The decline in visa issuances comes amid a series of policy changes introduced after Donald Trump returned to the White House in January 2025, which have gradually tightened requirements for Nigerian applicants.

In July 2025, the US Department of State announced that most non-immigrant and non-diplomatic visas issued to Nigerian citizens would be restricted to single-entry permits valid for three months, with existing visas unaffected.

In August, applicants were required to disclose all social media usernames used over the previous five years on DS-160 forms, with officials warning that omissions could lead to visa denial or ineligibility.

Akporiaye also noted that travel demand cuts across income levels, from affluent individuals to ordinary citizens travelling for social events. “Nigerians like to explore. We travel for birthdays, weddings, and other ceremonies. I’m not talking about people like Dangote or Otedola, but ordinary Nigerians you don’t even know,” she said.

The expert, however, acknowledged that demand for US travel has softened relative to other destinations, citing operational and policy-related constraints.

“The demand has reduced for some destinations like the US, and it’s becoming worse now. Conditional requirements and operational changes at the US Embassy in Abuja have made access more difficult, including the consolidation of services in Lagos,” she stated.

“There are stories about visas being cancelled or Nigerians getting deported, and that makes people a bit sceptical. But other destinations are still booming.”

Further tightening followed in December 2025, when the US Mission in Nigeria said Washington expanded travel restrictions to include partial limitations on Nigeria and five other countries, effective January 1, 2026.

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An executive at Travel and Tours Limited, Maureen Chimaobi, said securing a US visa has become increasingly difficult over the past year, with many first-time applicants facing steep odds despite completing all required procedures.

“Last year, getting a US visa drastically reduced, especially if you are a first-time traveller or first-time applicant. It’s almost a no-go area,” Chimaobi told our correspondent.

She noted that applicants continue to pay visa fees, schedule appointments and attend interviews, but approvals have become far less predictable. “You pay your visa fee, book your appointment and go for submission. Most of the time, they don’t give it,” the agent said.

The trend reflects growing concerns among travel operators about declining approval rates for Nigerian applicants, even as demand for overseas travel remains strong. Chimaobi said rejection levels have remained high throughout the period under review, particularly for individuals with limited international travel history.

The tougher environment is also influencing destination choices. More Nigerians are turning to countries where visa approvals are perceived to be more attainable, provided applicants can demonstrate sufficient financial capacity and present strong documentation.

“I think most countries still offer a 70 to 80 per cent chance of getting a visa, depending on the quality of your documents and your financial status,” Chimaobi revealed.

She identified the United Kingdom as one of the destinations with relatively stronger approval prospects, although she cautioned that British authorities have also hardened their assessment processes in recent months.

France and other countries within the Schengen area, once considered more accessible to Nigerian travellers, have become increasingly selective, especially toward first-time applicants, she added.

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“Before now, France used to issue visas more easily, but most Schengen countries have become difficult over time, particularly for first-time travellers,” Chimaobi said.

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Petrol imports crash by N2tn to N87bn; see why

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Nigeria’s spending on the importation of Premium Motor Spirit, popularly known as petrol, plunged by over 96 per cent in the first quarter of 2026, marking a dramatic shift in the country’s fuel supply landscape and signaling the growing impact of local refining capacity.

Latest foreign trade statistics released by the National Bureau of Statistics on Monday showed that only N87.401bn was spent on the importation of Motor Spirit Ordinary, the official trade classification for petrol, between January and March 2026.

The figure represents a sharp decline of N2.184tn, or 96.15 per cent, compared to the N2.271tn spent on petrol imports during the corresponding period of 2025. The development is particularly significant as petrol, which had consistently ranked among Nigeria’s most imported commodities for years, was completely absent from the list of the country’s top traded products in the first quarter of 2026.

An analysis of the NBS data by our correspondent showed that petrol did not feature among the top 19 traded products with the rest of the world, Africa, or West Africa during the review period.

Instead, the leading traded products included crude petroleum oils and oils obtained from bituminous minerals, gas oil, durum wheat, machines for reception, conversion and transmission of data, used vehicles, motorcycles, agricultural seeders, medicaments, aircraft parts, butanes, petroleum bitumen, sugar cane, herbicides and fuel additives.

The report read, “The value of total imports stood at N13,619.33bn in the first quarter of 2026, representing a 18.17 per cent decrease from the value recorded in the corresponding quarter of 2025 (N16,644.42bn) and a 21.05 per cent decrease compared to the value recorded in Q4 2025 (N17,250.93bn).

“Analysis of Nigeria’s import trade reveals that China remained the leading source of imports in the first quarter of 2026, followed by the United States of America, India, Germany, and the United Arab Emirates. The most imported commodities during the quarter were petroleum oils and oils obtained from bituminous minerals (crude), gas oil, durum wheat, machines for the reception, conversion, and transmission of voice, images, or data, and used vehicles with diesel or semi-diesel engines.

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“The value of other oil products imported in Q1 2026 stood at N748.10bn, reflecting an 85.05 per cent decrease from N5,005.22bn in Q1 2025 and an 81.38 per cent decrease from N4,018.31bn recorded in Q4 2025.”

The latest import figure is also the lowest quarterly amount spent on petrol imports since at least 2022, according to available trade records reviewed by our correspondent.

Data from previous years showed that Nigeria spent N2.694tn on petrol imports in the first quarter of 2022. The import bill declined by N661bn, or 24.5 per cent, to N2.033tn in the corresponding period of 2023.

However, petrol import spending surged by N1.780tn in 2024 to N3.813tn, representing an increase of 87.6 per cent year-on-year. The figure later dropped by N1.542tn, or 40.4 per cent, to N2.271tn in the first quarter of 2025 before plunging by a massive N2.184tn, or 96.15 per cent, to N87.401bn in the first quarter of 2026.

The latest figure means that for every N100 spent on petrol imports in the first quarter of 2025, only about N4 was spent during the same period in 2026. The NBS data also highlighted the changing structure of Nigeria’s petrol import trade profile over the years.

According to the report, the total trade value involving the petroleum product stood at N7.705tn in 2022. This declined marginally by N194bn, or 2.5 per cent, to N7.511tn in 2023.

Trade value, however, more than doubled in 2024, rising by N7.907tn, or 105.3 per cent, to N15.418tn, the highest level during the period under review. The figure subsequently fell by N5.045tn, or 32.7 per cent, to N10.373tn in 2025, reflecting changing trade dynamics in Nigeria’s downstream petroleum sector.

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The PUNCH reports that the sharp reduction in petrol imports reflects the increasing contribution of domestic refining facilities to fuel supply, reducing Nigeria’s dependence on foreign suppliers and helping conserve foreign exchange.

For decades, Nigeria relied heavily on imported petrol despite being Africa’s largest crude oil producer, owing largely to the poor performance of state-owned refineries and inadequate domestic refining capacity.

The trend began to change following investments in local refining and the gradual increase in output from domestic refineries, which have reduced the need for large-scale fuel imports.

The sharp decline in petrol imports in the first quarter of 2026 comes amid growing domestic refining capacity, particularly from the operations of the Dangote Petroleum Refinery, which began supplying petrol to the Nigerian market in 2024.

For decades, Nigeria relied heavily on imported Premium Motor Spirit despite being Africa’s largest crude oil producer. The country’s state-owned refineries operated far below capacity for years, forcing marketers and the Nigerian National Petroleum Company to spend trillions of naira annually importing fuel to meet domestic demand.

The commissioning of the 650,000 barrels-per-day refinery in Lekki, Lagos, marked a turning point in the downstream petroleum sector. Since commencing petrol production, the refinery has steadily increased output, supplying marketers, industrial users and fuel distributors across the country.

In January, the Nigerian Midstream Downstream Petroleum Regulatory Authority reported that Dangote refinery supplied an average of 40.1 million litres of petrol daily, accounting for 61.78 per cent of Nigeria’s petrol supply. Imported fuel contributed 24.8 million litres per day during the month.

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It increased significantly in February as imports collapsed. The refinery supplied about 36.5 million litres per day, while imports dropped to roughly 3.1 million litres per day, meaning locally refined fuel accounted for more than 92 per cent of national supply.

According to the NMDPRA March fact sheet, Dangote remained the sole domestic supplier of petrol, supplying 34.2 million litres per day. Imports rose slightly to 5.9 million litres daily, bringing total supply to about 40.1 million litres per day.

Supply rebounded strongly in April. Dangote supplied 40.7 million litres per day to the domestic market, while imports declined further to 3.7 million litres daily. Total petrol supply stood at 44.4 million litres per day, giving the refinery a market share of approximately 92 per cent of locally consumed fuel and about 80–92 per cent of overall supply, depending on the methodology used.

The disappearance of petrol from the list of top imported products is expected to strengthen arguments that local refining is beginning to alter Nigeria’s trade patterns, lower import dependence and reshape the country’s foreign exchange requirements.

The sustained reductions in fuel imports could improve Nigeria’s trade balance, reduce pressure on the naira and retain more value within the domestic economy, provided local production continues to meet demand.

The first-quarter data therefore represents one of the clearest indications yet of a major shift in Nigeria’s downstream petroleum sector, with petrol imports falling to levels not seen in more than four years.

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Nigerian workers deserve a living wage; read details

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THIS is a debate that never goes away for too long: what is due to Nigerian workers? The renewed agitation over workers’ wages, triggered by a fresh Nigeria Governors’ Forum proposal to raise the national minimum wage to N100,000 per month, only confirms that the country is trapped in an endless cycle of wage adjustments that inflation quickly renders meaningless.

This means that the issue is not just about the size of the minimum wage. Rather, it is about whether Nigerian workers can afford to live with dignity.

That is why the conversation must shift from a statutory minimum wage to a genuine living-wage regime – and a stable economy.

The proposal by the Chairman of the NGF, Governor AbdulRahman AbdulRazaq, has already been rejected by organised labour.

The Nigeria Labour Congress, through its spokesman, Benson Upah, dismissed N100,000 as grossly inadequate and argued that, given current realities, a realistic wage would be closer to N1 million per month!

The Federal Workers Forum also condemned the proposal as a “Greek gift,” insisting that it bears little relationship to prevailing economic conditions.

While the NLC’s N1 million demand may appear excessive to many, the underlying argument deserves serious attention.

The current N70,000 minimum wage approved in July 2024 has already been overtaken by inflation. Like every previous wage increase in Nigeria’s history, its real value has been rapidly eroded.

The country’s minimum wage trajectory elucidates this. It rose from N18,000 in 2011 to N30,000 in 2019 and then to N70,000 in 2024. Yet each increase was followed by soaring inflation that wiped out most of the gains.

It is alleged that some states have yet to implement the minimum wage for grassroots workers, local government employees and primary school teachers.

Dataphyte estimates that the real value of the previous N30,000 wage had collapsed to barely N11,708 by mid-2024. The current N70,000 wage is clearly following the same path.

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The CBN reported that workers lost N2.79 trillion in purchasing power in 2024 alone due to inflation. That explains why workers who celebrated the 133 per cent wage increase in 2024 now find themselves struggling to survive less than two years later.

Nothing illustrates the crisis more vividly than the National Bureau of Statistics and Global Alliance for Improved Nutrition Cost of a Healthy Diet data.

According to an analysis by The Whistler, a healthy diet for one adult now costs an average of N1,541 per day or N46,230 per month, excluding meal preparation costs.

This means that a worker earning N70,000 is left with just N23,770 after feeding only himself.

For an average Nigerian household of 5.06 persons, the monthly cost of a healthy diet rises to N233,923 — equivalent to 334 per cent of the current minimum wage.

In other words, the average worker cannot afford the minimum nutritional requirements recommended by global health standards.

Even the governors’ proposed N100,000 wage would still leave most families far below the subsistence level. It is therefore difficult to dispute labour’s argument that Nigeria’s wage structure has become detached from economic reality.

However, raising wages alone cannot solve the problem.

The organised private sector has raised legitimate concerns about its ability to pay across the board.

The president of the Lagos Chamber of Commerce and Industry, Leye Kupoluyi, said the private sector should not be compelled to pay the same wage level as the government if businesses could not afford it.

The Director-General of the Nigeria Employers’ Consultative Association, Adewale Oyerinde, points out that the process for arriving at a National Minimum Wage is “rooted in widely acclaimed tripartite negotiations and consultation and not just political statements, without any empirical data to back up the quantum of increase.”

The Centre for the Promotion of Private Enterprise warned that many businesses are already struggling under crushing energy costs, logistics bottlenecks, foreign exchange challenges, multiple taxation and weak consumer demand. All this needs to be addressed.

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Indeed, any wage increase that is unsupported by productivity growth and economic reforms risks fuelling another inflationary spiral. Businesses facing higher wage bills often pass costs to consumers, thereby worsening the very inflation the wage increase seeks to offset.

Nigeria must therefore avoid the false choice between workers’ welfare and business survival.

The real objective should be a living-wage framework tied to measurable economic indicators and supported by aggressive cost-of-living reduction policies.

This is the model increasingly adopted across many countries. In South Africa, the national minimum wage is approximately 28.79 rand per hour, translating to well over N250,000 monthly at prevailing exchange rates.

Algeria’s minimum wage is around 20,000 dinars (N204,000) monthly, while Egypt recently increased its public-sector minimum wage to 7,000 Egyptian pounds (N184,000).

Kenya’s minimum wage varies by sector and location, but the average of 16,113 Kenyan Shillings (N169,500) remains significantly higher in purchasing power terms than Nigeria’s.

Nigeria should not be setting wage policy as though inflation were a temporary inconvenience.

Food inflation remains the principal driver of household hardship, standing at 16.06 per cent YoY and higher than headline inflation of 15.69 per cent as of April.

Massive investments in agricultural productivity, rural roads, storage infrastructure and security in farming communities are urgently needed.

The absurd situation where healthy diets are more expensive in some rural communities than in urban centres because of poor roads must end.

The government must also address transport costs through investments in rail, inland waterways and public transportation systems.

Electricity tariffs remain a major burden on both households and businesses. Lowering energy costs would immediately improve living standards while enhancing business competitiveness.

Investments in health by ramping up health insurance enrolment and better access to quality care, and in education, via massive infrastructure improvements and teacher recruitment, will reduce household expenditure on these essentials.

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Furthermore, labour’s argument regarding improved government revenues deserves scrutiny.

Since the outbreak of conflict in the Middle East, higher oil prices have boosted Nigeria’s earnings. It is estimated that the windfall has added more than N5 trillion to government coffers.

Whether that figure is an exaggeration or not, governments are receiving historically high FAAC allocations, averaging over a 50 per cent surge for states in 2025 and all tiers sharing up to N2 trillion in 2026.

Nigerians deserve to see some direct benefit from these gains through targeted subsidies for food production and transportation, public transit and essential services.

More fundamentally, wage determination should no longer depend on sporadic political negotiations every few years.

The National Minimum Wage Act should be amended to provide for automatic annual adjustments linked to inflation, productivity and cost-of-living indicators. Such a mechanism would prevent workers from suffering prolonged erosion of purchasing power before the government responds.

Above all, policymakers must remember that they are insulated from the hardships confronting ordinary citizens.

Governors, legislators, political appointees and senior public officials enjoy humongous allowances, subsidised accommodation, official vehicles, security details and generous expense accounts.

They do not queue for transport. They do not worry about school fees after buying food. They do not feel inflation in the same way as the average worker.

That disconnect explains why debates over N70,000, N100,000 or even N1 million often miss the central issue.

The goal of wage policy is not simply to keep workers alive so that the job is done. It is to ensure that honest labour can provide a decent standard of living.

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