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Private sector faults N100,000 minimum wage proposal

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Members of the organised private sector have cautioned against expecting private sector employers to automatically match the N100,000 minimum wage being adopted by some state governments. They warned that many small and medium-sized enterprises are already struggling under rising production costs and shrinking profit margins.

The business groups said that while some large firms and thriving sectors of the economy could afford wages above N100,000, most SMEs were battling high operating costs, inflation, energy expenses and weak consumer demand.

The comments followed growing speculation over the possibility of a new national minimum wage and the decision by some state governors to raise workers’ pay to N100,000.

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.

“National minimum wage does not necessarily mean private sector operators must pay their workers the same level if they cannot afford such a level at the time of introduction. This point is based on too many cost burdens that businesses are coping with at this time,” Kupoluyi said.

He added that the government must address key economic challenges affecting businesses, including fuel supply for local refineries, poor road infrastructure and support for strategic industries.

The LCCI president also expressed concern over the government’s revenue position, noting that rising debt servicing obligations could worsen Nigeria’s infrastructure deficit.

Director-General of the Nigeria Employers’ Consultative Association, Adewale Oyerinde, said although the proposed increase reflected prevailing economic realities, it could not automatically become binding on private sector employers.

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“We commend the state governments for proposing the increase of the minimum wage to N100,000. This seems plausible in view of the biting economic situation, made worse by the increasing cost of energy, etc.

However, it should be strongly noted 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,” Oyerinde said.

He added: “While the government can, at a bipartite engagement with the Unions, agree on what the wages would be, that cannot be binding on the organised private sector. For any wage increase to be nationally binding, the International Labour Organisation process of negotiating a minimum wage must come into play.”

Oyerinde further argued that reducing the cost of living would have a greater impact on workers’ welfare than what he described as an irrational increase in wages.

National Vice President of the National Association of Small-Scale Industrialists, Segun Kuti-George, said the proposed wage level might be suitable for public sector workers but was not realistic for many businesses.

“Whereas it is good for the public service, the private sector should not be constrained to follow suit. It is desirable but not feasible for the private sector. Interestingly, the governors are getting their funds from the national commonwealth. MSMEs are already groaning under the burden of increased production costs and the consequential decline in the bottom line (profit),” Kuti-George said.

President of the Association of Small Business Owners of Nigeria, Dr Femi Egbesola, also warned that many SMEs lacked the financial capacity to immediately implement a N100,000 minimum wage.

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“The move by some state governments to raise the minimum wage to N100,000 is commendable and reflects the reality of the rising cost of living. However, whether the private sector can match this level depends largely on the size, capacity, and financial health of individual businesses,” Egbesola said.

He added: “Large companies may adjust their wage structures to remain competitive and retain talent, but many SMEs are already struggling with high operating costs, inflation, energy expenses and weak consumer demand. For such businesses, an immediate increase to N100,000 may be difficult to sustain.”

Egbesola urged the government to focus on reducing the cost of doing business, saying a more supportive business environment would enable employers to pay higher wages sustainably while preserving jobs.

Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said wage levels in the private sector differed significantly across industries, company sizes and locations.

Yusuf noted that sectors such as financial services, oil and gas, and information and communications technology already pay wages well above N100,000, with some organisations offering minimum salaries of N150,000 or N200,000.

However, Yusuf said conditions were markedly different in sectors such as manufacturing, agriculture, education, retail and hospitality, where many operators continued to struggle with rising operating costs. “For many small businesses, it is a struggle to even keep the business afloat. That is the reality,” Yusuf said.

He noted that many enterprises were still finding it difficult to comply with the current N70,000 minimum wage because of soaring energy costs and weak consumer spending. “Many of the small businesses will have to struggle to be able to meet this N100,000. Even the N70,000, many of them are still struggling to pay it because they can’t give what they don’t have,” Yusuf said.

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He added that businesses in rural communities would face even greater challenges because of lower purchasing power and weaker revenue generation. “It will be extremely difficult to pay this minimum wage,” Yusuf said.

The business leaders maintained that improving the operating environment and reducing production costs would be more effective in raising workers’ welfare than imposing a wage level that many businesses cannot sustain.

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Read how Nigerians tap savings, loans to buy Dangote refinery shares

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Some Nigerians seeking to invest in the Dangote Petroleum Refinery and Petrochemicals FZE Initial Public Offering have turned to personal savings, loans and proceeds from the sale of assets to raise funds to buy shares, Saturday PUNCH has learnt.

Findings by our correspondents revealed strong interest in the shares among prospective retail investors, some of whom said they expected the investment to yield substantial returns in the future.

While some respondents said they were dipping into savings or raising funds through other means, others said the prevailing economic hardship had made it difficult for them to participate in the offer.

The refinery opened its IPO on Monday, September 14, giving Nigerians an opportunity to own equity in the company.

The offer comprises 4.1 billion ordinary shares priced at N525 each, with the company targeting about N2.15tn to part-fund an expansion that would nearly double the refinery’s capacity to 1.4 million barrels per day.

The minimum subscription is 10 shares, costing N5,250.

Dangote Group Chief Executive Officer, Aliko Dangote, said the low entry threshold was deliberately set to allow ordinary workers, including drivers, cooks and domestic staff, to become shareholders, describing the offer as “the IPO for the people.”

The offer is expected to close on October 13.

Investors turn to savings, loans

A staff member of the Federal Ministry of Works, David Adelabu, described the shares as expensive for struggling civil servants but said he considered the offer an opportunity to become a shareholder in the refinery.

He said, “I have small shares in some companies, including Glo and MTN, but Dangote’s shares will be the highest I will be buying. It is on the high side, but I feel this is an opportunity to become a shareholder in Dangote.

“I understand that the dividends are not going to be immediate, but I don’t mind even if it will entail selling a plot of land I have in Metumbi here in Minna. I will gladly do so.”

A trader in Dutse, Jigawa State, Adamu Bala, said he planned to use savings from his business to buy the shares.

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“I will not sell my house. I will use a small profit from my shop to buy,” he said.

Similarly, a civil servant, Fatima Mannir, said women in her group had started raising money through contributions, known as adashe, to participate in the offer.

“We have started raising money through adashe,” she said.

A trader in Damaturu, Yobe State, Malam Musa Ibrahim, said he invested part of his business savings after learning about the offer.

“I am using part of the money I have saved from my business.

“I believe that if I can invest a small amount now, it may become useful to me in the future. But I am also being careful because business is not easy at the moment,” he said.

Another resident, Aisha Mohammed, said she raised money by cutting down on some household expenses.

“I did not borrow money to buy the shares. I have been saving little by little, and when I heard about the offer, I decided to use part of what I had saved,” she said.

A businessman, Abdullahi Yusuf, however, said he obtained financial assistance from a friend to increase his subscription.

“I wanted to buy more shares than what my savings could afford, so I discussed it with a friend who agreed to lend me some money.

“I know that borrowing money to invest carries risks, but I am hoping that the investment will perform well. I will repay the money from my business income,” he said.

A petty trader, Hauwa Lawan, said she sold some personal belongings she no longer used and added the proceeds to her savings to finance her purchase.

“I sold some things that I was no longer using and added the money to my savings,” she said.

A farmer, Mallam Abdullahi Adamu, said he sold farm produce to raise about N500,000 to invest in the shares.

In Kano State, an investor, Abdulmalik Ibrahim, said he bought 10 shares for N5,250 using personal funds.

Hardship keeps some investors away

While some Nigerians are finding ways to participate in the IPO, others said economic pressures had put the investment beyond their reach.

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A civil servant in Kogi State, Saliu Joseph, said he would have loved to invest but had just paid his children’s school fees.

“Right now, I don’t think I can afford to participate unless a miracle happens,” he said.

A retired permanent secretary in the state, Bola Boro, also said he would not participate because he could not afford the investment at the moment.

“As a retired civil servant, I cannot afford such an amount to invest in the offer. Even though I am a fan of investment through the stock market, which I have been doing for years, I don’t think it will be convenient for me to participate considering the time frame of just one month,” he said.

A civil servant, Kuta Abdulahi, said the financial demands of his children’s education had left him unable to participate in the share offer.

“I must tell you the truth, I know about the Dangote Refinery shares, but I cannot even think of it at this time. My children are just resuming a new term in school. Where will I get the money for their school fees before thinking of buying shares? Please, I have a lot on my head,” he said.

Similarly, a vulcaniser, Ahmed Alkali, said his income was barely enough to meet his family’s basic needs, making investment in shares difficult.

“With the kind of job I do, I am working from hand to mouth. So, how can I buy shares when I have not eaten?” he asked.

Experts warn against borrowing

Investment experts, however, cautioned Nigerians against taking loans, selling properties or committing all their savings to the IPO, warning that equity investments carry risks.

Speaking with Saturday PUNCH, the Group Managing Director of Lancelot Group, Adebayo Adeleke, urged prospective investors to understand the risks associated with the capital market before committing their funds to the IPO.

Adeleke, who is also a former Secretary of the Independent Shareholders Association of Nigeria, said capital market investments should be made with funds that investors could afford to leave untouched for the long term, noting that equities were unsuitable for people struggling to meet immediate financial needs.

He said, “When you buy shares, you are buying a portion of the ownership of the business. Investment takes a lot of time to pass through gestation, to stability, to profitability. And you cannot, with any degree of certainty, predict when the company is going to turn the corner and begin to produce profits.

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“So, investment money is not the money you are likely to need in the next two months, three months, six months, even one year. If you cannot part with your money for a minimum of three to five years, the capital market is not the place to invest.”

Adeleke, however, described the IPO as a strategic investment, citing the refinery’s scale and demand for its products.

Also speaking, the Head of Financial Institutions Ratings at Agusto & Co., Ayokunle Olubunmi, urged Nigerians to consider the risks associated with the investment and avoid committing all their savings to the offer.

He said, “There are plenty of risks to this business. It’s not risk-free. Things can get worse for the business. Valuation is based on expectations of what will happen in the future. Things might not go as planned. And, like we all know, equity is a risky business.”

Olubunmi particularly cautioned prospective investors against selling property or using up all their savings to invest in the offer.

He advised them to invest only a portion of their funds and diversify their portfolios.

The expert also advised those considering taking loans to buy the shares to have a separate and reliable repayment plan rather than depending on returns from the investment.

The Emir of Kano, Muhammadu Sanusi II, had earlier warned prospective investors against using their children’s school fees or selling their homes to invest in the shares.

Sanusi, who gave the warning on Thursday while speaking at the company’s roadshow in Kano, urged prospective investors to invest only money they could afford to set aside for some time, suggesting amounts such as N10,000, N20,000 or N30,000.

Source: punchng.com

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ARE NIGERIANS BUILDING CHINA’S ECONOMY WHILE NEGLECTING THEIR OWN?

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While other nations are busy producing, manufacturing and exporting, Nigeria must ask itself a difficult question: Are we building our own economy, or simply creating a bigger market for other countries?

Nigeria has a huge population, abundant natural resources and a massive consumer market. Yet the country continues to depend heavily on imported finished products—from electronics and clothing to machinery, household goods and other consumer items.

The issue is not simply about Chinese businesses or businesses from any other foreign country operating in Nigeria. Foreign investment can bring capital, technology, jobs and expertise.

The bigger issue is whether **Nigerian businesses are being given the opportunity and support to manufacture competitively at home.

Instead of remaining primarily a consumer of finished products, Nigeria needs to strengthen its manufacturing sector and move further up the value chain.

Nigeria needs to produce, not just consume.

A stronger manufacturing economy could help Nigeria:

* Create more jobs for Nigerians
* Add value to locally available raw materials
* Develop industrial skills and technology
* Reduce excessive dependence on imported finished goods
* Build competitive Nigerian companies
* Increase the country’s ability to export

The goal should not be to drive legitimate foreign businesses out of Nigeria. The goal should be to build an economy where **Nigerian manufacturers can compete, grow and eventually take Nigerian-made products to markets around the world.

The question Nigerians should be asking is simple:

**Why should Nigeria remain one of the world’s biggest markets for finished products when we have the potential to manufacture many of them ourselves?

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🇳🇬 **Nigeria must move from being predominantly a consumer nation to becoming a stronger producer, manufacturer and exporter.

What do you think?

Which products should Nigeria prioritize for local manufacturing instead of relying heavily on imports?

Share your thoughts in the comments.

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ICRC defends toll pricing on highways

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The Infrastructure Concession Regulatory Commission has defended the toll pricing structure under the Highway Development and Management Initiative, saying charges are evaluated against the quality and benefits of the upgraded roads.

In a statement made available to PUNCH Online on Thursday, the Director-General, Dr. Jobson Ewalefoh, cited the 227-kilometre Akwanga–Makurdi road corridor as an example.

He said the route has four toll gates, and motorists pay as they travel along it.

He argued that toll payments should be viewed against the previous costs imposed by the poor condition of the road, including lost man-hours, vehicle damage and accident risks.

Feedback from road users, he said, shows many motorists are willing to pay tolls where they see clear improvements in road quality.

Some drivers have expressed support for similar arrangements on other major corridors if the roads are upgraded to the same standard.

“That, to me, is the beauty of a well-structured PPP,” Ewalefoh said.

He explained that negotiators carefully consider toll pricing to keep charges fair. A portion of the revenue is set aside specifically for road maintenance. Under the concession agreements, the government does not bear additional maintenance costs for the duration of the contract.

The government must repair potholes within 48 hours, and it funds major routine repairs from the dedicated toll revenue.

Source: punchng.com

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