Nigeria’s minimum wage: Too much to ask?

On the campaign trail for re-election in February, Nigeria’s President Muhammadu Buhari may have spoken too soon when he backed an initiative to hike his country’s minimum wage by a whopping two thirds. Buhari, who had been advised on the wage by a negotiating committee made up of union representatives, the government and the private sector, praised the “patriotic and professional” members.

The recommendation to hike the minimum wage to 30,000 naira ($82) from 18,000 was “realistic, fair and implementable” and would be studied by the executive “within the shortest possible time”, before being returned to parliament for final approval, he said.

The unspoken agreement was that Nigeria’s unions, which had threatened to paralyse Africa’s largest economy of more than 180 million people with a massive, open-ended strike, would deliver their members’ vote to Buhari in a presidential poll set for February 2019 in return for the pay hike.

But the very next day the information minister poured cold water on the idea, claiming that the Nigerian government had in no way acceded to the 30,000 naira demand and said this “recommendation should first be studied.”

Standing in the way of Buhari’s strategy to win the popular vote with the wage promise are the 36 state governors who say they are already struggling to pay civil servants and public officials with the current wage.

David Umahi, Governor of southeast Ebonyi state, warned this week that the 30,000 naira minimum wage for public servants couldn’t work.

“Many states are experiencing various problems and cannot pay salaries,” he told reporters after Buhari’s remarks.

Even if it went through, a higher wage would still be modest given that a 25 kg bag of rice costs nearly 10,000 naira.

“It is very low considering the cost of living,” Charlie Robertson, Renaissance Capital economist and Nigeria specialist, said.

But attempting to do more would be unrealistic because Nigerian businesses already have high overheads, and many workers are unqualified, making a pay hike hard to justify, he said.

Nigeria’s patchy power supply is another factor undermining the competitiveness of businesses, and therefore their margin for any wage increase.

“Nigeria’s difficulty on the minimum wage is that because its electricity, literacy are less than most countries, its wages must be less too. Or it will attract no foreign investments,” Robertson said. “30,000 is a sensible compromise but still debatable.”

Ivory Coast, for example, has a higher minimum wage than Nigeria but its good energy network still allows it to stay competitive with its West Africa neighbours.

In contrast, electricity is almost nonexistent in most of Nigeria and the literacy level of the adult population is close to 60 per cent, a number that falls to less than 50 per cent in the predominantly Muslim north.

Nevertheless, it will be hard to explain to voters that Nigeria, Africa’s largest oil exporter can neither afford a modest minimum wage for its civil servants nor provide a decent level of education and infrastructure to attract investors.

Several months ago, a senator caused a scandal by revealing lawmakers’ salaries: 14.25 million naira a month with bonuses, making it one of the highest salaries of politicians in the world.

At 30,000 naira, it would take 35 years for a Nigerian worker to earn what deputies make in a month, and 68 years at the current minimum wage level of 18,000 naira.

Life expectancy in Nigeria is barely above 53. On the eve of a presidential election and after two years of painful recession beginning in 2016, voters are demanding accountability.

“Where are you going to find the money to pay the salaries?” asked Gbenga Omotoso, a columnist in the normally pro-government newspaper The Nation.

“Reduce these outrageous wages, force the rich to pay their taxes, pursue the corrupt and engage the economy in a real programme of diversification.”

Standing in the way of President’s strategy to win popular vote with the wage promise are the 36 state governors who say they are already struggling to pay civil servants and public officials with the current wage