Nigeria’s above-$42 billion debt burden may worsen as the Federal Government commits a whopping N4 trillion yearly to workers’ payments when the new minimum wage gets underway.
   
While the wage increase aims to improve workers’ welfare, economists however warned that it could lead to further inflation and reliance on loans, potentially impacting pension funds and dormant accounts.
   
According to the template, the Federal Government will need N334.9 billion to pay its workers’ salaries as of this September.  This was contained in a circular from the office of the Accountant General of the Federation, addressed to Ministries, Departments, and Agencies (MDAs).
   
The new national minimum wage, initially scheduled to take effect in May 2024, has now been shifted to September 2024. The circular released by the Office of the Accountant General of the Federation noted that there are 592 MDAs with a staff strength of 1,236,824.
   
The circular reads, “The New National Minimum Wage, as approved by Mr President, is implemented this September 2024. The 35 per cent and 25 per cent salary adjustment for staff on the Consolidated Public Service Salary Structure (CONPSS) applies to all the staff of Federal Ministries, Extra-Ministerial Offices and Agencies formerly operating the Harmonised Public Service Salary Structure (HAPSS).”
   
The CONPSS and the Consolidated Paramilitary Salary Structure (CONPASS) are the official salary scales for paramilitary agencies in Nigeria. The Federal Government approved the revision of the CONPSS, effective July 24.
   
Speaking on the development, the Chairman of the National Salaries, Incomes and Wages Commission (NSIWC), Ekpo Nta, said any federal public service, whether self-funded or treasury-funded, that had not received a circular to that effect, specifically from the NSIWC should contact it for further directives.
   
He noted, “This is to avoid an uncoordinated implementation, which tends to destroy the existing salary relativities in the federal public service.” He disclosed that additional directives on how pensioners, NYSC members, and interns would benefit from the implementation would be available in due course.
   
Nta listed other revised templates, including the Consolidated Research and Allied Institutions Salary Structure (CONRAISS), Consolidated Universities Academic Salary Structure (CONUASS), and Consolidated Tertiary Institutions Salary Structure II (CONTISS II).
   
Other benefitting entities include Consolidated Polytechnics and Colleges of Education Academic Staff Salary Structure (CONPCASS), Consolidated Tertiary Educational Institutions Salary Structure (CONTEDISS) and Consolidated Medical Salary Structure (CONMESS).
   
The Consolidated Health Salary Structure (CONHESS), Consolidated Paramilitary Salary Structure (CONPASS), and Consolidated Police Salary Structure (CONPOSS) were also captured, as were the Consolidated Intelligence Community Salary Structure (CONICSS) and Consolidated Armed Forces Salary Structure (CONAFSS).
   
“This is consequent to the enactment of the NSIWC Amendment Act 2024 and the Memorandum of Understanding reached by the committee on consequential adjustments in salaries arising from the National Minimum Wage (Amendment) Act 2024.
   
“The MoU was reached between the Federal Government of Nigeria and the Trade Union sides of the Joint National Public Service Negotiating Council on September 20,” Nta said.

HOWEVER, with the lowest earner’s yearly salary of about N730,000, experts are worried about sustainability and how to enhance workers’ productivity. A retired banker, Mohammed Ande, said measuring productivity is difficult under the current system.
   
“Where the government is the employer, measuring or enforcing productivity is impossible. Most people enter public service because of who they know or buy their employment. Service is not primarily driven by merit.  
   
“The government should allow the private sector to drive the civil service. One way to improve high performance in civil service is to outsource recruitment to the private sector. Government should also outsource performance measurement,” Ande said.
   
With about 63 per cent of its income allocated to servicing $42.115 billion in external loans, Nigeria is set to enter deeper debt holes by adding an N4 trillion yearly wage bill.
   
Ande observed that while Nigeria’s debt stock will rise next year, the government has no choice. He added: “I think the government is already thinking ahead. First, it allows hiking electricity tariffs and then increasing fuel prices. These two steps will give the government some headroom. There is more money now, especially with the devaluation that has crossed N1,600 to the dollar. We wait to see how things turn out. Future happenings will be interesting to watch.”
   
The template showed that a Grade Level 17 worker on the directorate cadre would receive about N8,870,837 yearly salary, which translates to about N739,000 monthly.
   
Deputy President of the Trade Union Congress of Nigeria (TUC), Dr Tommy Okon, said the government must cut the cost of governance and other wastages to pay the wage bill.
   
He faulted those who see it as corruption compared to politicians who, in a few months, go home with an amount that runs into millions. “If a director goes home with N739,000, do you know what it takes to get to that level? But a political officer within a year can go home within a month with millions of naira,” he said.
   
Okon said the government must establish an environment conducive to productivity to combat corruption and enhance productivity within the civil service. He stressed that the government should consider more than just salaries and focus on improving workers’ living conditions, education, health, and other essential needs. According to Okon, emotional stability is crucial for boosting productivity among workers.    
   
“How can productivity work in a place where you have 10 people clustering an office, no electricity, trek to about an 11-floor story building, looking at health challenges? Labour punches the button to work no matter what. Productivity cannot work in a vacuum. There must be an enabling work environment that ignites the activities and socioeconomic needs that increase productivity,” he added.
   
A public affairs analyst, Jide Ojo, said the government must incentivise public service to increase productivity. “How did President Bola Tinubu source the funds for a presidential jet and vehicle that ran for almost N1 billion, pay political office holders, and fund the Vice President’s lounge that was not in the 2024 Appropriation Bill?”
   
He called for complete automation of the civil service, recruitment of ICT-compliant workers, and disengagement of old hands, bringing more people into the tax net, reducing oil theft, and blocking revenue leakages from MDAs to meet up with workers’ salaries.
   
Economist and Researcher Isaac Botti maintained that the government must reduce wastage and frivolities and be prudent in spending, especially when citizens suffer hardship.
   
Another Economist, Dr Chiwuike Uba, said the government would seek more loans to meet workers’ salaries despite the country’s high debt. He said the wage increase would amount to nothing, as labour would lose more to inflation due to the rise.
   
“Loans collected by this administration and previous ones have been used to fund recurrent expenditure instead of capital expenditure, and that is what is going to happen, where the government will keep accumulating more loans. In funding, the government will lose more loans, and they will also get more money when they stop subsidies in whatever form. They will introduce various forms of taxes,” he said.
   
Uba stressed that the government might eye pension funds, “where the Pension Act would be reviewed that offers government more leverage towards using pension funds for whatever they want, where the greater part would be used to fund recurrent expenditures.” He added: “The government may take over idle funds in dormant accounts on the pretence that the CBN will manage them.”

MEANWHILE, a review of international payments data published by the Central Bank of Nigeria (CBN) has shown that the Tinubu administration spent $5.1 billion on external debt servicing between June 2023 and July 2024.
   
This came at a time when the Federal Government pleaded for debt relief at the United Nations General Assembly.  The data review shows that the country paid $54.3 million in June 2023, $641.6 million in July 2023, $309.9 million in August 2023, $439 million in September 2023, $509 million in October 2023, $367.7 million in November 2023 and $65.6 million in December 2023.
   
In January 2024, the government paid $560 million, $283.2 million in February 2024, $276.1 million in March 2024, $215.2 million in April 2024, $854.3 million in May 2024, $50.8 million in June 2024 and $542.5 million in July 2024.
   
Nigeria suffers from its heavy reliance on loans, and as of the first quarter of 2024, the country’s loan portfolio stood at N121 trillion. Vice President Kashim Shettima, representing President Tinubu at the 79th United Nations General Assembly in New York, the United States of America, called for a special concession for countries in the global south.
   
“Countries of the global South cannot make meaningful economic progress without special concessions and a review of their current debt burden,” he had stated.Experts have worried that Nigeria’s heavy debt servicing spending will hamper development, as money for development is spent on servicing debt.  

RELATEDLY, the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) commended the Federal Government’s decision to commence paying the new minimum wage of N70,000 to workers in the country.
  
 In a statement, the National President of NACCIMA, Dele Kelvin Oye Esq., expressed concerns about the threat of imprisonment for defaulters and described the decision as unhelpful.
  
 He said: “While we expect state and local councils that have not yet implemented the new minimum wage to do so, we urge the government to engage with stakeholders, including the labour unions, in a collaborative manner to address the complaint of Labour regarding the alleged breach of contract on the increase in the price of fuel and the economic challenges facing businesses and workers.”