The recent increase in personnel costs for Nigerian states highlights a major fiscal shift. With the introduction of the N70,000 minimum wage, state salaries are up by nearly 90 per cent in the 2025 budget.
According to data obtained from the 2025 approved budget of the 36 state governments, the increase occasioned by the implementation of the newly approved N70,000 minimum wage and spiralling political appointments reflects an increase of nearly 90.23 per cent.
The approved budgets are also contained in Open States, a BudgIT-backed website that serves as a repository of government budget data.
The budget report also indicated that at least 27 states of the federation would not be able to pay workers’ salaries this year without having to wait for federal allocations from the central government.
In July 2024, President Bola Tinubu officially approved a significant increase in the minimum wage for Nigerian workers, raising it from N30,000 to N70,000.
This decision came after several months of rigorous discussions and negotiations between the government and labour unions.
This surge is mainly due to the gradual implementation of the new wage structure, which has caused significant variations in state budgets.
While some states saw massive increases in their personnel costs—Abia, Cross River, and Rivers, for instance, recorded more than a 100 per cent rise—others like Gombe, Osun, and Ondo experienced more modest increases.
This disparity is due to different state budgets, internal revenues, and political dynamics.
The rising personnel costs have led to a situation where 27 states are likely to depend heavily on federal allocations to meet payroll obligations.
These states are struggling to generate enough internal revenue to cover their wage bills.
In contrast, nine states, including Lagos and Abia, are in a better position to manage these increased costs without external financial support.
This scenario raises concerns about the sustainability of state budgets, especially when internal revenue generation fails to meet the demands of rising personnel expenses.
It also points to the financial challenges that state governments face in balancing worker welfare with efficient fiscal management.
The reliance on federal allocations could affect states’ financial autonomy, potentially leading to borrowing from banks or other sources to bridge the gap.
