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| (Image credit: Punch Newspaper) |
A recent analysis of the approved 2025 budgets of Nigeria's 36 state governments has revealed a significant increase in personnel costs, with a total allocation of N3.87 trillion, representing a 90.23% surge from the N2.036 trillion spent in 2024, according to Punch Newspaper.
The substantial increase is attributed to the implementation of the newly approved N70,000 minimum wage, which was officially approved by President Bola Tinubu in July 2024. However, the implementation of the wage increase has been gradual across the country, with some states still yet to adopt the new minimum wage.
According to the analysis, at least 27 states will struggle to pay workers' salaries without relying on federal allocations from the central government. This means that only 9 out of the 36 state governments can independently pay their workers' salaries without depending on federal allocations.
The states with robust internal revenue are Lagos, Abia, Benue, Enugu, Ogun, Niger, Kaduna, Kwara, and Osun. However, the remaining 27 states face significant challenges in meeting their payroll obligations, highlighting concerns about workers' productivity and state governments' efficiency in internal revenue generation.
Economists have attributed the low revenue generation to disparities in natural endowments among states, as well as bloated civil service workforces. They emphasize the need for states to reduce the cost of governance, block wastages, and ensure accountability and transparency in government.
The analysis also highlights the need for states to explore alternative revenue sources, such as internally generated revenue, to reduce their dependence on federal allocations. As the country grapples with the challenges of implementing the new minimum wage, it is essential for state governments to prioritize prudent fiscal management and explore innovative solutions to address their financial challenges.
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