Nigeria Risks another Recession as NLC Strikes

Nigeria Risks another Recession as NLC Strikes

It is looking very challenging across major Nigerian cities as the Nigeria Labour Congress (NLC) declares indefinite warning strike pushing government to adopt a new minimum wage for workers. This is a huge decision which could cause massive dislocation in the recovering economy. If you are paying attention, you will notice that the average time to receipt of payments from vendors is going up. I do think companies are having liquidity challenges because paralyses are brooding. This strike will be damaging to the economy.

The Nigeria Labour Congress (NLC) has declared the starting of an indefinite warning strike to press the Buhari administration to adopt a new minimum wage for workers.

The strike will start Wednesday morning.

Its sister labour group, the Trade Union Congress, had earlier on Tuesday announced it would begin strike from the early hours of Thursday, following the federal government’s failure to honour its ultimatum on the new minimum wage.

Both unions had earlier said the organised labour’s demand to reconvene a tripartite committee on the national minimum wage for workers was not met, and that the leaders have cautioned the federal government against foot-dragging on the new minimum wage.

Last Thursday, the NLC resolved to commence an indefinite nationwide strike after the expiration of the 14-day ultimatum given to the federal government which will elapse Wednesday.

Already, banks are scaling down their investments in businesses, reducing credits at significant level compared to the same time last year. When you combine lack of credits and apathy from foreign investors, you cannot expect any growth in the economy under a high-voltage political tension.

The numbers are not looking good for companies looking for bank credits: In H1 2018, total credit by banks to companies dropped by N855 billion or 5.7% from N14.9 trillion compared to H1 2017. Within the same period, bank’s investments in government securities – bonds and treasury bills- rose by 2.6% to N6.87 trillion.

I call on the leadership of NLC and the Government to get into serious talks: Nigeria can fall into severe recession if this strike goes on for even few days. We do not have the economic buffer to absorb it.

Yet, it is time government understands that no human can survive in Nigeria at N18,000 (about $50) per month (before taxes). It is an insult that a nation where politicians are paid in thousands of dollars in the parliament cannot even pay the people training its future (yes, teachers) at least $100 per month. What NLC is asking for is not crazy: they want committed members, and to achieve that, they deserve living wages.

This is the moment for Mr. President to lead because there is no other option – workers deserve good pay. Yet, I also hope NLC manages this well to avoid messing up a fragile economy.


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