The Nigeria Employers Consultative Association (NECA) has raised alarms about the potential adverse effects of approving a minimum wage exceeding N62,000, warning that it could result in job losses.

Adewale-Smatt Oyerinde, NECA’s director-general, expressed these concerns during an interview with journalists on the sidelines of the Nigeria Employers Summit held in Abuja. The summit’s theme was “Economic Renaissance: Harnessing Government Reforms and Private Sector Agility.”

Oyerinde stated that the organized private sector cannot afford a minimum wage higher than N62,000, which was agreed upon during tripartite committee negotiations. He warned that any figure above this threshold could lead to significant job losses, set a precedent for non-compliance, and spark litigation.

“Setting a national minimum wage that reduces people’s ability to pay will set the stage for litigation and crisis,” Oyerinde stated, highlighting the delicate balance needed to ensure compliance without crippling businesses.

Responding to allegations of delays in the minimum wage process, Oyerinde clarified that the process is ongoing and that misinformation about delays should be addressed. He noted that a bill would be sent to the National Assembly following the tripartite committee’s recommendations to the president.

“There is no waiting game, and I think we must put all this into context. It is misinformation,” he said.

Federal Executive Council’s Decision

On Tuesday, the Federal Executive Council (FEC) decided to step down the memorandum on the report of the Tripartite Committee on the New National Minimum Wage. Minister of Information and National Orientation, Mohammed Idris, explained that the decision was to allow for further consultations between President Bola Tinubu, state governors, local government authorities, and the private sector.

“The new national minimum wage is not just that of the Federal Government, it is an issue that involves the Federal Government, the state governments, local governments, and the organized private sector and of course, including the organized labour,” Idris stated.

Divergent Proposals and Reactions

The discussions about the new minimum wage have seen significant differences in proposed figures. The Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) have been advocating for a minimum wage of N250,000. In contrast, the Federal Government, states, and the Organized Private Sector (OPS) have countered with an offer of N62,000. State governors and local government chairmen have expressed concerns about the sustainability of even the N62,000 figure proposed by the federal government.

In response to the FEC’s decision to step down the memo, the NLC and TUC have called for an urgent meeting. The NLC President, Joe Ajaero, reiterated that the union would not accept the latest offer of N62,000 or the N100,000 proposal made by some individuals and economists.

A senior NLC official announced that the meeting is scheduled to take place at Labour House on Wednesday at 10:00 am. This meeting aims to help the unions strategize and respond to the federal government’s stance on the minimum wage issue.

The Backstory of the Minimum Wage Debate

The push for a new minimum wage has deep roots in Nigeria’s socio-economic landscape. The previous minimum wage, set at N30,000, expired at the end of April 2024. The expiration prompted immediate calls for a review and an increase, given the rising cost of living and inflationary pressures affecting Nigerian workers.

The situation reached a boiling point earlier this year when the Nigerian Labour Congress (NLC) and Trade Union Congress (TUC) organized a nationwide strike to protest the government’s delay in addressing the wage issue. The strike had significant economic repercussions, paralyzing many sectors, including transportation, education, and healthcare. Businesses suffered substantial losses, and the economy was estimated to have lost billions of naira during the period of industrial action.

Nigeria’s economic environment has been challenging, with soaring inflation, currency devaluation, and increased cost of living. These economic headwinds have fueled the demand for a living wage that can adequately support workers and their families. The call for a minimum wage of N250,000 by labor unions is seen as a reflection of the economic realities faced by many Nigerians.

Potential for Further Industrial Action

Given the government’s current approach and the deferment of decisions on the new minimum wage, there is growing concern that unions may resort to another round of nationwide strikes.

The unions have expressed frustration over the government’s perceived lack of urgency and commitment to addressing their demands. The Assistant General Secretary of the NLC, Chris Onyeka, indicated that the unions would not accept the proposed figures of N62,000 or N100,000, emphasizing the need for a substantial increase to meet the cost of living.

I estimate that more than $400 billion of funds flow from consumers to businesses in Nigeria yearly. I also estimate that in rural Nigeria, more than 90% of those funds are non-credits (i.e. non-borrowed). In your village market, if $2 million exchanges hands on a big market day, all those funds are non-credits. Yes, we live on money, in its different forms.

Good People, Africa is built on money and Africa still operates on money. When I was home recently, I went to Oriendu Market Ovim to shop (paid for the items, but did not collect from the sellers). Nothing has changed since decades Ndubuisi left the village: it was still pay and carry. In other words, Oriendu Market is years away from bringing credit and capital to work at scale.

That lack of capital is the challenge for Africa. Until African policymakers focus on creating systems for Capital development and evolution over our fixation on money, we will continue to struggle. When I read our policies on land, agriculture, etc, I see policies geared towards money, when what we should focus on is how to stimulate capital, even as we pursue the scaling of money.

Money is a subset of Capital, and companies and nations which allow Money to rule over them underperform. In Africa (excluding South Africa), we’re pursuing so much money, with limited efforts designed to advance Capital, triggering a system where there are many farmlands but no capital market product for farmlands. And without Capital, we scale poverty. When South Africa’s stock (capital) market has close to $1 trillion value, and Nigeria’s is hovering around $50 billion, you can see that we have a lot of money in Nigeria, but limited Capital. That must change.

In the five factors of production – land, labour, Capital, entrepreneur and knowledge – there is no Money listed. Capital represents assets (physical and non-physical encapsulating skills, education, knowledge systems, etc) which are used to make goods and services during the transmutation process of turning ideas, and raw materials, into finished goods. Money does one thing: means to exchange goods and services. In short, the unit of Capital is money (i.e capital is measured in monetary terms).

If Nigeria scales Capital. If Kenya scales Capital. If Ghana scales Capital. They will even pay off their debts and be free, because CAPITAL will unlock wealth which Money is unable to do in Africa. That is going to be the key way to stop the protests of the future in Africa.

Kenya has largely paused the finance bill which is designed to scale taxes. Great call as it does not need to tax the overtaxed citizens. Rather, it needs to focus on how to transform its economy so that it can grow it, and collect more taxes, from expanded economic activities. That is also a message for Nigeria, Ghana and all African nations. It’s time for CAPITAL.

Question: “You wrote that Kenya’s public debt stands at 68% of GDP and servicing that debt could have contributed to the government expanding taxes, leading to the protests. But that does not reconcile the fact that the United States’ public debt is more than 100% of the GDP. How do you reconcile that?”. This is the piece here.

Why are Kenyans protesting? Simple answer: the young people do not want more tax burdens. But why does the government plan to scale the burdens? Answer: “In the 2024/25 bill, the Kenyan government aims to raise $2.7 billion in additional taxes to reduce the budget deficit and state borrowing. Kenya’s public debt stands at 68% of GDP, higher than the 55% of GDP recommended by the World Bank and the International Monetary Fund.”

Ndubuisi: Kenya is not the United States. And the United States is not broadly raising taxes to service its debts.  That said, how the US debts are configured is orthogonal to the ways sovereign debts in Africa are structured. In short, let me share what I posted a few days ago as my response:

“It is an anomaly: the nation with the largest debt is also the one that is seen as the most developed and richest. The US national debt … is about $34.75 Trillion.

It is a real economic mystery when you think deeper: Nigeria does not even have a lot of debts, but it is “poor”, and experts will tell you not to over-borrow because it can put you in trouble, if you are unable to pay. So, how can a New Yorker who has thousands of dollars of debt on his head, better than an Ovim man who has no debt? That is where the mystery is solved! Yes, the magic of capital, over money, making the United States better and richer.

“First, some experts have modeled that the United States interest payment will hit $1.6 trillion by year end, making it the largest US Government outlay. In nearly every other nation in the world, that would be an economic apocalypse. But for the United States with the custodial of the dollar, the impact would be muted.

“Why? In an Igbo novel, Uwadiegwu, the author dropped a great hint: when you borrow, go to your kinsman so that if the debt goes bad, he may lock you up, but at the same time he would be expected to take care of your family since he is your kinsman! That is how debts work: pains are lesser when the debt is home. America borrows dollars and they’re responsible for printing dollars. No other country enjoys that combo.

“So, provided the US has those special printers, they can print US dollars, and if necessary, flood the world with dollars. [And] the US companies which hold these debts cannot wish for the US to have pains since if the US goes, companies like Blackrock, State Street, etc will fade. That is possible because these debts are all localized.

“Contrast with Nigeria. Nigeria has to earn US dollars to pay its US dollar-denominated debts, and the debts are not with Nigerian companies or entities. Magically, that burden pushes Nigeria to make decisions… ”

You can replace Nigeria there with Kenya; Kenya’s debts are not localized in shillings and that is part of the pressure. Of course, a real issue is not just the debts, but what they were used for?