The Federal Government has approved a 25% pay increase for lecturers in all federal institutions, marking a departure from its previous stance of not raising their pay.

The decision was communicated in a circular marked: OAuGF/ SW/C/QP/1395/VOL.1/11, and dated September 21, 2023, which was issued by the office of the Auditor General of the Federation to Polytechnics and Colleges of Education.

The Auditor General said the implementation was approved by the Presidential Committee on Salaries at its 13th meeting. This is coming after the salaries of professors were raised by 35%.

The circular said that the decision was taken after taking into consideration various stages of collective bargaining.

The upward review of salaries of lecturers, professors, and academic staff has been an integral part of demands by the Academic Staff Union of Universities (ASUU), leading to repeated industrial strikes.

This circular followed a letter from the Chairman of the National Salaries, Incomes, and Wages Commission (NSIWC) dated September 14, 2023. The letter was addressed to the Minister of Education, Tahir Mamman, and conveyed the government’s decision to raise the salaries of workers in federal government institutions, including the 25% pay raise for lecturers.

According to the letter, which was signed by Ekpo Nta, Chairman of the Commission, the 23.5% earlier approved was increased to 25%.

In the letter, Nta expressed satisfaction with the positive outcomes achieved through informal discussions with the Minister. It conveyed the Commission’s commitment to supporting the Minister’s efforts to revamp the education sector. The letter also included additional circulars related to the four salary structures in universities, polytechnics, and colleges of education.

The decision seems to have brought a reprieve to the contention between the federal government and ASUU regarding the salaries of federal university lecturers.

Former Minister of Education, Adamu Adamu, had previously maintained that the Federal Government could only manage a 23.5% salary increase for all employee categories in federal universities. However, individuals in the professorial cadre were approved to receive a higher increase of 35% in their salaries.

Adamu, who initiated the controversial no work no pay policy, said last year that “A sum of N150 billion shall be provided for in the 2023 Budget as funds for the revitalization of federal universities, to be disbursed to the institutions in the first quarter of the year,” and “That a sum of N50 billion shall be provided for in the 2023 Budget for the payment of outstanding areas of earned academic allowances, to be paid in the first quarter of the year.”

But ASUU reiterated its stance that it will not accept any salary increase proposed by the Federal Government without subjecting it to collective bargaining in accordance with labor law provisions.

Nigeria’s Finance Minister, Wale Edun, has “said up to $6.8 billion of overdue forward payments in the foreign exchange market need to be addressed before the naira stabilizes”. He dropped the key words: “The issue we have now is that the market is not liquid enough”. Recall my position when the nation floated the currency. I posited that floating Naira without working for parity on demand and supply of US dollars is hopeless in saving Naira.

Nigeria’s Finance Minister, Adebayo Olawale Edun, has attributed the naira’s abysmal decline to the approximately $6.8 billion in overdue forward payments in the foreign exchange market, emphasizing that addressing this issue is crucial for the stabilization of the local currency.

According to Bloomberg, Edun stated that resolving these outstanding contracts would not only strengthen the naira but also facilitate additional foreign exchange inflows.

The naira’s decline has been attributed to the illiquidity across Nigeria’s FX markets – especially in the Investor & Exporter window. The naira reportedly reached the N1,000/$1 threshold in the parallel market on Thursday, as supplies from the central bank to the FX market tanks amid rising demand.

This is a vicious circle when you see that the new official rate (import export window, ~ N785/$) is now far away from the black market (N980/$) demonstrating a highly imperfect market, cushioned on the asymmetry and imbalances on demand and supply positions.

Expect the government to re-introduce fuel subsidies (directly, no backdoor) even as it brings a quasi-official FX rate back (outside the IE window). In June 2023, I wrote: “In his O’ Level textbook on economics, AO Lawal explained demand and supply and the movement of price on the demand-supply curve. If I apply what he explained in that book, floating naira with no capacity to earn USD dollars will kill Naira, because there is an asymmetric imbalance on demand and supply of USD in the Willing Buyer, Willing Seller nexus. In other words, two people may each have $100 to sell while twenty people want to buy each $100. If you do not close that number to near parity, the equilibrium point will keep shifting and I do not see how Naira will stabilize because demand outweighs supply here”

That imbalance is that $6.8 billion Mr Edun is talking about. Until we fix it, no better days for Naira.

Comment on Feed

Comment 1: It’s still basic demand and supply.
How can we have more supply of dollars? Earn it!
How can you earn it? Export more!

How can you export more? Start from commercial agric through state-led farm settlements(ekiti has a big one in Orin-ekiti built in the 80s just sitting there wasting away).

Also, fix your power generation and distribution.
Improve the rail capacity to transport goods across the country.

When the teeming youth population is gainfully employed in jobs, and goods are being exported, we won’t even talk about the exchange rate.

Also, the dollarization of the economy is illegal. Enforce this and see the demand for dollar decrease.

Economic nationalism must be the chosen ideology. Nigeria must aim for self-sufficiency(autarky).

Nigeria’s Finance Minister, Adebayo Olawale Edun, has attributed the naira’s abysmal decline to the approximately $6.8 billion in overdue forward payments in the foreign exchange market, emphasizing that addressing this issue is crucial for the stabilization of the local currency.

According to Bloomberg, Edun stated that resolving these outstanding contracts would not only strengthen the naira but also facilitate additional foreign exchange inflows.

The naira’s decline has been attributed to the illiquidity across Nigeria’s FX markets – especially in the Investor & Exporter window. The naira reportedly reached the N1,000/$1 threshold in the parallel market on Thursday, as supplies from the central bank to the FX market tanks amid rising demand.

“The issue we have now is that the market is not liquid enough. We are committed to encouraging liquidity based on reforms that have been made at the moment, on the fiscal side and the monetary side. And together with the restoration of trust and confidence, we think the FX flows will return,” Edun, who accompanied President Bola Tinubu to New York for the United Nations General Assembly, was quoted as saying in an interview there.

The FX illiquidity backdrop, which has culminated in a huge economic crisis for Nigeria over the years, has defied attempts by President Bola Tinubu’s administration to address it. Reform policies such as the removal of fuel subsidy and the floating of the naira, have instead seen the embattled currency crumble further in the FX market.

The impact is loudly evident in Nigeria’s inability to fulfill its international financial obligations that require foreign exchange. Nigeria has about $7 billion backlog in FX obligations to clear with insufficient dollar inflow.

Last year, Emirates Airlines suspended its operation in Nigeria due to its inability to repatriate over $80 million in trapped revenue.

The situation stands in the way of FDIs (foreign direct investments) and PDIs (portfolio direct investments). Economists said that investors are being spooked by the lax macroeconomic framework spearheaded by the FX crisis.

So far, efforts by the federal government, such as the $3bn emergency loan the Nigerian National Petroleum Company Limited secured from Afreximbank, have failed to boost FX liquidity.

Recently, the situation has been compounded by the inactivity of the central bank, which, besides halting FX supplies to the market, has postponed its Monetary Policy Committee (MPC) meeting scheduled for September 25-26, where it’s expected to further raise interest rate to tame rising inflation.

The central bank’s inactivity is attributed to the wait for the confirmation of the newly-appointed CBN governor, Olayemi Cardoso, which has led to the resignation of the acting governor and four deputy governors.

The gap in decision-making created by this development has impacted the CBN’s supply to the FX market, opening an N230 exchange rate gap between the parallel market and the I&E window, which has been relatively stable at N770/$1.

Edun said the solution is to boost FX supply by sustaining and improving the reforms.

“The commitment is to maintain the existing reforms and improving them, improving the FX market further so the gap narrows. Looking at all options for boosting supply so the one-way bet of speculators that we are seeing at the moment is reversed,” the finance minister said.