The personnel expenses of state governments across Nigeria have witnessed a dramatic 90% increase, rising from N2.036 trillion in 2024 to N3.87 trillion in the approved 2025 budget. This sharp escalation is attributed to the newly approved N70,000 minimum wage and a surge in political appointments across the 36 states.
According to data obtained from the 2025 budget reports of the state governments, the total sum allocated for salaries stands at N2.8 trillion. However, in 2024, states only managed to disburse N2.036 trillion, falling short by N764 billion, as indicated in budget implementation reports.
Despite this increase in personnel costs, at least 27 states will struggle to meet their salary obligations without reliance on federal allocations. This financial strain has raised concerns about the sustainability of wage payments, particularly in states with low internally generated revenue (IGR).
Implementation Challenges and Labour Union Pressure
President Bola Tinubu approved the wage increase in July 2024 following extensive negotiations with labour unions. However, the implementation has been inconsistent across states, prompting the Nigerian Labour Congress (NLC) to issue a December 1, 2024, ultimatum for full compliance. Despite this directive, several states have yet to adjust their salary structures accordingly, leaving workers in financial uncertainty.
Disparities in Salary Increases Among States
Analysis of the budget documents reveals significant variations in personnel cost increases across states:
- States such as Abia, Cross River, Ekiti, Niger, Rivers, and Taraba recorded over 100% increases in payroll expenses.
- Cross River's personnel cost surged by 202%, the highest among all states, rising from N35.02 billion to N106.12 billion.
- Lagos recorded the highest absolute personnel cost, more than doubling from N225.114 billion to N401.12 billion.
- Rivers State saw an increase from N167.05 billion to N343.196 billion, marking a 105.6% rise.
- Conversely, Gombe experienced a marginal decline in personnel costs, dropping by 0.6% from N40.52 billion to N40.28 billion.
Fiscal Sustainability Concerns
The significant rise in state salary expenditures has intensified concerns over fiscal sustainability. An analysis of the budgets indicates that only nine states—Lagos, Abia, Benue, Enugu, Ogun, Niger, Kaduna, Kwara, and Osun—can meet their salary obligations without relying on federal allocations.
Muda Yusuf, Director of the Centre for the Promotion of Private Enterprise, highlighted two major concerns: disparities in state revenue generation and an oversized civil service workforce. He pointed out that many states operate bloated payrolls, sometimes filled with ghost workers, which strain already limited resources.
Similarly, economic experts, including Professor Segun Ajibola of Babcock University and former Zenith Bank Chief Economist Marcel Okeke, have urged state governments to explore sustainable revenue streams, cut governance costs, and streamline ministries and agencies.
Governance and Transparency Criticism
Critics have also pointed to inefficiencies and political excesses as significant contributors to the financial challenges states are facing. Okechukwu Nwagunma, Executive Director of the Rule of Law and Accountability Advocacy Centre, condemned the continuous expansion of government structures and appointments, stating that such practices exacerbate economic hardships for citizens.
Despite promises of governance cost reduction, new ministries and appointments continue to be created, increasing public expenditure. The ongoing economic strain, coupled with rising inflation and stagnant revenue sources, underscores the urgent need for financial prudence and strategic economic planning among state governments.
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