The FG and unions have finally agreed on the percentage increase on the consequential adjustment in workers’ salaries as a result of the new minimum wage of ₦30,000. The secretary of the Joint National Public Service Negotiating Council, Alade Lawal, said that both parties agreed on 23.2 percentage increase for workers at grade level 07; 20 percent for those at grade level 08; 19 percent for workers at grade level 09; 16 percent for those on levels 10 to 14; and 14 percent for workers at grade levels 15 to 17. The agreement came 182 days after President Buhari signed the new minimum wage into law in April. On 14 May, the FG inaugurated the relativity and consequential adjustment committee, which set up a technical subcommittee to work out a template for the adjustment of salaries of public service employees in line with the minimum wage law.

President Buhari has asked Nigerians to be wary of statistics developed abroad by the World Bank, IMF and other foreign organisations. Agreeing to the significant role an accurate collection of data can play in the country’s social and economic planning, the President recommended that local institutions are better suited over foreign agencies to collate such records. “Some of the statistics from foreign bodies are wild estimates that bear little relation to the facts on the ground,” Buhari said via his official Twitter handle. He said he had raised the matter with the recently-constituted Presidential Economic Advisory Council and urged them to prioritise a framework on data collection that would make national planning and policy-making more feasible. The National Bureau of Statistics, established under the Statistics Act of 2007, has been the only public institution collecting centralised data on social and economic activities across Nigeria. According to the bureau’s director-general, Yemi Kale, the NBS is largely responsible for most of the data collected for use in Nigeria and by foreign bodies. The foreign bodies do not collect in-country data, he said, but the World Bank, IMF and other foreign institutions regularly enter into partnerships with the bureau to facilitate data collection.

The FG has given conditions for reopening its borders with the country’s neighbours, especially the Benin Republic and Niger, and has commenced negotiations. The Minister of Finance, Budget, and National Planning, Zainab Ahmed, said this at the 2020 Budget briefing. Once both neighbours demonstrate enough commitment to past deals, the borders would be reopened, Ahmed said, adding that Nigeria’s interest was uppermost in resolving the border issue. Ahmed said the closure “is not forever” and reiterated the government’s commitment towards negotiating to make sure that the challenges that brought about the border closure are addressed on both sides. Meanwhile, the Nigeria Customs Service announced that it has seized ₦1.4 billion worth of goods since the enforcement of the partial closure.

The Nigerian National Petroleum Corporation has announced the discovery of oil and gas “in commercial quantities” in the north-eastern part of the country. An NNPC spokesman, Samson Makoji, announced the discovery on October 11, saying the oil, which was discovered in the expansive Gongola Basin, is expected to attract foreign investment, generate employment for people to earn income and increase government revenue. Drilling of the Kolmani River II Well was flagged-off by President Buhari on 2 February 2019, Makoji said. The NNPC acquired 435.54sq.km of 3D Seismic Data over Kolmani Prospect in the Upper Benue Trough of the Gongola Basin in order to evaluate SNEPCO’s Kolmani River 1 Well Discovery of 33 BCF and explore deeper levels. Makoji further explained that one of the rigs, which was drilled to a total depth of 13,701 feet, led to the discovery of oil and gas in several levels. He said one of the reservoirs was perforated and “hydrocarbon started flowing to the wellhead at 2120 hours in which the gas component was flared to prevent air charge around the rig,” adding that the state oil firm has deployed world-class cutting-edge technologies. Makoji added that the NNPC would give attention to the Dahomey and Anambra Basins, in the west and east of the countries respectively, which have already witnessed oil and gas discoveries.

Commentary

  • The specifics of the numbers are in the agreement between the FG and the unions not really important. The real issue is that the government cannot meet its current salary commitments pay without borrowing, a situation which has left the debt service to revenue ratio at an unsustainable 60%. As context, due to inflationary trends over the last three years, this upward review is overdue. Yet the government will still be unable to pay. That is the conundrum Nigeria currently finds itself. A secondary but similarly important point is the expectation that states will pay the federally negotiated minimum wage. Considering that the cost of living and capacity of each state differs, the norm should be that each state determines its own minimum wage. Nigeria is structurally anomalous and this fact is the fundamental driver behind a lot of the social and economic fissures, including this, which the country is currently grappling with.
  • Ironically, when Candidate Buhari was running for office he often quoted these same statistics as evidence that the previous government was a failure. Now that he has served a term in office they cannot be trusted. From all indications, most of the foreign institutions utilise data from the NBS, the legally empowered data collection arm of Nigeria’s government and from other official sources like the Central Bank, the Debt Management Office, and other similar government-owned statistics agencies in making sense of the country. The President’s statement, therefore, questions not these foreign agencies but their ultimate source of data which ironically are Nigerian institutions. At SBM we continue to applaud the NBS and the great work they do in making Nigerian data available and reliable. We urge the government to do the same and tackle the uncomfortable issues the data raises rather than attack the credibility of institutions as a default reaction. It is important to note that the President’s statements came the week before crucial inflation data was released. Unemployment and GDP data are expected later in the year. Data also shows that Nigeria’s debt is ballooning. Indeed, it has been alleged that the government spends up to 60% of its earnings servicing the interest element of loans taken. These before salaries and other recurrent expenditure are settled. Simply put, this is not sustainable, and attacking both the messenger and the message is not the way to go.
  • Nigeria is a signatory to the AfCFTA as well as all the ECOWAS protocols guaranteeing the movement of people and goods. The ongoing border closure stands in contravention of all of these legal commitments. Different neighbours have reacted differently, with Ghana and Niger threatening to stop exports to Nigeria, and Benin, whose economy is more closely dependent on Nigeria, adopting a conciliatory approach. What is clear is that these actions are a deja vu to 1984 when the then military head of state, a certain Muhammadu Buhari, took similar actions. One fundamental difference between then and now is that Nigeria is no longer able to effectively police its borders. From the recent announcements that show an aversion to data and the CBN’s pleas to rice farmers not to raise prices, we can hazard a guess at what comes next – price controls, and if the closure persists, some reincarnation of the essential commodities regime that was so loathed during Buhari’s first coming.
  • The drive to find oil in the Gongola Basin has intensified since 2015, largely led by the NNPC, and this seeming lack of interest by IOCs is a red flag regarding commercial viability. There have also been discovery announcements in the Dahomey and Anambra basins as the NNPC noted. However, it is a long journey from such announcements to actual commercial production as those two examples have shown, and it is curious to note that there is no estimate of how many barrels lie within the Gongola Basin. What the NNPC needs to clarify is the estimated reservoir and recoverable volumes. Then it must be determined if the economics makes sense. What will be the cost of developing the fields? What will the cost of infrastructure of piping the crude to Kaduna refinery? Or to the ports for export? These are the factors which oil companies will have to consider before they bid for oil blocks in the area. Any excitement on this announcement will depend on the barrel size of the find and if it is commercially viable to exploit. What we are certain about is that a discovery of commercial quantities of oil in northern Nigeria will greatly impact the country’s political economy and many of the current demands from the oil producing areas for greater resource control will have to be discussed.