The Federal Government of Nigeria has announced plans to increase its spending on personnel costs by at least 60% in 2025, primarily due to the implementation of the new national minimum wage and consequential adjustments for all cadres of the federal civil service.
This increase will see the personnel expenditure rise from N4.1tn in 2024 to N6.56tn in 2025.
The new minimum wage, which was approved by President Bola Tinubu in July 2024, increased the minimum wage for Nigerian workers from N30,000 to N70,000.
While federal workers have started receiving the new wage, implementation across states has been gradual, with some still yet to adopt the new minimum wage.
According to the 2025-2027 Medium Term Expenditure Framework and Fiscal Strategy Paper, the government has disbursed N2.67tn, representing 65% of the N4.10tn appropriated in the 2024 Budget, as of August.
The report also projects a 60% increase in personnel cost expenditure for 2025 due to adjustments in minimum wage and consequential adjustments.
The government has allocated a total sum of N9.64tn for personnel and pension costs, representing an increase of N3.56tn or 58.7% over the 2024 provision.
This increase is mainly due to the implementation of the new minimum wage and its consequential adjustments.
However, the Nigerian Labour Congress has given non-compliant state governments an ultimatum of December 1, 2024, to implement the new minimum wage. Some states have pledged to meet the N70,000 minimum wage, while others have committed to paying amounts higher than the federal mandate.
The increased spending on personnel costs has contributed to the 2025 budget deficit, which is projected to be N13.08tn, representing 3.87% of the estimated GDP.
The government aims to lower the deficit levels to the threshold stipulated in the FRA 2025 within the medium term, primarily through domestic borrowings.
