Nigeria’s 30 biggest firms seen raising salary bills to hedge inflation

Nigeria’s 30 biggest firms have seen their salary bill rise to the highest in at least five years, as they scramble to retain employees amid soaring inflation, BusinessDay’s findings have revealed.

According to the listed companies financial statements, their staff cost rose to N1.03 trillion in 2024, a 68.7 percent from N611 billion reported in 2023

“The increase in salaries shows companies’ investments for employees in light of some of the macroeconomic challenges. Inflation has gone up and companies, especially in the banking sector have revised their salaries,” Omobola Adu, an economist at BancTrust & Co, said.

Israel Odubola, a Lagos-based research economist, said that some banks took it upon themselves to increase personnel costs so that their human resources would not be affected by the cost-of-living crisis.

In addition to curtailing inflation, banks use salary increases as a strategy to retain their best talent, as the Japa wave continues to drive these individuals abroad,” he said.

Data from the 30 biggest companies disclosed that FBN Holding now First Holdco reported the highest amount of salary bill totalling N320.2 billion, followed by Dangote cement with N232.2 billion and Stanbic IBTC with N87.6 billion during the period.

As of the time of this report, big lenders – Access Holdings, GTCO, UBA were yet to release the full-year report.

In October 2024, GTCO raised employee salaries by 40 percent, signaling its commitment to retaining top talent amidst rising living costs. Union Bank followed suit, significantly increasing pay across the board and positioning itself as one of the highest-paying banks in the country.

The latest salary increments from these lenders came from Sterling Bank and Wema bank.

According to Techcabal insights, Sterling bank has increased salaries for its 3,000+ employees, with entry-level staff now earning N528,000 net monthly, up from around N320,000.

Read also: Firms’ salary bill hits 9-year high amid soaring inflation

While Wema Bank significantly boosts salaries across multiple levels, making it the best-paying bank in Nigeria at several job tiers.

“This marks Wema Bank’s second major salary increase in under two years. In July 2023, the bank implemented a 45 percent salary hike across all employee levels, citing inflation and the rising cost of living following government reforms that exacerbated economic hardship,” the report said.

Rising costs seen declining consumer spending

Data from the Nigerian Gross Domestic Product Report (Expenditure and Income Approach) report by the National Bureau of Statistics (NBS), the compensation of employees fell by 5 percent to N12.6 trillion in the first half of 2024 from N13.2 trillion in the same period of 2023.

Household consumption also fell to N10.6 trillion from N22.3 trillion in real terms, according to the Nigeria household consumption data.

This decline can be attributed to inflation eroding real income, households have adjusted their spending habits by focusing only on essentials, leading to a sharp drop in discretionary spending.

Inflation has been one of Nigeria’s biggest headaches. It stood at 24.48 percent in January after the rebasing exercise.

Food inflation dropped to 26.08 percent. However, the rebased food inflation doesn’t mean a steep fall in food prices in Africa’s most populous nation in the review period.

In 2023, Picodi, an international e-commerce organisation, revealed that Nigerian households spent 59 percent of their income on food, the highest globally.

The latest ‘Cost of Healthy Diet’ report, produced by the NBS and the Global Alliance for Improved Nutrition, disclosed that the national average cost of a healthy diet rose to N1,371 per day in October 2024 from N703 per day in the same period of 2023.