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The arithmetic of Nigeria’s minimum wage

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This week I will like to share a WhatsApp message sent to me recently about the new Minimum Wage that the Nigerian governors are promising to pay, as if they are doing the workers a favour.

It read thus: The new minimum wage and the old minimum wage are the same thing? I wondered whether we have a Labour Union in this country.

Before this administration, the price of petrol was N87 and minimum wage was N18,000. N18,000 ÷ N87 = 206.8965517 litres (meaning the minimum wage could only buy 207 litres of petrol).

And today, minimum wage N30,000 ÷ N145 (for petrol) = 206.8965517 litres (meaning the minimum wage can only buy 207 litres of petrol), exactly the same amount even to the last decimal point (You will say Nigerians can be crazily creative).

In essence, the newly approved minimum wage is in real terms lower than the previous N18,000. It can’t buy the same amount of goods today as it could eight years ago when inflation was mild and N160 exchanged for a dollar, but today it is N360+, depending on where you source it. As someone has described this minimum wage adjustment, it is simply this: a motion without movement.

On the other hand, it is on record that in 2018 alone, the Federal Government of Nigeria spent N730.9 billion as subsidy on petroleum products. From a conservative point, this amount is far higher than funds allocated to education, health, infrastructure and other key ministries and parastatals that year, which would have increased the economic growth or standard of living of the about 200 million Nigerians.

This amount also can pay the Nigerian public workers at N75,000 per month in six month conveniently, even if there is no addition from elsewhere. This same amount, if projects are not inflated, can build and equip several general hospitals, link Nigeria with a viable rail system, build highways to link states in the six geopolitical zones, and above all, create small businesses that can employ several thousands of Nigerians.

Look at it further, this same 2018 subsidy (N730.9bn) outweighed 2018 budgets of Ministry of Education, N651bn; Ministry of Health, N356bn; Ministry of Transportation, N267bn, and Ministry of Agriculture and Rural Development, N203bn.

This amount was six times more than the total 2018 combined allocation of Nigeria’s top 10 public universities of N112.6 billion, which include University of Ibadan, N12.9bn; University of Lagos, N11.6bn; University of Nigeria, N16bn; Ahmadu Bello University, N17.4bn; Obafemi Awolowo University, N17.4bn; University of Benin, N13.4bn; University of Jos, N11.7bn; University of Calabar, N14bn; University of Ilorin, N8.8bn, and University of Abuja, N6.8bn.

Remember, in 2007, former President Olusegun Obasanjo sold the nation’s obsolete refineries to a consortium in order to deregulate the downstream sector. Those Nigerians profiting from subsidy sponsored Labour Unions to ask for a reversal of the sale.

Saharareporters on May 14, 2007, reported, “Whoever buys the Port Harcourt Refinery of Nigeria will be holding it in trust for President Obasanjo who is set to retire in a few days to a private but highly lucrative lifestyle.”

According to Saharareporters, “Sources said all the bidders who have been granted the Right of First Refusal (ROFR) are working directly with President Obasanjo to hold the refinery in trust for him.

“The President is working with Aliko Dangote and Femi Otedola and some other companies said to be in cahoots with the President as he embarks on a last minute sale of more lucrative public enterprises to himself and some members of his “private investment club” that have been buying up Nigeria in the last four years.”

This blackmail continued until Obasanjo’s immediate successor, Late Umaru Musa Yar’Adua, reversed the sale of two of the country’s refineries, which had been finalised before he left office due to “pressure.”

This was disclosed in Obasanjo’s serialised interview with “Book Club,” aired on Channels TV. According to Obasanjo, Aliko Dangote, leading a consortium of investors, had paid $750 million for the two refineries, as the Federal Government was unable to manage them at the time. Since the Yar’Adua administration failed to consolidate on the sale of the refineries so the investors could revamp them, but Yar’Adua fell to pressure and cancelled the sale.

He said: “The refineries are old and Dangote and some investors paid $750 million for two of the refineries. My successor came to office and reversed the sale. He even refunded the money they paid.

“So, I went to him and said ‘why did you do this?’ He said it was because of pressure. So, I said ‘so the pressure of some people was more important than the interest of the whole nation?’ “Right now, you will hardly be able to sell the refineries for more than $250 million because they are very old.”

Also, in January 2012, former President Goodluck Jonathan advocated removal of subsidy. This sparked off series of demonstrations across the country, as various subsidy interest groups sponsored Labour Unions to sustain the protest and strike that lasted till January 14; then, fuel subsidy was only $8 million in 2011. Today, nobody will be willing to buy those refineries, even at $20 million, except to the intent to stripe the assets.

This piece is not meant to join issues with anybody but to tell Nigerian workers that they are the eventual losers from the N30,000 minimum wage they are all rejoicing over. The Labour leaders know this but have blindfolded their followers for too long from knowing the truth. Have you ever asked where the Labour leaders got the money and the bulletproof vehicles they use? How much are their salaries and savings that they can drive bulletproof SUVs? Who gave it to them and for what reason(s)? If they cannot answer these questions, then know too they have not been dealing with you truthfully. I don’t want to say the obvious.

Dangote today is a happier man to have accepted the refund from the government. Godwin Emefiele, the CBN governor, said recently that the government would source foreign exchange from Dangote when Dangote Refinery starts operations. What a shame!

If Yar’Adua had not reversed the sale of the refineries and Jonathan did not bow to pressure from subsidy-infested groups, the N730.9 billion spent on subsidy today would have benefitted more Nigerians than going into the pockets of about 100 pseudo-business people.

Nigerian workers, imagine this. Why should the few benefitting from the subsidy allow its removal? Like one of them said, “Subsidy removal will squeeze life out of us.” This is a man that can afford to take friends on a chartered flight to anywhere in the world for just a party. Why? Because they live on free money – subsidy, and therefore any attempt to remove it would always be resisted.

Imagine if Dangote and the consortium were allowed to keep the refineries – your guess is as good as mine. The sooner we wake up the better for us, Nigerians.

 

Victor Obayagbona

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