Nigeria's N70,000 minimum wage and the cost-of-living reality

The Minister of Finance and Coordinating Minister of the Economy says savings from removing fuel and foreign exchange subsidies helped fund debt servicing, the new national minimum wage, student loans and other government obligations. That answers where public money went, but it does not answer the question Nigerians keep asking: is the worker actually better off?

Higher wage bill, weaker purchasing power

The national minimum wage rose from N30,000 to N70,000, increasing the government's wage bill by about 133 per cent. On paper, that is a major commitment. But workers care about what the income can buy, not just the figure on a payslip.

Over roughly the same period, the official exchange rate moved from about N460 to approximately N1,400 per US dollar, an increase of about 204 per cent. In an import-dependent economy like Nigeria, that depreciation pushed up the cost of fuel, food, medicines, machinery and other essential goods. Household purchasing power has been squeezed.

Exchange rate gains helped government finances

Ironically, the same exchange-rate movement strengthened government finances. Nigeria earns a large share of oil revenue in dollars, so every dollar now converts into far more naira. At N460/$, US$1 billion yielded about N460 billion. At N1,400/$, the same revenue generates roughly N1.4 trillion, an increase of about 204 per cent.

This suggests subsidy removal alone did not create all the fiscal space. Exchange-rate liberalisation also substantially expanded the government's spending capacity. So linking the new minimum wage mainly to subsidy savings does not fully capture the broader fiscal picture.

The household experience is different

Before the reforms, petrol sold for about N198 per litre. Before recent global oil market pressures, pump prices had broadly stabilised around N800 per litre, an increase of approximately 304 per cent. That raised transport costs, which then fed into food, housing, healthcare and other essentials.

As a result, much of the nominal wage increase has been eroded by inflation and the rising cost of living. This is not an argument against economic reforms or higher wages. It is a case for judging reforms by improvements in real incomes, not by bigger nominal salaries or larger government expenditure.

What this means for Nigerians

Strengthening workers' welfare through lower inflation, better public transportation, affordable housing and higher productivity is sound economic policy. Workers with stronger purchasing power are more productive, businesses benefit from stronger consumer demand, and the nation enjoys greater growth, stability and security. The real measure of reform is not how much government spends, but how much better Nigerians live.

Aguolu Kenechukwu, FCA, is a chartered accountant, business analyst and project management professional.