While states argue that they should set their own salaries, the Federal Government insists on a uniform national minimum wage. This tension is heightened as workers demand salary reviews amid rising inflation and a depreciating local currency that have eroded Nigerians’ purchasing power. Yet many states have still not implemented the minimum wage established by law in 2019, and six states have yet to pay the current N30,000 floor.
Some economists contend that state governments should have the autonomy to determine salaries and allowances based on the revenue they generate. Although this runs counter to the prevailing practice of federal fixation of public officials’ remuneration to ensure uniformity, experts claim that allowing states this leeway would stimulate regional growth. They argue that decentralising remuneration would enable states to manage finances more effectively, meet obligations, and avoid salary arrears. While the federal‑approved N30,000 minimum wage was set in good faith, it may be too low for workers in revenue‑rich states and too high for those in poorer ones. “The capacity of a state like Lagos cannot be compared to that of Ekiti, Ondo or others with far less internally generated revenue or federal allocation,” said Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise. He emphasized that remuneration should reflect each state’s fiscal capacity, allowing negotiation between governments and labour based on what they can afford.
Yusuf, former Director‑General of the Lagos Chamber of Commerce and Industry, warned that the current system of pooling state revenues and redistributing them monthly among the three tiers of government is outdated. He cited Lagos as an example, where ports and multinational activities strain infrastructure while taxes such as import duty, company tax, and education tax flow to the central pool, leaving the state to bear the costs. “It is not equitable,” he said, noting that many public‑sector employees receive state‑provided facilities while the revenue they generate benefits the centre. He called for a stronger derivation component, especially for activities that create negative externalities, noting that only oil‑producing areas currently enjoy significant derivation.
Governor Oluwarotimi Akeredolu of Ondo State, Chairman of the Southern Nigeria Governors’ Forum, also criticised the federal practice of fixing salaries and allowances. Speaking at a zonal public hearing on the review of the 2008 remuneration package, he argued that a federal‑centric revenue system hampers development and that each state should control its resources and set its own pay scales. Represented by Deputy Governor Lucky Aiyedatiwa, Akeredolu urged that states determine salaries and pay taxes to the centre, rather than the centre dictating remuneration.
Former President of the Association of National Accountants of Nigeria, Dr. Sam Nzekwe, echoed these sentiments. He explained that while federal civil service salaries serve as a benchmark, states should set pay based on their revenue capacity. “If a state’s earnings are small, it cannot match federal salaries,” he said, adding that cost‑of‑living differences across states must be considered. Nzekwe also opposed the central pooling of state revenues, arguing it limits states’ ability to develop their own revenue bases. He suggested a model akin to the United States, where states retain most of their earnings and contribute a portion to the federal government, thereby encouraging states to boost internally generated revenue (IGR) and foster economic growth.
Billy Gillis‑Harry, President of the Coalition of South‑South Chambers of Commerce, Industry, Mines and Agriculture, reinforced the view that not all states can afford the federally prescribed salaries. “Some states lack the financial wherewithal to meet the approved sums, so it is reasonable to allow them to operate according to their capacities,” he concluded.
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