The total amount allocated for personnel costs, including salaries and allowances for state civil servants, has surged from N2.036 trillion in 2024 to N3.87 trillion in the approved 2025 budget.
Despite budgeting N2.8 trillion for salaries in 2024, state governments only disbursed N2.036 trillion by the year’s end, underspending by N764 billion, according to their budget implementation report.
An analysis of the 2025 approved budgets for all 36 states reveals that the increase stems from the implementation of the newly approved N70,000 minimum wage, alongside a rise in political appointments. This represents a staggering 90.23% rise in personnel costs.
These budget figures were sourced from
Open States, a BudgIT-supported platform that tracks government financial data.
Most States Struggle to Pay Salaries Without Federal Allocations
Despite the wage increase, at least 27 states will struggle to pay workers’ salaries without relying on federal allocations. This situation underscores the financial strain on state governments following the new minimum wage approval.
In July 2024, President Bola Tinubu approved an increase in the national minimum wage from N30,000 to N70,000 after prolonged negotiations with labor unions. However, implementation has been slow, with several states yet to fully adopt the new wage structure.
The Nigerian Labour Congress (NLC) issued a deadline of December 1, 2024, for full implementation, but many states have yet to comply, delaying financial relief for workers.
Personnel Costs Surge Across States
An in-depth review of state budgets shows significant variations in salary increases:
– 20 states recorded personnel cost increases exceeding 50%.
– 16 states saw more modest rises, with salary growth below 50%.
– Six states, including Abia, Cross River, Ekiti, Niger, Rivers, and Taraba, more than doubled their personnel budgets, exceeding a 100% increase.
– Gombe, Osun, and Ondo reported the lowest salary increases, staying below 15%.
Major Salary Increases by State
– Abia: N33.05bn → N77.34bn (+134%)
– Cross River: N35.02bn → N106.12bn (+202%)
– Niger: N25.36bn → N104.3bn (+311.5%)
– Rivers: N167.05bn → N343.19bn (+105.6%)
– Lagos: N225.11bn → N401.12bn (+78%)
Meanwhile, Gombe was the only state where personnel costs slightly decreased, from N40.52bn to N40.28bn (-0.6%).
The sharp increase in salaries across most states has intensified concerns about financial sustainability.
Only 9 States Can Pay Salaries Without Federal Aid
With rising personnel costs, only **nine states**—Lagos, Abia, Benue, Enugu, Ogun, Niger, Kaduna, Kwara, and Osun—can independently fund salary payments without federal government allocations.
In contrast, 27 states lack sufficient internally generated revenue (IGR) to cover wages and may have to rely on federal funds or bank loans. This situation has raised questions about the efficiency of state governments in generating revenue.
According to analysts, the growing wage bill in states with weak IGR raises concerns about workers’ productivity and the overall cost of governance.
Experts Call for Cost-Cutting and Revenue Growth
Economic experts stress the need for states to reduce governance costs and improve revenue generation to sustain salary payments.
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, noted that disparities in natural resources and economic activity contribute to states’ revenue challenges.
“States like Lagos and Delta benefit from industries and large tax-paying businesses, while states like Jigawa, Gombe, and Kogi rely heavily on agriculture and SMEs, limiting their IGR potential,” Yusuf explained.
He also criticized states for maintaining bloated workforces, with many ministries overstaffed or employing ghost workers. “Some ministries could function with half their current staff, but political considerations lead to unnecessary employment,” he said.
Prof. Segun Ajibola of Babcock University urged states to boost revenue without overburdening citizens. He also emphasized reducing wasteful spending, streamlining government agencies, and ensuring accountability in governance.
Marcel Okeke, a former chief economist at Zenith Bank, highlighted that excessive political appointments at both federal and state levels are worsening the wage bill crisis.
“Governors appoint hundreds or even thousands of aides—many of whom have no real function. Some ministries employ five people for a task that one person could handle,” Okeke stated.
Okechukwu Nwagunma, Executive Director of the Rule of Law and Accountability Advocacy Centre, strongly criticized government officials for failing to cut costs despite the economic crisis.
“Leaders claim they will reduce governance costs, yet they create new ministries and appoint record numbers of aides. Meanwhile, the economy worsens, and citizens struggle with poverty and hunger,” Nwagunma said.
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Conclusion
The increase in the minimum wage to N70,000 has significantly raised personnel costs across Nigeria’s 36 states. While some states have managed to adjust, many now face financial instability, relying on federal allocations to meet salary obligations.
Experts warn that without serious cost-cutting measures and revenue growth strategies, many states will continue to struggle with wage payments, further straining their economies.
