As controversy over the new minimum wage continues in the country, economists have explained why some state governments cannot meet the $2.15 per day extreme poverty benchmark of the World Bank for some developing countries of the world.
In a release issued in April 2024, the global bank had said that in parts of sub-Saharan Africa, about 700 million people live on less than $2.15 per day and that the Sustainable Goal of ending extreme poverty by 2030 remains out of reach.
The bank stated, “Around 700 million people live on less than $2.15 per day, the extreme poverty line. Extreme poverty remains concentrated in parts of sub-Saharan Africa, fragile and conflict-affected areas, and rural areas.
“Global poverty reduction was dealt a severe blow by the COVID-19 pandemic and a series of major shocks during 2020-22, causing three years of lost progress. Low-income countries were most impacted and have yet to recover.
“In 2022, a total of 712 million people globally were living in extreme poverty, an increase of 23 million people compared to 2019.”
The global bank had stressed, “Eradicating poverty requires tackling its many dimensions,” and that “Countries cannot adequately address poverty without also improving people’s well-being in a comprehensive way, including through more equitable access to health, education, and basic infrastructure and services, including digital.”
It advised that to change the ugly tide, “policymakers must intensify efforts to grow their economies in a way that creates high quality jobs and employment, while protecting the most vulnerable.
“Jobs and employment are the surest way to reduce poverty and inequality. Impact is further multiplied in communities and across generations by empowering women and girls, and young people.”
But speaking with Saturday PUNCH, economic analysts said that the already bogus staff strengths of some states in the country might not allow them to put more workers under their payrolls.
The analysts also argued that the backlogs of arrears, gratuities and debts some of the governors inherited from their predecessors would also hinder them from paying a minimum wage as high as N90,000 monthly which equated to the $2 per day extreme poverty benchmark of the World Bank.
In his submission, the Chief Executive Officer, Centre for Promotion of Private Enterprise, Dr Muda Yusuf, said there was no way the governors could meet the World Bank extreme poverty gauge for the payment of workers’ wages.
He said, “I don’t think they (governors) can meet it. This is because even now, some of them are struggling to pay the N30,000 minimum wage. One of the biggest reasons for this is that the number of staff they are carrying is too large and the level of redundancy in many of the states is extremely very large.
“I am talking of people who are on the payroll of the states, but doing practically nothing daily. So, it is a big issue. Unless, they (governors) are going to drastically cut down on the number of staff. That is the only way I think that option (paying the World Bank benchmark) can work.
“As we speak, most of the governors are spending about 80 per cent of their revenues on salaries. Should the wage be increased substantially, it means the governments may use the totality of their incomes to pay salaries. How then do they take care of other citizens? At least they have to provide good roads, schools, water system and others.”
Also sharing his viewpoint with Saturday PUNCH, a finance analyst and former chairman (Western zone), Institute of Chartered Accountants of Nigeria, Dr Oyebade Oyedepo, said the major reason most of the state governments cannot pay any high minimum wage for their workers is due to the high cost of governance plaguing the country.
He said, “If cost of governance is reduced drastically, I can tell you authoritatively that most of the state governments will be able to pay a wage as high as N90,000 which the World Bank extreme poverty line benchmark of $2 per day equals going by the current exchange rate.
“The problem we are facing in this country is that the cost of governance is excessively high. If this can be reduced, they will be able to pay any amount agreed as minimum wage.”
