The financial burden of state governments has increased significantly following the implementation of the new N70,000 minimum wage, with personnel costs rising by nearly 90% from N2.036 trillion in 2024 to N3.87 trillion in the approved 2025 budget.
Despite allocating a total of N2.8 trillion for salaries in 2024, states collectively spent only N2.036 trillion, resulting in a N764 billion shortfall, according to budget implementation reports.
The surge in personnel costs stems from the enforcement of the new minimum wage and an upsurge in political appointments. Data extracted from the 2025 approved budgets of all 36 states, as documented on Open States, a BudgIT-backed platform, revealed that at least 27 states would struggle to pay salaries without federal allocations.
In July 2024, President Bola Tinubu officially approved the minimum wage increase from N30,000 to N70,000, following extensive negotiations between the government and labor unions. However, implementation has been inconsistent across states, prompting the Nigerian Labour Congress (NLC) to issue an ultimatum demanding full adoption by December 1, 2024. Despite this directive, several states are yet to initiate payments under the new wage structure, prolonging financial difficulties for civil servants.
A closer analysis of state budgets shows wide disparities in personnel cost increases. While 20 states recorded an increase exceeding 50%, 16 states experienced more moderate hikes below the 50% threshold.
Several states witnessed sharp escalations in their payroll expenses. Abia, Cross River, Ekiti, Niger, Rivers, and Taraba states experienced the highest surges, exceeding 100% of their 2024 personnel budgets. Meanwhile, Gombe, Osun, and Ondo recorded the lowest increases, remaining below 15%.
Some notable increases across states include:
Abia: Personnel costs rose from N33.045 billion to N77.34 billion, a 134% increase.
Adamawa: Increased from N48.61 billion to N74.23 billion, marking a 52.7% rise.
Akwa Ibom: Jumped from N91.74 billion to N126.69 billion, a 38.1% increase.
Anambra: Increased from N34.001 billion to N63.41 billion, reflecting an 86.45% growth.
Bauchi: Rose from N42.29 billion to N70.41 billion, a 66.5% rise.
Bayelsa: Increased from N60.18 billion to N114.21 billion, an 89% jump.
Cross River: Experienced one of the highest increases, rising from N35.02 billion to N106.12 billion, a 202% surge.
Delta: Grew from N139.999 billion to N185 billion, a 32.5% increase.
Ekiti: Almost doubled from N30.69 billion to N62.51 billion.
Kano: Witnessed a drastic increase from N89.97 billion to N150.996 billion, a 67.8% rise.
Lagos: Recorded the largest increase, with personnel costs more than doubling from N225.114 billion to N401.12 billion.
Niger: Notably jumped from N25.36 billion to N104.301 billion, a staggering 311.5% rise.
Oyo: Increased from N116.207 billion to N214.116 billion, an 84.3% growth.
Rivers: Surged from N167.05 billion to N343.196 billion, a 105.6% rise.
Taraba: Increased from N36.319 billion to N95.23 billion, reflecting a 162% rise.
On the lower end of the spectrum, Gombe’s personnel cost decreased slightly from N40.52 billion to N40.28 billion, a marginal drop of 0.6%.
The staggering increase in personnel costs has raised concerns about the financial sustainability of state governments. With many states reliant on federal allocations to meet salary obligations, economic analysts have warned of potential financial crises if internally generated revenues do not improve.
State governors have also voiced concerns over the fiscal strain, with some calling for an urgent review of federal revenue-sharing formulas to ensure states can meet salary commitments without jeopardizing development projects.
As the financial landscape shifts, the pressure remains on state governments to balance wage increases with broader economic sustainability, ensuring that civil servants receive fair compensation while maintaining fiscal responsibility.