States Challenge FG’s N600bn Allocation for N70,000 Minimum Wage

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State representatives at the recent Federation Accounts Allocation Committee (FAAC) meeting have voiced strong opposition to the Federal Government's decision to reserve an additional N600 billion from the federation’s revenue for the implementation of the new minimum wage.

During the FAAC meeting held on August 16, 2024, it was revealed that the Federal Government transferred N200 billion into a non-savings account, bringing the total reserved funds to N595 billion. This decision, which affected the distribution of revenue to states, sparked significant debate among state finance commissioners.

Akwa Ibom’s Finance Commissioner, Dr. Linus Noah, Delta’s Okenmor Tilije, and Ekiti’s Akintunde Oyebode were among those who raised concerns, arguing that the withheld funds should instead be distributed among the states to alleviate their financial difficulties.

Despite an increase in gross revenue—from N2.48 trillion in June to N2.61 trillion in July—the FAAC distributed N1.36 trillion to the three tiers of government in August, slightly less than the N1.35 trillion shared in June.

The Minister of Finance, Wale Edun, praised President Bola Tinubu for signing the National Minimum Wage Act into law, noting that its implementation would benefit all Nigerians. He added that discussions on the necessary adjustments were still ongoing.

However, the commissioners questioned the deduction from the statutory allocation, with Dr. Noah arguing that the funds should have been distributed due to the financial pressures facing states. Delta State's Commissioner, Okenmor Tilije, agreed, stating that the savings only benefited the central government, and the funds should instead be used to augment the distributable revenue.

In response, the Accountant-General of the Federation (AGF) explained that the decision to save was made to ensure funds were available for future obligations, including the payment of the new N70,000 minimum wage.

Nevertheless, Ekiti’s Finance Commissioner, Akintunde Oyebode, maintained that sub-national governments should have autonomy over their portions of the funds, especially as they did not benefit from the interest accrued on the savings. He emphasized the importance of the time value of money in deciding whether to save for the future.

Despite the objections, Lydia Jafiya, the Permanent Secretary of the Finance Ministry, who chaired the meeting after Edun's departure, concluded the discussion by endorsing the revenue distribution for the month, effectively overruling the state representatives' concerns.

President Tinubu had signed the new minimum wage into law on July 29, following negotiations with labor unions. While implementation has yet to begin, labor leaders have urged patience, expressing optimism that the process would be completed by the end of August. Currently, only Adamawa, Lagos, and Edo states have commenced payment of the new minimum wage.

In addition to concerns over the wage allocation, state finance commissioners also questioned the transparency of the Nigerian National Petroleum Company Limited (NNPCL) in its financial dealings. They called for the NNPC to operate independently of the Federation Account to ensure accountability.

These concerns were raised after it was revealed that NNPC had claimed N4.34 trillion from the Federation due to exchange rate differentials, a significant increase from the N2.69 trillion claimed in May.

In response to these issues, the finance minister emphasized the government's commitment to the rule of law and the sanctity of contracts, urging all stakeholders to respect these principles.


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