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‘Many States ‘ll go Bankrupt Over N30,000 Minimum Wage’

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  • ‘Many States ‘ll go Bankrupt Over N30,000 Minimum Wage’

A former Commissioner for Finance in Lagos State, Dr Adebayo Adewusi, says many states will become bankrupt when the implementation of the new N30,000 minimum wage commences.

He said some states did not have the capacity to pay the new wage, adding that the situation might become worse if there was a decline in revenue.

Adewusi, an immediate past chairman of WEMABOD, stated this in an exclusive interview with our correspondent on Monday.

Also giving an analysis of the N12,000 increase on the minimum wage, Adewusi said the N30,000 was lower in value compared with the N18,000 of 2015, due to the current level of inflation in the country and the exchange rate.

He said, “The N30,000 minimum wage in real terms is desirable at this time, given the level of inflation and the exchange rate as at now. From analysis, in 2015 before the President Muhammadu Buhari-led administration came on board, the minimum wage of N18,000 was $122, now the minimum wage of N30,000 today is about $85.

“So, if you look at it in real terms, you will say it is still not enough, but the truth is that even the N30,000 that we are talking about, many of the states cannot pay, they do not have the capacity to pay and that is the simple truth.”

According to him, there is the need for the Federal Government to augment the revenue allocation of states in order to meet up with their wage bills.

“What this means is that there is the need to do a total review of the revenue sharing formula. Except that is done, there is no way many of the states will pay and it will create a serious destabilising effect on the operations and the economy of many states. Even when it was N18,000, many states could not pay.

“We are all witnesses to the constant interventions to states in the name of bailout funds that the Federal Government gave as support. Right now, many states are still owing several months of unpaid salaries and pensions.

“So, it is a serious matter, and if what we are projecting comes to pass, of course there is going to be serious wahala because at the end of the day, if prices of crude oil come down, it means allocations to states will decline. When this happens, it means that the states would work extra hard to source for their own Internally Generated Revenue, otherwise many states will be bankrupt. It is the truth and reality of it,” he added.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market.

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Economy

Oil Prices Decline on Rising COVID-19 Cases

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Global Oil Prices Dipped on Friday as New COVID-19 Cases Jump Globally

Global oil prices decline on Friday as the number of confirmed COVID-19 cases surged across the world.

Brent crude oil, against which Nigerian oil is priced, declined from $43.47 per barrel it traded on Thursday during the Asian trading session to $41.60 per barrel on Friday at around 11:39 am Nigerian time.

global Oil prices While the price of US West Texas Intermediate (WTI) crude oil dipped from $40.97 per barrel it traded on Thursday to $38.78 on Friday.

Oil traders and investors are worried that the rising number of COVID-19 new cases would disrupt demand for the commodity and force refineries to shut down once again.

“I do not suspect many oil traders will be looking to place significant bids in the market today, suggesting prices may continue to wallow into the weekend,” said Stephen Innes, chief global markets strategist at AxiCorp.

Despite efforts by both OPEC plus and other top oil producers to halt falling oil prices and reduce global oil glut, the lack of a cure for COVID-19 remained global concerns.

As previously stated on this platform, until a cure is found the world would have to find a way to either work through COVID-19 or shut down activities completely.

This is coming a day after the Federal Government of Nigeria announced that it was putting school resumption plan on hold following the latest COVID-19 report that shows Nigeria’s confirmed cases crossed 30,000 on Wednesday.

In the United States, more than 60,000 new COVID-19 cases were reported on Thursday, forcing lawmakers to start contemplating the second phase of COVID-19 lockdown.

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Economy

We Are Losing N13.9bn Monthly Because FG Caps Tariff – Discos

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Discos Says it is Losing N14bn Monthly Because of NERC Capped Tariff

The Nigerian power Distribution Companies (Discos) have said they a losing N13.9 billion in revenue every month because the Nigerian Electricity Regulatory Commission, limited how much they can charge for consumption.

Ernest Mupwaya, the Managing Director, Abuja Electricity Distribution Company, made the statement during a presentation on behalf of the Discos to the House of Representatives Committee on Power.

The statement was after the Discos demanded realistic indices before the implementation of the proposed service reflective tariff, which was supposed to be implemented on July 1.

Mupwaya said there were some outstanding requirements before the service reflective tariff could be implemented.

“One of them is the removal of estimated billing caps. The financial impact of the Capping Order is an average loss of N13.9bn monthly, thereby, undermining or jeopardising the minimum remittance requirement,” Mupwaya stated.

The July 1 service tariff implementation was halted by members of the National Assembly, who prevailed on the Discos to shelve the date to the first quarter of 2021 due to the current economic challenges in Nigeria.

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Economy

Gbajabiamila Says Nigeria Can’t Compete in AfCFTA With Weak Industries

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Nigeria Must Ramp up Industrialisation to Prevent Dumping by Other Nations

The Speaker of the House of Representatives, Femi Gbajabiamila, has said the nation can not compete effectively in the African Continental Free Trade Area (AfCFTA) with weak industrialisation and manufacturing activities.

Gbajabiamila disclosed this while receiving Adesoji Adesugba, the newly appointed Managing Director of the Nigeria Export Processing Zones Authority.

The details of the visit were made public on Thursday in a statement titled, “AFCFTA: House Speaker tasks Nigeria on industrialisation through free trade zones.”

Gbajabiamila was quoted as saying “We must act proactively so that we don’t become a dumping ground for other African nations.

“Our best option in this circumstance is to immediately set machinery in motion to ensure the effective functioning and flourishing of our export processing zones.

“We must remove all bottlenecks and perfect all stumbling blocks. We will then be fully prepared for AfCFTA and also generate massive jobs for our unemployed youths and enhance our foreign earnings.”

He added that the nation must as a matter of national emergency ramp up industrialisation through free trade zones and other effective means to compete with South Africa, Africa’s most industrialised economy and other African nations.

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