The Federal Government of Nigeria has projected a significant rise in its personnel costs, estimating an increase of at least 60% for the year 2025. This surge is attributed to the recent implementation of a new national minimum wage and corresponding adjustments across all levels of the federal civil service.
According to the 2024 budget, personnel expenditure was initially set at N4.1 trillion. With the anticipated 60% rise, this figure is expected to increase by N2.46 trillion, bringing the total personnel cost to an estimated N6.56 trillion in 2025. The disclosure was made in the recently released 2025-2027 Medium Term Expenditure Framework and Fiscal Strategy Paper.
The Medium Term Expenditure Framework, which received approval from the Federal Executive Council, aims to align government policy objectives with available financial resources. In July 2024, President Bola Tinubu sanctioned an increase in the minimum wage from N30,000 to N70,000 for federal workers.
Reports indicate that federal employees have begun receiving the updated wage, though the implementation has been uneven across states. While several states have pledged to adopt the N70,000 minimum wage, others have committed to paying even higher amounts. The Nigerian Labour Congress recently issued a December 1, 2024, deadline for state governments that have yet to comply with the new minimum wage policy.
The MTEF report highlighted that as of August, the government had disbursed N2.67 trillion, which constitutes 65% of the N4.1 trillion allocated for personnel costs in the 2024 budget. The report projects that the personnel costs will increase by 60% in 2025, primarily due to adjustments in the minimum wage. The document states that the personnel expenditure for 2023 was N3.83 trillion, and by mid-2024, it reached N2.67 trillion. With the new wage adjustments, the personnel cost is expected to rise considerably, influencing both employee salaries and contributions to pension and health insurance schemes.
Furthermore, the government has allocated a total of N9.64 trillion for personnel and pension costs in 2025, which marks an increase of N3.56 trillion (or 58.7%) compared to the previous year. This substantial hike is mainly attributed to the implementation of the new minimum wage and related adjustments.
The rise in personnel expenses, coupled with increased debt obligations, has led to a projected budget deficit of 3.87% of GDP for 2025. The estimated deficit is expected to reach N13.08 trillion, up from N9.18 trillion in 2024, accounting for approximately 38% of total government revenue. The government attributes this growing deficit to the financial impact of the new wage policy, pension liabilities, and rising debt costs.
