Daniel Otera
The United States Department of State’s 2024 Country Reports on Human Rights Practices, released in August 2025, casts a critical spotlight on Nigeria’s newly implemented N70,000 minimum wage. Describing it as insufficient to alleviate poverty amid the country’s escalating economic challenges, the report raises alarms over the wage’s limited coverage, weak enforcement, and its diminished purchasing power due to the naira’s depreciation.
The report, a comprehensive assessment of human rights and labour conditions globally, urges Nigerian stakeholders to focus on effective enforcement and protective labour policies to combat poverty and the country’s economic vulnerabilities. It also emphasizes the need for reforms that extend protections to Nigeria’s vast informal sector, which employs a significant portion of the population.
The US Department of State’s report underscores that Nigeria’s new minimum wage of N70,000 (equivalent to approximately $47.90 per month at an exchange rate exceeding N1,500 to the dollar) “falls below the poverty income level.” Enacted through the National Minimum Wage (Amendment) Act 2024, the wage doubled from N30,000, aiming to provide relief to workers grappling with soaring living costs. However, the report highlights the naira’s significant depreciation as a critical factor eroding its value. The currency depreciation placed the new wage below the poverty income level, as the naira’s value plummeted by over 50% in 2023 from N450 to N1,035 per dollar, according to the International Monetary Fund (IMF).
By November 2024, the exchange rate had worsened to over N1,600 per dollar, driven by Nigeria’s foreign exchange market liberalisation, as reported by the Central Bank of Nigeria (CBN). This depreciation severely curtailed the purchasing power of the N70,000 wage. For example, in 2024, the average price of a 50kg bag of rice rose from N45,000 in January to over N85,000 by November. With food inflation escalating to 39.9%, largely driven by staples like rice, yam flour, and bread, the purchasing power of workers earning N70,000 has plummeted.
The National Minimum Wage (Amendment) Act 2024 only applies to employers with 25 or more full-time employees, leaving a large portion of Nigeria’s workforce uncovered. The law excludes seasonal agricultural workers, part-time employees, and commission-based workers, which is problematic considering the structure of Nigeria’s economy. According to the African Development Bank, approximately 92.6% of Nigeria’s workforce operates in the informal economy, including market traders, artisans, and small-scale farmers. The US report points out that between 70 to 80% of Nigeria’s workforce operates informally, where wage regulations and occupational safety and health laws are rarely enforced.
This exclusion of informal workers makes the minimum wage law largely irrelevant for most Nigerians, as it does not apply to the vast majority of the population. Mr. Ayuba Wabba, former president of the Nigeria Labour Congress (NLC), underscores this issue, stating that the law does not reflect the realities of Nigeria’s labor market, where most Nigerians work in small businesses or informal setups.
The report also highlights the insufficient number of labor inspectors as a critical barrier to enforcing the minimum wage and labor laws. According to the International Labour Organization (ILO), Nigeria has fewer than 1,000 labor inspectors overseeing a workforce of over 60 million people. The ILO recommends a ratio of one inspector for every 20,000 workers, which is considered standard for developing economies, but Nigeria’s current system falls drastically short.
This discrepancy highlights a critical gap in the enforcement of labor laws, leaving millions of Nigerian workers vulnerable to exploitation. In small businesses and the informal sector, where workers often earn far below the minimum wage and face unsafe working conditions, non-compliance with labor laws is rampant. Human Rights Watch reported that many informal workers, including street vendors and domestic workers, earn as little as N10,000 monthly with no access to formal grievance mechanisms.
The economic hardship exacerbated by inflation and currency devaluation is reflected in the growing levels of poverty. According to the World Bank’s Nigeria Development Update (October 2024), approximately 46% of Nigeria’s population, or about 104 million people, currently live below the poverty line. This stark figure highlights the growing inequality in the country, with many Nigerians unable to meet their basic needs due to the rising cost of living. The National Bureau of Statistics (NBS) reports that Nigeria’s headline inflation rate surged to 34.6% by November 2024, driven by skyrocketing food prices and an overall increase in the cost of essentials.
Despite the minimum wage increase, the gap between wage growth and the cost of living remains significant. Dr. Ngozi Okonjo, a labor economist based in Abuja, emphasizes, “While the minimum wage has been adjusted in recent years, it simply cannot keep up with the skyrocketing prices of basic goods, leaving a significant portion of the population struggling.”
The US report also cites the shortcomings of the minimum wage policy within the broader context of Nigeria’s economic reforms, such as the removal of fuel subsidies and exchange rate unification. These policies, aimed at attracting foreign investment, have triggered sharp inflation and increased living costs. The World Bank notes that the removal of fuel subsidies in May 2023 led to a 167% increase in petrol prices, further driving up transportation and food costs.
While the IMF notes some macroeconomic gains, such as an increase in Nigeria’s international reserves, the report warns that these reforms have “increased economic vulnerabilities” for ordinary Nigerians. SBM Intelligence, a Lagos-based consulting firm, raises concerns about the short-term hardships, emphasizing that the poorest segments of the population are bearing the brunt of these changes.
Despite the well-intentioned efforts behind Nigeria’s minimum wage increase, the US Department of State’s report paints a stark picture of its inadequacy in the face of Nigeria’s economic realities. The report emphasizes that while the minimum wage policy is a step forward, it is insufficient due to currency depreciation, the dominance of the informal economy, and weak enforcement.
The report calls for comprehensive labor reforms that not only focus on wage increases but also improve the enforcement of existing labor policies. It advocates for enhanced investment in labor inspection systems, with a particular emphasis on increasing penalties for non-compliance, to deter exploitation and ensure fair treatment of workers across all sectors. The government must also focus on extending labor protections to Nigeria’s informal workforce, which remains largely excluded from social protections.
For millions of Nigerians, the promise of a better livelihood remains elusive.
“The minimum wage increase is a drop in the ocean of Nigeria’s economic challenges,” says Mrs. Aisha Ibrahim, a labor rights advocate with the Trade Union Congress (TUC).