Was Nigeria minimum wage $120 in 2010 more valued than $83 in 2019?

Verdict: Partially True
The Claim: A WhatsApp post questioning the monetary value of the new minimum wage has gone viral. The post reads; “Nigeria minimum wage in 2010 was N18, 000 ($120). In 2019, the minimum wage is N30, 000 ($83). They won’t show you this”.
Following the signing of the new National Minimum Wage Act by President Mohammadu Buhari on the 18 April 2019, the new Act provides for payment of N30,000 minimum wage, which increased from N18,000, but a claim alleging that the value of the new minimum wage is less than the previous minimum wage when converted to dollar went viral.
The Fact: In January 2011, former president, Goodluck Jonathan sent a Minimum Wage Bill to the National Assembly, proposing N18,000 as the National minimum wage. On February 23, 2011, the Senate amended the National Minimum Wage Act, thus increasing the minimum wage from N7, 500 to N18, 000. The bill was finally signed by the president in March, 2011.
Our analysis of exchange rate data of dollar to Naira from the  Central Bank of Nigeria (CBN) website for the month of March 2011 indicates that the average central rate for the month was N150.49/$1. Thus, at the time the former President signed the Minimum Wage Bill into law, the dollar equivalent of the N18,000 minimum wage was $119.6. This is approximately $120.
However, as at the day (18 April 2019) that the incumbent president signed the new law, CBN exchange rate was N306.45/$1. By implication, the N30,000 new minimum wage, if converted to dollar, amounts to $98 approximately.
However, using the purchasing power parity (PPP), the value of N18,000 minimum wage will be $58.7. Exchange rates can quickly change which artificially changes the values of currency. The PPP of a currency is the quantity of the currency needed to purchase a given unit of goods. The purchasing power of N18,000 in 2011 has changed in value.
For instance, The cost of a bag of rice in 2011 sells for around N6,500. In 2019 the same quantity of rice is selling above N15,000. The N30,000 ($97.9) minimum wage is therefore of greater value than N18,000 in present time.
Conclusion:  Though the claim that Nigeria minimum wage in 2011 was N18, 000 ($120) is PARTIALLY TRUE, but using the purchasing power parity calculation, the claim that N18,000 is of greater value than N30,000 in 2019 is false.

Leave a Comment

Your email address will not be published.