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Rising Wages and Low Productivity: The Need for a Justified Minimum Wage Agreement

declaration of an indefinite strike action in response to the Government’s failure to favourably review Nigeria’s minimum wage.



Labour, Minimum wage, Oil marketers back out of NLC, TUC nationwide strike, support deregulation policy

Recently, the age-long battle between the Nigerian Government and the Labour Unions played out with a declaration of an indefinite strike action in response to the Government’s failure to favourably review Nigeria’s minimum wage (currently ₦18,000 per month, approximately $50 per month).

Many workers familiar with these scenarios expected a total downing of tools, resulting in a drawn-out battle between Government and the Unions that would only end when the nation could no longer bear the effects of the near total suspension of economic activities.

Quite surprisingly, the strike was largely ignored by many associated unions, particularly the heavyweights – Nigeria’s oil unions and the general private sector. The Government also quickly asked the labour unions to return to the negotiation table with a promise to “make the Nigerian worker smile”. The strike barely lasted a week and the impact was less visible than many expected.

With an expected fiercely-contested re-election barely six months away, Government’s willingness to engage in negotiations is quite understandable. What is less clear to many is the unwillingness of many labour unions to embark on an industrial action over the issue.

The International Labour Organisation (ILO) defines minimum wage as one that ensures workers (and in some cases, their families) will receive a basic minimum income which enables them to meet their needs (and those of their families).

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At ₦18,000 per month, for a country with a minimum living cost of ₦40,100 and ₦131,700 per month for individuals and families respectively (, Nigeria’s minimum wage does not meet the ILO’s definition of an acceptable minimum wage. Also, at $50 per month, most workers earning the minimum wage can be expected to sit well below the United Nation’s set poverty standard of $1.08 dollars per day if they have a household with more than one dependent.

While the labour unions’ clamour for a significant increase in the minimum wage is well justified given the cost of living and poverty standards, a negotiation by Government which leads to more taxpayers money being channelled into increasing workers’ wages without an enforceable action plan to increase productivity of the public service is unjustifiable and does not deliver value-for-money to taxpayers.

The public service is not only known for its poor wages, but it is also known for its low productivity. A quick review of BudgIT’s 2017 State of States report shows that all states fall below international standard in terms of human capital and other development indices (health, education, life expectancy & ease of doing business). While the productivity level of the public service may not be solely to blame for these issues, it does play a significant role in these indices.

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Interestingly, most of these states also have public service wage bill which is over 200% of their internally generated revenue and sometimes as high as 60% of their total revenue (internally generated plus federal allocation).

With such a significant amount of state resource devoted to the running of the public service, it is understandable that there is huge expectation that the public service will drive development in these states by improving service delivery to enable the other sectors to thrive well.

With the development of the nation at stake, the Government must not short-change taxpayers and trade away development of the country, by agreeing to a wage increase without setting out enforceable actions at improving productivity in the public service.

This article was contributed by Akintade Rotimi

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Fidelity Bank Plc must cover the chink in its curtains to keep rising 

Fidelity Bank Plc follows the narrative of top tier-2 banks, which have had better or easier years.



Fidelity Bank Plc

The Nigerian banking sector has consistently been one of the most profitable sectors in the Nigeria Stock Exchange market. However, in 2020, Deposit Money Banks (DMBs) have faced a flurry of impediments, which may have affected their solidity.

With reduced income from fee and commission implemented at the start of the year by the Central Bank of Nigeria, the paucity of foreign currency for international transactions, the resulting economic contraction from dire effects of the coronavirus pandemic, and the consequent operational constraints of keeping employees safe, 2020 is obviously fraught with numerous disorders for banking institutions.

READ: Another Fidelity Bank Non-Executive Director purchases 1 million shares worth N2.75million

For most, it hasn’t exactly been a year for growth at all, more like a walk in the woods, where improvements to bottom-line is almost unexpected. This period, many banks seem content with simply surviving and fundamentally matching their previous feats.

Fidelity Bank Plc follows the narrative of top tier-2 banks, which have had better or easier years. The bank generated a 2020 9M PAT of N20.4billion, rising 7.08% from the corresponding figures last year, but drilling solely into its results in Q3’2020 and its exact comparative period in 2019, the bank suffered reduced interest revenue, reduced fees and commission, reduced profit before tax, and reduced after-tax profit.

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READ: STANBIC IBTC posts Profit After Tax of N45.2 billion in H1 2020

Fidelity Bank Plc concluded Q3 with a profit position of N9.1billion, 13.7% decline compared to its position in 2019 y/y. PBT reduced by 12.9% from N10.8billion in 2019 to N9.4billion this year. Gross earning in Q3 was only N49billion as against N57billion in 2019 – plummeting 14%.

The Group Chief Executive Officer of the bank, Mr. Nnamdi Okonkwo, commenting on the result said: “Our 9 months results reflect our resilient business model, particularly in a very challenging operating environment. We worked closely with our customers to gradually recover from the economic impact of the pandemic and the attendant effect of the lockdown. The drop in gross earnings was due to the decline in interest and similar income, caused by lower yields and drop in fee income.”

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READ: Sterling Bank Plc records 3.28% decline in 2020 9M gross earnings

True cause of the reduction in earnings

DMBs generate gross earnings under three primary subheads: Interests earned, Fees and commission, and Other operating income. Fidelity Bank Plc generated a combined total of N150.8billion for the period ended September 2020 from these three categories, compared to the N158.5billion in the corresponding period last year.

READ: Ethereum Miners earn a staggering $1 million in 1 hour

Deeper analysis reveals that this rising tier-2 bank has seen more deficit in revenue from fee and commission compared to the other aforementioned gross-earnings’ generating-sources within this period. Interest earned dropped by a difference of N4.3billion, while revenue from fee and commission saw a decline of N4.8billion from N14.5billion in 2019 to N19.3billion YoY.

Fee and commission as a component of gross earnings

Card maintenance fees, account maintenance fees, commission on remittances, collect fees, telex fees, electronic transfer fees, amongst others, represent the plethora of channels that makes up income from fee and commission.

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READ: Strong performance from Stanbic IBTC, despite weak retail banking position

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The real insight this particular component of gross earnings provides is that a spike in revenue generated indicates increasing/increased customer account activity. The more a customer maximizes the usage of an account’s product and facilities, the more the revenue earned from this segment. Thus, earnings from fees and commissions are so overriding due to their apparent controllability.

For example, a bank could make the decision to purely pursue and aggressively drive the usage of its ATM debit card and promptly see the revenue from commission rise. Furthermore, an increased rate of card production and collection necessitates usage and consequently means more money is earned as card maintenance fees.

READ: Unity Bank Plc posts gross earnings of N11.04 billion in Q3 2020

The fact that gross earnings reduced mostly from fees and commissions should be a telling concern for the Management of Fidelity Bank Plc. Post covid-19 would birth the dawn of a new era for business processes. The management must guarantee the usability of its electronic banking channels, promotion of its cards, and with urgency, implement improved service delivery mechanisms to ensure that it is the first port of call to customers for general payments and remittances.

These measures are of grave significance in the bid to bridge its widened fee and commission income gap.

READ: Central Bank says monetary policy not to blame for rising food cost

Other indices

Holistically, in the 9 months ended September, it is worthy of note that the bank made certain advancements. Customer Deposits, Net Loans and Total Assets all grew in double digits. Customer Deposits grew by 22.3% from N1.2billion to N1.5billion, Total Assets also rose by 21% from N2.1billion in 2019 to N2.5billion, and Net Loans rose by 12.9% to N1.3billion from N1.1billion.

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Airtel is paying up its debts

Airtel’s annual report revealed that the company has a repayment of $890 million due in May, as well as, an installment of $505 million due in March 2023.



Top payday loans, Airtel is paying up its debts

Airtel’s presence in 14 countries from East Africa to Central and West Africa would have been impossible without relevant financial investments. But, while the funds have been key to its growth in the past few years, many of its financial obligations are starting to mature quickly.

The Covid-19 pandemic has had negative economic effects on different sectors of the economy; however, the resilience of the telecom sector is evident in an increase in Airtel’s income. The overall performance of Airtel increased with a revenue growth in constant currency of 19.6% in Q2 compared to 16.4% recorded in Q1, while revenue on reported basis increased by 10.7% to $1.82 billion, with Q2 revenue growth of 14.3%.

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Unilever Nigeria Plc: Change in management has had mixed impact

9 months into the change of management, Unilever Nigeria Plc’s performance in Nigeria has been largely underwhelming.



Unilever Overseas increases stake in Unilever Nigeria Plc

Change in the management of a company is never a walk in the park. Transitions usually take time to yield the desired results. Organizations can look to past successful managerial transitions for inspiration, but not for instruction because there is no defined playbook. The decision to replace Mr Yaw Nsarkoh, who served as the Managing Director of Unilever Nigeria Plc until the end of 2019 was plausible, but adjustments were never going to be an easy task.

Mr Nsarkoh had served as Managing Director of the company for 5 years and steered the course of its proceedings with remarkable skill up until the financial performance disaster which culminated in his resignation on November 28th, 2019.

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