2023 Survey On Employers Response To Fuel Subsidy Removal in Nigeria VF

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2023 Survey on
Employers’ Response
to Fuel Subsidy
Removal in Nigeria
September 2023
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© 2023 KPMG Advisory Services, a partnership registered in Nigeria and a member firm of the KPMG global organisation of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Content
Content
01
Excecutive
Overview
pg. 04
04
Outlook for the Rest
of 2023 and 2024
pg. 15
06
Conclusion
pg. 43
02 04
Participants Key Findings
Demography from the Survey
pg. 05 pg. 16
03 05
Inflation & Some Market Developments
Pay Increases Post-KPMG Fuel Subsidy Survey
pg. 08 (July to August 2023)
pg. 33
Executive Outlook for the Key Findings Some Market Developments
Participants Inflation & Conclusion
Overview Rest of 2023 from the Post-KPMG Fuel Subsidy
Demography Pay Increases
2023 Survey on Employers’ Response to Fuel Subsidy Removal in Nigeria and 2024 Survey Survey (July to August 2023)
Executive Overview
We are pleased to publish our survey report on employers’
response to the removal of subsidy on the pump price of
Premium Motor Spirit (PMS) (otherwise called Petrol or Fuel),
announced by President Ahmed Bola Tinubu at the swearing-in
Executive Overview
ceremony of his administration on May 29, 2023. The survey

was conducted in June, a month after the announcement to
gauge employer’s response as well as provide insights for
informed decision making.
We have also covered market developments subsequent to

the survey to draw a holistic view of the market for informed
decision making.
Although there had been past attempts and discussions on

removal of fuel subsidy, the May 29 pronouncement has
turned out to be different because it has fully eliminated
subsidy, unlike past instances of partial removal. The
development took most, if not all employers by surprise.
Virtually caught offguard, most employers were uncertain of
their response, especially given business challenges within
prevailing economic circumstances. This is evidenced by the
fact that 81% of respondents were yet to implement any
palliative one month into the subsidy removal. We, however,
expect this number to have reduced significantly as of the
time of this report, given subsequent developments and
demands from employees/labour unions post the survey.
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Participants Demography
We received about 200 submissions from respondents. However, after quality assurance review, we have
prepared this report based on 164 submissions. About 55% of the submissions comprise FMCG; ICT, Payment Systems & E-Commerce; Consulting;
Oil and Gas (Retail, Marketing & Services); and Financial Services (Banking Institutions) companies, as shown below. We also noted that 97% of the
respondents are private sector organisations, while the balance of 3% are public sector entities.
Sector Breakdown of the 164 Participating Companies
Sector Breakdown of the 164 Participating Companies
15.24% 15.24%
9.15%
8.54%
6.71% 6.71%
5.49%
4.88%
4.27%
3.05% 3.05% 3.05%
2.44%
1.83% 1.83% 1.83% 1.83%
1.22% 1.22% 1.22% 1.22%
FMCG
Consulting
Power & Renewable Energy

Others
Church
Chemicals & Industrial
Oil and Gas (Exploration)
Entertainment & Hospitality

Aviation, Transport &
Education
Financial Services (Banking
Financial Services (Non-
Materials & Construction
Legal Services
Oil and Gas (Midstream)

ICT, Payment Systems & E-
Marketing & Services)
Pharmaceuticals
NGO & Development
Conglomerates
Real Estate & Facility Mgt

Oil and Gas (Retail,
Banking Institutions)
Healthcare &
Engineering, Building
Agencies
Logistics
Markets
Institutions)
Commerce
Note: “Others” include Advertising, Packaging, Outsourcing, Agribusiness.
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Financial Turnover of Respondents: In terms of size, the survey

respondents are well-distributed between small and large entities. About
22% of the respondents have revenue of more than ₦100 billion, while
about 9% have revenue of above ₦500 billion. Also, about 71% have
turnover size of ₦50 billion and below, as presented in the chart below:
Survey Respondents by Financial Turnover (N)
>500bn,
>500bn,
9.15%
9.15%
<= 500m,
<= 500m, <= 500m
<= 500m
19.51%
19.51%
>500m - 1bn
>500m - 1bn
>100bn - 250bn,
>100bn - 250bn, >1bn - 5bn
8.54% >1bn - 5bn
8.54%
>5bn - 10bn
>5bn - 10bn
>50bn -
>50bn - >10bn - 50bn
100bn, 6.71% >500m -
>500m - >10bn - 50bn
100bn, 6.71% 1bn,1bn,
12.80%
12.80%
>50bn - 100bn
>50bn - 100bn
>100bn - 250bn
>100bn - 250bn
>10bn - 50bn, >250bn - 500bn

>250bn - 500bn
>10bn - 50bn,
15.85%
15.85% >1bn>1bn
- 5bn,
- 5bn, >500bn
14.02% >500bn
14.02%
>5bn>5bn
- 10bn,
- 10bn,
9.15%9.15%
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Staff Strength of Respondents (Temporary and Permanent)
About 18% of respondents have staff strength of at least 2,500, while about
69% have strength of 500 employees and below. Further details are presented
in the chart below:
Staff Strength of Survey Participants

Staff Strength of Survey Participants
34.1% 34.8%
% of Respondents
9.8%
7.3% 7.9%
6.1%
<=100 101-500 501-1000 1001-2500 2501-5000 >5000
Staff Strength
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Inflation & Pay

Increases
Following the subsidy removal, the pump price of petrol has
increased from between ₦189/litre and ₦194/litre1 as of
May 2023 to between ₦577/litre and ₦617/litre2 presently,
depending on location within the country. This represents an
increase of between 205% and 218%.
According to National Bureau of Statistics, the average

cost of intra-city bus transportation in Nigeria has increased
from ₦649.59 in May 2023 to ₦1,285.41 in June 2023,
representing about 979% increase, largely due to the increase
in pump price of petrol.
From experience, average salary increases have generally

lagged inflation due to affordability and sustainability issues.
This is depicted in the chart overleaf. However, pay increases
have trended in similar trajectory as inflation. For the gap
between pay increases and inflation to narrow, the former
must either grow at a higher pace and/or inflation drops over
time. Rising energy and food prices present a challenge to
this, including persistent currency depreciation.
1
emoving Nigeria’s PMS Fuel Subsidies: We Can’t Have Our Cake & Still Eat It, KPMG Nigeria, June 2023
R
2
www.globalpetrolprices.com; www.carmart.ng
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Pay Increases Lag Inflation
Inflation Vs. Pay Increases

25.0
22.5
20.0 18.8
17.0
16.4
15.0
13.2 13.5
12.1
Percentage
11.3
10.0 8.8 9.0
5.0
0.0
2018 2019 2020 2021 2022 2023
Inflation Pay Increase
Source: National Bureau of Statistics; KPMG
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Inflation increased from 22.41% in May 2023 to 24.08% in July 2023 indicating a steep increase in price levels compared to prior months. According to
the World Bank, Nigeria’s consumer price index has surged and is currently one the highest globally. Generally, average annual inflation has been on an
upward trend since 2019 and a source of concern for employers and employees.
The chart of historical inflation below shows an upward trend in inflation from September 2019 to March 2021, due to rise in food prices occasioned by
border closure, increase in minimum wage, foreign exchange restrictions on food importation, increase in VAT from 5% to 7.5%, increase in power tariff,
COVID-19 adverse impact on foreign exchange rate and increase in pump price of petrol, amongst others. Thereafter, we experienced a downward trend
from April 2021 to November 2021. However, there has been a reversal with a steady increase from early 2022 to date owing to rising global energy and
food crises and persistent depreciation of the Naira. The sharp increase between June 2023 and July 2023 (highlighted below) is partly attributable to the
pass-on effect of the fuel subsidy removal and high food prices.
The World Bank has projected that inflation may hit 25% in 2023 because of the petrol subsidy removal. In Q1 2024, it is projected that the subsidy
removal will start to have a disinflationary effect, meaning
Monthly that itRate
Inflation willTrend
alleviate inflationary
in Nigeria pressures
from 2019 - 2023 despite higher petrol prices3.
Monthly Inflation Rate from 2019 - 2023
25.00
24.00
23.00
22.00
21.00
20.00
Percentage
19.00
18.00
17.00
16.00
15.00
14.00
13.00
12.00
11.00
Apr-19
May-19
Jan-19
Feb-19
Aug-19
Nov-19
Nov-21
Sep-19
Apr-22
May-22
Aug-22
Nov-22
Jan-20
Feb-20
Apr-20
May-20
Aug-20
Nov-20
Sep-20
Jan-21
Feb-21
Apr-21
May-21
Aug-21
Sep-21
Jan-22
Feb-22
Sep-22
Jan-23
Feb-23
Apr-23
May-23
Mar-19
Jun-19
Jul-19
Oct-19
Dec-19
Mar-20
Jun-20
Jul-20
Oct-20
Dec-20
Mar-21
Jun-21
Jul-21
Oct-21
Dec-21
Mar-22
Jun-22
Mar-23
Jul-22
Oct-22
Dec-22
Jun-23
Jul-23
Source: National Bureau of Statistics; KPMG
3
Punch Newspaper
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Based on the chart below, pay increases between November 2020 and July 2023 have generally trended between 4% and 22%, compared to inflation
which trended between 16% and 24% during the same period. In response to the fuel subsidy removal, we observed that employers have implemented
much higher pay increases of between 19% and 40% in 2023. This has the potential to narrow the gap between inflation and income levels and protect
purchasing power.
Review of Pay Trends Per Sector

2020/2021 Actual
2021 Actual
25%
2022 Actual
22%
2023 Actual
20%
19%
17%
15% 15% 15% 15%
15% 15%
15% 14% 14%
13% 13% 13% 14%
13% 13%
12% 12%
12%
10% 10% 10%
10% 10%
10%
8%
7% 7% 7%
6%
5% 4%
0%
Banking Industry Building Materials/ FMCG Oil & Gas (E&P) Pharmaceuticals Telecoms
Constructions
Source: KPMG Annual Industry Surveys in Nigeria
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Global Pay Movements & Inflation
The global market has witnessed significant increase in inflation over the past two (2) years, as shown below. According to Euromonitor, global
inflation is forecast to reach 7.0% in 2023 and 4.7% in 2024.4
Global Inflation for 2015 - 2024

Global Inflation for 2015 - 2024
9.0%
8.0% 8.3%
7.0% 7.0%
6.0%
Percentage
5.0%
4.7%
4.0%
3.5%
3.0%
2.2% 2.4% 2.2%
2.0% 1.9%
1.4% 1.6%
1.0%
0.0%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Forecast Projected
Source: Euromonitor; www.macrotrends.net
4
Euromonitor
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For most countries globally, salary increases are still being awarded. Inflation, labor markets, unemployment rates and overall economic climate
continue to play an important role in determining those salary increases. The data below shows a drop in pay increases in 2020 and 2021, due to
COVID-19 and the aftermath tough economic conditions. However, we noted a pick-up in 2022 before moderating again in 2023.
2015 - 2023 Actual Salary Increases Across the Globe

2015 - 2023 Actual Salary Increases Across the Globe
12.0%
10.0%
Mean Percentage Increase
8.0%
6.0%
4.0%
2.0%
0.0%
2015 2016 2017 2018 2019 2020 2021 2022 2023
Switzerland Japan Canada UK United States Singapore Mexico China India
Source: WorldatWork; KPMG
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2023/2024 Budgeted Salary Increase - Around the World

2023/2024 Budgeted Salary Increase Across the Globe
As shown in the adjacent

9.6% chart, the projected salary
India
9.8%
increase for 2024 is lower,
6.2%
China compared to 2023 actual
6.3%
increases. Also India,
5.8%
Mexico
5.8% China and Mexico have
the highest pay increase
4.3%
Singapore rates, which should be an
4.5%
4.3% indication of their relatively
United States
4.4% high price levels.
4.3%
Germany
4.3%
4.1%
Netherlands
4.4%
4.1%
UK
4.2%
4.1%
France
4.1%
3.8%
Canada
4.0%
3.8%
Spain
3.9%
3.6%
Italy
3.6%
3.2%
Japan
3.3%
2.9%
Switzerland
2.9%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%
2024 Projected 2023 Actual
Source: WorldatWork 2023/24 Salary Budget Survey
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Outlook for the Rest of 2023 and 2024

The World Bank projects that the subsidy removal in
Nigeria will start to have a disinflationary effect from
Q1 2024, meaning that it will alleviate inflationary
pressures despite higher petrol prices5. In the global
market, the expectation is that inflation will drop to
around 4.7% in 20246. The US Energy Information
Administration (EIA) forecasts higher crude oil
prices in the second half of 2023 and into 2024,
as shown in the adjacent chart. Given the positive
correlation between crude oil prices and petrol, it is
expected that the current high pump price of petrol
may persist into 2024 and possibly increase further.
The Dangote Refinery that was inaugurated on 22
May 2023 is yet to deliver on the expectation of
producing the first fuel products by July or August
2023. Based on media reports, the revised date to
commence operation is October at 370,000 barrels
per day,7starting with diesel, jet fuel, then gasoline
(petrol) after ramp-up in November 2023. In addition,
there are efforts to rehabilitate the NNPC refineries
with the Port Harcourt refinery expected to be ready
in December 2023, while Warri & Kaduna refineries
are expected to commence production in Q1 20248. Source: EIA
This implies that petrol import may continue for
the rest of 2023, at the minimum, and possibly
into part of 2024. Employers will need to monitor
developments and plan to respond appropriately.
5
Punch Newspaper
6
Euromonitor
7
S & P Global Commodity Insights
8
Reuters News
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Key Findings from the Survey

Communication & Engagement with Employees
Key Findings from the Survey
Given the sudden nature of the subsidy removal and significant impact on employees, it is important that employers communicate and
engage their employees to acknowledge the difficult situation, show empathy and give assurance of necessary support to cushion the
impact. As of the time of this survey, only 46% of the 164 participating companies had issued some form of communication and / or
engaged their employees. We expect this percentage to have increased as of the time of this report.
Respondents Who Had Sent Out

Communication
Respondents Who HadtoSent
StaffOut
a Month into the
Communication
Subsidy Removal
to Staff a Month into the Subsidy Removal
46%
Yes
54% No
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A cross-section of the communication rate per sector is provided in the chart that follows. Communication was lowest amongst the Oil & Gas
Exploration & Production Sector. Also, although majority of respondents came from the FMCG sector, only 24% of the FMCG participants had put
out communication or engaged their employees as of the time of this survey. Legal Services; Oil & Gas (Midstream); and Real Estate & Facilities
Management are at 100% because of the relatively lower number of participants:
Sector Breakdown
Sector Breakdown of Rate of Communication of Rate of Communication with Employees
with Employees
100.0% 100.0% 100.0%
71.4%
64.0% 66.7% 66.7%
60.0% 60.0%
50.0% 50.0%
42.9%
35.7% 37.5% 37.5%
33.3% 33.3% 33.3%
24.0% 22.2% 20.0%
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Key Messages Communicated to Employees:

1. Acknowledgement of the situation and showing empathy, as well as appreciating staff for their
patience and commitment
2. Assurance of Management’s commitment to working out a suitable palliative in due course. Some of
the potential palliatives communicated included salary increase, remote working, car and transport
allowance review, etc.
3. Introduction or enhancement of Work-for-Home (WFH) arrangements to reduce commuting to and

from the office. A technology company said it “activated a one-month WFH”.
4. Introduction of a temporary day-off for staff, while Management works out a permanent solution.
5. Analysing the impact on both company and employee at a townhall
6. Advising employees to wait for the outcome of Nigeria Labour Congress’ (NLC) engagement with
government.
7. One company charged its employees to support the business to grow in the midst of the challenging
environment in order to support sustainable salary increases and other incentives, while working
to cut waste and inefficiencies. Similarly, another company communicated the need for cost
containment and restructuring.
8. Some companies used the opportunity to source palliative ideas from employees as a way of obtaining
their input towards arriving at a decision.
9. Other companies made suggestions to staff to explore car-pooling and other cost-saving options.
What Employers that Had Communicated Told
10. One company gave employees the option of working from home three (3) times a week or accept a
their Employees transport subsidy of ₦50,000 to work onsite every day of the week.
For companies that had issued a communication 11. One company plans to review its policy on mileage to align it with new realities.
or engaged their employees, we noted similarity
in their messaging when compared with the 12. Advice to employees on financial management and other tips to cope with or navigate the current
communication plans of the companies that were tough economic circumstances.
yet to engage their employees. The key messages
revolved around the following (in no particular order): 13. To prioritise and support employees with wellbeing and mental health programs, whilst the business
works out mitigating measures.
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Based on the chart below, most employers that had communicated or engaged their employees used the opportunity to communicate
initiatives or palliatives to mitigate the impact of the subsidy removal.
Key messages employers are communicating to employees

Key messages employers are communicating to employees
Acknowledgment of the current situation 21%
Message of empathy, patience, appreciation and hope 14%
Introduction of initiatives 39%
Currently reviewing the impact 6%
Financial management suggestion to employees 6%
Sourcing of palliative ideas from employees 3%
Dissemination of information about subsidy 11%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
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Companies Yet to Communicate & Engage Employees Respondents Who Had Sent Out
RespondentsCommunication
Who Had Sentto StaffOut Communication
a Month into the
to Staff a Month intoSubsidy
the Subsidy
Removal Removal
For the 54% respondents (see adjacent chart) that were yet to communicate or engage
their employees, most (29%) believed it was early days and wanted to wait to see how
developments would unfold before acting, as shown below. Given experience with past
attempts to eliminate fuel subsidy, where government have had to scale back decisions
to manage stiff resistance from the populace, the position of these companies may be 54% 46%
understandable. However, based on developments to date, this particular instance of subsidy 46% Yes
Yes
removal seems to be permanent. Another 25% of those yet to communicate are undecided on 54% No
No
their response or what to communicate to staff:
Reasons for non-communication

Reasons for non-communication
29%
25%
21%
17%
8%
No communication to be Early days - making Satisfied with status Intervention considered Undecided
made observations before quo or made in the past
communicating
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76% of the companies yet to send out any communication to staff

said they had plans to still engage their employees by July 2023. The
remaining 24% are undecided or plan to engage as soon as possible,
as shown below.
Timing of Planned Communication with Staff

Timing of Planned Communication with Staff
50%
47%
46%
45%
40%
35%
30% 29%
25%
20%
15%
12% 12%
10%
5%
0%
June July As Soon As Undecided
Possible
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Companies Not Planning to Engage

Employees Existing staff bus will continue to One company said it believes
run despite increase in fuel cost; more in action (palliatives)
It was interesting to note that 27%
than communicating with
of the companies did not plan to
communicate or engage employees staff;
on the subsidy matter. For these ₦ Recently carried out a salary
companies, some of the reasons they increase just before the subsidy Undecided on what to do;
gave include: removal;
Planning to send out communication Palliatives and flexible work

Planning to send out communication
arrangements are already in Collective bargaining ongoing;
place;
The business is already Some companies prefer to

27% considering increasing the have clarity and direction on
number of staff buses as well as the course of action before
Yes increasing allowance for senior engaging employees.
No management;
73%
Waiting to see the full effect of
the subsidy removal to be guided
appropriately;
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Demands Employees Made on Employers After the Subsidy Removal
Regardless of whether employers had engaged employees or not, employees had formally or
informally made demands on the business to respond to the situation. Employees of 114 of the
164 participating companies (about 70%) made requests such as:
Increase in compensation and benefits Introduction or expansion of staff bus

(including for outsourced staff), especially arrangement
lunch, transport subsidy / fuel allowance
for those commuting to the office. One
company said employees requested 150%
increase in all allowances!
Early closure from work to limit exposure to
Introduction or increase in WFH/remote traffic commuting back home
work, with transport allowance provided for
commute days as well as review of data
and airtime allowances
‘Request to continue with a temporary
allowance introduced as an inflationary/
₦ currency devaluation response’
Increase mileage rate/policy
‘Educate the public more and hasten the

Alignment of fuel card allowance with roll out of regulations. Provide clarity to
current market realities such as increase in Stakeholders for better understanding of the
fuel allocation new policy.’
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Palliatives Implemented
Only 19% of respondents had implemented a form of

palliative or the other as of the time of the survey, as
shown below. We expect this percentage to have gone up
materially, subsequent to the survey.
Respondents who have implemented a

palliative vs those who are yet to
Respondents who have implemented a palliative
vs those who are yet to
19%
Yes
No
81%
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Most of the palliatives implemented were Salary

Increase, Transport/Car/Fuel Allowance or Voucher
Review and WFH, as shown in the chart that follows:
Forms of palliative implemented after the fuel subsidy removal

Forms of salary review implemented after fuel subsidy removal
Quarterly Bulk food purchases 2%
Transport palliative/transport subsidy 32%
Increase in car fueling limit 13%
Inceased virtual working 28%
Cost of living adjustment/Salary increase 20%
Fuel allowance/voucher 5%
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Some key highlights of the palliatives implemented
Up to 100% increase Transport support of

Increase in staff N 10,000 per permanent staff &
bus routes in car fueling limit
N 5,000 per outsourced staff
At least
Fuel voucher of at least Allowance of N 50,000
15% increase in N 15,000 per head for employees who work
transport allowance from the office
Provision of an equivalent of
Cost of Living 15% - 25%
40 Litres of fuel Adjustment pay review
in cash at prevailing pump
price to car owners 20% - 30% for junior blue collar staff
of net monthly salary
Remote Working 30% - 100% increase One-off payment of

arrangement of 2 days in transport subsidy N 30,000 to N 60,000
in-person, 3 days work for field sales staff, as transport palliative
from home depending on coverage
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83% of the companies yet to implement a palliative at

the time of the survey plan to do so before the end of
2023. Some of the measures being considering are
as follows:
Forms
Forms of palliative of considered
being salary review/palliative
by companies yet tobeing considered
announce after
any intervention fuel subsidy removal
*Others 3.5%
Transport palliative/ increase in transport allowance 27.0%
Increase in car fueling limit 9.5%
Inceased virtual working 17.5%
Cost of living adjustment/ salary increase 34.0%
Fuel allowance/voucher 8.5%
*Others: Includes one-time relief payment, an increase in mileage rate, more staff buses, a fixed
variable monthly productivity pay, and staff carpooling initiative.
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The remaining 17% of the companies that are yet to implement

any palliative are not considering doing so due to the following
reasons:
Reasons for of
Reasons for not considering implementation notsalary
considering implementation
review or palliative of salary review or palliative
Indecision
Indecision 26%
Affordability/Business performance
Affordability/Business performanceissues
issues 32%
Compensation/Benefit review
Compensation/Benefit review carried out recently 42%
carried out recently
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How Businesses Plan to Fund the Palliatives
Most businesses plan to absorb the additional cost or cut other costs to
accommodate the palliatives, as shown below:
Ways business will fund the Ways business

provision will fund
of palliatives the provision of palliatives to employees
to employees
28%
26%
17%
10%
9%
6%
4%
*Others Staff rightsizing Increase in sales volume Price Increase Reduction in other HR Cutting operating and Absorption of cost by
costs such as training administrative cost the company (via
reduced profit margin)
*Others: Includes donations/grants, budget reallocation, reassigning cost, increase in productivity, etc.
while some other businesses were undecided about the funding mechanism.
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Salary Reviews
Majority of companies (65%) conduct their annual salary reviews in first and
second quarters of the year. This is further evidenced by 60% of the companies
that had already conducted 2023 salary reviews as of 30 June 2023.
Annual salary review cycle Companies that had already carried out 2023 salary review as
Annual Salary review cycle Companies
Companies
ofthat
Junehave
that
2023already
have already
carriedcarried
out 2023
out salary
2023 salary
reviewreview
10%
13% Other
40%
39% 40% 40%
Q4 (October - December)
No No
Q3 (July - September)
12%
60% 60%
Q2 (April - June) Yes Yes
Q1 (January - March)
26%
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It is interesting to note that of the 40% which are yet to carry out a
salary review, close to 70% plan to implement at least 10% increase,
as shown below.
Expected percentage increase for respondents who are yet to implement salary
Expected percentage increase for respondents whoreview
are yet to
inimplement
2023 salary review as of June 2023
27%
24%
18% 18%
13%
5-10% 10-15% and 13%

10-15% 15-20%
16-20% Above 20% Undecided/Can't
disclose
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Of the 60% that had conducted a salary review, 30% implemented a 10-15% salary increase in 2022, compared to 31% that did so as of June
2023. Even though it was still middle of the year (June 2023), we noted an increase in the percentage of companies implementing higher pay
reviews, compared to 2022. For example, 83% of companies carried out more than 10% increase as of June 2023, compared to 58% in 2022.
Salary increase implemented in 2022 and 2023

Salary Increase Implemented in 2022 and 2023
35%
31% 31%
30%
30%
25%
22%
21%
20%
20%
17% 16% 17%
15%
12%
10%
5%
5%
0% 0%
0%
0-5% 5-10% 10-15% 15-20% Above 20% No Review carried
out/yet to decide
2022 2023
32
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Some Market Developments Post-KPMG

Fuel Subsidy Survey (July to August 2023)
2
The federal government released
Federal Government’s Response 5 Trucks of Rice to each state

We observed the following steps from the federal government: to be distributed to their citizens.
1
The federal government announced a
3
The federal government indicated willingness to carry out upward
N 5 billion palliative for each state review of public sector workers’ wages, including
of the federation, including the federal capital territory (FCT), to cushion

the impact of the removal of the petrol subsidy. The funding is aimed at
at least doubling minimum wage
assisting state governments procure 100,000 bags of rice, 40,000 bags which is currently set at ₦30,000 per month8. From experience,
of maize and fertilizers to cushion the effect of food shortage across the consequential increases typically follow an increase in minimum wage,
country7. for staff levels above the minimum wage cadre. Earlier in April 2023,
the federal government implemented a 40% salary increase in the
form of Peculiar Allowance for 144,766 federal civil servants under the
7
The Cable Newspaper Consolidated Public Service Salary Structure to help cushion the effects
8
Premium Times Newspaper of rising inflation, rising cost of living, and hikes in transportation fare,
9
FG begins 40% pay rise for workers, excludes doctors, lecturers, The Punch Newspaper
housing and electricity tariffs.9
33
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Federal Government’s Response - Continued
4 Introduction of Mass
Transit Schemes 6
Monthly Funds Transfer of N8,000 to the Poor:
A monthly transfer to 12 million of the poorest
households in the country for six (6) months, in a bid
to cushion the effects of the removal of fuel subsidy.
However, government plans to review the initiative,
for the urban working population at the following negative backlash from Nigerians11.
State and Federal Level.
5 CNG-powered Buses 7
The federal government intends to establish more The federal government has announced its
gas stations in Nigeria and procure more commitment to rehabilitating and bringing
onstream the nations dilapidated refineries to
as well as electric buses, to mitigate the high and

increasing cost of diesel and petrol10.
reduce petrol importation
10
The Cable Newspaper
11
Channels Television
34
©
© 2023
2023 KPMG
KPMG Advisory
Advisory Services,
Services, aa partnership
partnership registered
registered inin Nigeria
Nigeria and
and aa member
member firm
firm of
of the
the KPMG
KPMG global
global organisation
organisation of
of independent
independent member
kpmg
member
firms
firms affiliated
affiliated with
with KPMG
KPMG International
International Limited,
Limited, aa private
private English
English company
company limited
limited by
by guarantee.
guarantee. All
All rights
rights reserved.
reserved.
Some State
Governments’
Response 12
Some of the responses announced by

some state governments (not exhaustive)
are summarized below:
12
The Cable Newspaper
35
35
kpmg
firms affiliated with KPMG International
InternationalLimited,
Limited,aaprivate
privateEnglish
Englishcompany
companylimited
limitedby
byguarantee.
guarantee.All
Allrights
rightsreserved.
reserved.
Some State Governments’ Response

Ondo State Kwara State
₦1,000 cash transfer to 1,000 vulnerable ₦10,000 to indigenous tertiary
persons per the 18 Local Government institution students; ₦10,000 to
Area (LGA); ₦10,000 to state and local some category of security agents;
government pensioners; free bus Other multisectoral interventions
and boat shuttle for students from were also implemented.
September to December 2023 and from
January 2024, affordable transport fare
would apply. In addition, the government
will support farmers with palliatives such
as agrochemicals, farm tools, etc. at
affordable rates.
Ekiti State
5,000 conditional cash transfer
for 10,000 households from
August to December 2023, with
emphasis on aged persons;
food distribution; provision of
free shuttle buses for workers
Oyo State and students; payment of

one-year leave bonus and one-
month pension arrears for state
Increase in government buses at reduced and local government workers
fares; food relief packages to 200,000 and pensioners, respectively;
“poorest of the poor”; one-year health distribution of inputs to farmers
insurance cover for 100,000 most as well as financial support to
“vulnerable households”. small businesses and the informal
sector.
36
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Some State Governments’ Response - Continued
Lagos State Ogun State

50% reduction in transport fare of ₦10,000 cash palliative to all civil
all state-owned transport services; servants and pensioners in the state
agreement with commercial bus from July to September 2023; hazard
owners to reduce fares by 25%; free allowance to all health and medical
ante-natal and birth services in state workers; peculiar allowance to all civil
general hospitals; direct food relief servants; distribution of food to the
for the vulnerable; and expansion vulnerable; distribution of subsidized
of staff bus fleet for public service fertilisers and farm input to farmers.
employees.
Edo State Osun State

Creation of more virtual classes to Free medical care and surgical
reduce cost of commuting for parents, palliative for residents; amongst
teachers and students; improvement of others.
power supply to homes; continuation of
₦40,000 revised minimum wage.
37
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Imo State Rivers State

Increase in minimum wage to
₦40,000; increase in fleet of staff Launching of 17 luxurious
bus, recalibration of the tax system to buses to cushion transportation
exempt those earning below ₦100,000 burden on residents.
per annum; provision of soft loans,
grants, seedlings and farm tools to
qualified farmers.
Ebonyi State Bayelsa State

Salary increase of ₦10,000 for state Launching of new transport
workers; employment of 1,454 people scheme of 100 cabs and 6
into the state civil service. luxurious buses
38
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Yobe State Borno State

Distribution of food items and other
palliatives to 400,000 individuals in ₦5,000 cash, a bag of rice, a bag of
80,000 households across the state. beans and one wrapper (for women) for
300,000 households; 50 buses and 30
pick-up vans to convey farmers to their
farmlands for free.
Adamawa State
₦10,000 for civil servants and pensioners
for six (6) months; implementation of
national minimum wage (of ₦30,000) from
August 2023; procurement of 70 trucks of
Cross River State
maize and 20 trucks of rice for distribution
Distribution of food and non-food
at a subsidised rate; purchase of 50 trucks
items to vulnerable households.
of fertiliser for state civil servants at a
subsidised rate; purchase of staff bus to
convey workers.
39
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Taraba State
Implementation of federal Zamfara State
government approved minimum
wage in October 2023; subsidized Distribution of foodstuff
transportation for farm produce; across the state.
access to free seedlings and
fertilizers; employment of 10,000
youth to clean up the state at a
salary of ₦15,000 per month.
Jigawa State
₦50 million to empower 1,000 women
traders; ₦134 million for the purchase of
five trucks of rice for distribution to the less
privileged; ₦50,000 each for 1,500 young
entrepreneurs
40
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Banking Sector Response

Market Movement in Banking Sector Post-Fuel-Subsidy-Removal
Pay Increase Implemented or

Banks Other Measures Taken
In July 2023, it was reported that Wema Proposed
Bank PLC increased salaries of employees to
cushion the impact of the fuel subsidy removal. 1 None COLA Introduced. Amount vary
Guaranty Trust Bank PLC also increased salary
for Junior and Contract Staff with cleaners 2 9-19% - Senior Management
earning between ₦70,000 and ₦80,000, while
drivers earn between ₦140,000 and ₦150,000 12-29% - Management Staff Bus; Hybrid Work
per month. Zenith Bank PLC also increased
salaries across board, ranging from 25% to 21-52% - Other Levels
50%, depending on staff level, with cleaners
and drivers now earning ₦80,000 and ₦120,000. 3 15%-25% Hybrid Work
In addition, it was reported that Fidelity Bank
PLC, GTB and Zenith Bank commissioned more 4 Yes, but details not available at Staff Bus; Hybrid Work
staff buses to ease the burden on commuting the time of this report
employees13.
5 17% None
Banking sector employers implemented pay
increase of 9% to 52%, largely in response to 6 No Hybrid Work
the fuel subsidy removal. In addition, we noted
staff bus and hybrid work arrangements, to 7 20-36% Transport Subsidy; Hybrid Work
complement the pay increases, as shown in the
adjacent chart14 8 15%-25% None
Source: KPMG Compensation Database
13
Business Day; Independent Newspaper (July 2023)
14
Only one of the banks is yet to implement the increase indicated in the table
41
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Independent Oil & Gas

Exploration & Production
Response
Based on KPMG Compensation Database, we noted up to
41% increase in guaranteed pay package across staff levels
between 2021 to 2023. We reason that this increase reflects
improvement in business with the price of Bonny Light crude oil
ranging between USD50 and USD88.3515 during the period as
well as the companies responding to the fuel subsidy removal,
amongst others. The increase translates to a cumulative annual
growth rate (CAGR) of up to 18.74%.
15
Oil Price Charts | Oilprice.com
42
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Conclusion
The recent removal of subsidy on petrol price has triggered
significant changes in the lives and livelihood of households as well
as businesses. For employees, there has been a material reduction
in purchasing power as prices of goods and services continue to
rise. The development is expected to accelerate energy transition
as government and households consider alternatives like electric
vehicles (mass transit), CNG-powered vehicles, solar power,
amongst others. It is expected that the boost to government
revenue from the subsidy savings will be deployed to initiatives
that enhance lives and businesses in the medium to long-term. In
the meantime, employers must deal with a volatile and uncertain
environment and introduce palliatives to cushion the impact on
employees’ take-home pay. Some of the measures introduced
include salary increase, cost of living adjustment, transport / fuel
subsidy, staff bus, work-from-home policy to reduce commute to
the office, food stamps by the government, etc. Employers need
to continually monitor market developments to remain informed
and ensure data-backed decisions as well as engagement with all
stakeholders. At KPMG, we understand the importance of data in
empowering companies to take informed decisions for their people
and, ultimately, the business. We will continue to make necessary
investments to support the industry in this regard, and do hope that
you find this report useful, although delayed.
43
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2023 KPMG Survey on Employers’ Response to Fuel Subsidy Removal in Nigeria
How We Can Help

- People & Change Services
Organisation Design Remuneration Strategy and Design & Administration of
for Performance Remuneration Cost Optimisation Equity Incentive Scheme
Behavioural Change Culture Workforce Transition & Effectiveness

Management Transformation and Benefit Realization
Executive Search HR Function Optimization / Compensation and Benefits

and Selection HR Transformation Survey and Pay Structure Design
HR Operating & Service

Employee Experience Strategic Workforce Planning
Delivery Model and HR
& Retention Strategy and Workforce Optimization
Policy and Processes
Board Remuneration Performance Management Leadership Development and

Committee Support Framework Design Competency Catalogue Design
44
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Contact Us
Segun Sowande Yetunde Kanu Boluwaji Apanpa Nneka Jethro-Iruobe Joshua Ademuwagun
Partner & Head Partner & Head Partner Associate Director Senior Manager
Energy & Natural Resources Advisory People & Change, Advisory Services People & Change, Advisory Services People & Change, Advisory Services People & Change, Advisory Services
KPMG in Nigeria KPMG in Nigeria KPMG in Nigeria KPMG in Nigeria KPMG in Nigeria
M: +234 803 402 0994 M: +234 803 402 0998 M: +234 706 417 1642 M: +234 808 313 3012 M: +234 803 294 4516
E: segun.sowande@ng.kpmg.com E: yetunde.kanu@ng.kpmg.com) E: boluwaji.apanpa@ng.kpmg.com E: nneka.jethro-iruobe@ng.kpmg.com E: joshua.ademuwagun@ng.kpmg.com
kpmg
kpmg.com/socialmedia kpmg.com/app
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely
information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without
appropriate professional advice after a thorough examination of the particular situation.
© 2023 KPMG Advisory Services, a partnership registered in Nigeria and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a
private English company limited by guarantee. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm
vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.

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ceremony of his administration on May 29, 2023. The survey

We have also covered market developments subsequent to

Although there had been past attempts and discussions on

Sector Breakdown of the 164 Participating Companies

Power & Renewable Energy

Oil and Gas (Exploration)

Entertainment & Hospitality

Financial Services (Non-

Materials & Construction

Oil and Gas (Midstream)

Marketing & Services)

NGO & Development

Real Estate & Facility Mgt

Note: “Others” include Advertising, Packaging, Outsourcing, Agribusiness.

Financial Turnover of Respondents: In terms of size, the survey

Survey Respondents by Financial Turnover (N)

>10bn - 50bn, >250bn - 500bn

Staff Strength of Respondents (Temporary and Permanent)

Staff Strength of Survey Participants

<=100 101-500 501-1000 1001-2500 2501-5000 >5000

Inflation & Pay

According to National Bureau of Statistics, the average

From experience, average salary increases have generally

Pay Increases Lag Inflation

Inflation Vs. Pay Increases

10.0 8.8 9.0

Source: National Bureau of Statistics; KPMG

Monthly Inflation Rate from 2019 - 2023

Review of Pay Trends Per Sector

Source: KPMG Annual Industry Surveys in Nigeria

Global Pay Movements & Inflation

Global Inflation for 2015 - 2024

Source: Euromonitor; www.macrotrends.net

2015 - 2023 Actual Salary Increases Across the Globe

Switzerland Japan Canada UK United States Singapore Mexico China India

Source: WorldatWork; KPMG

2023/2024 Budgeted Salary Increase - Around the World

As shown in the adjacent

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%

2024 Projected 2023 Actual

Source: WorldatWork 2023/24 Salary Budget Survey

Outlook for the Rest of 2023 and 2024

Key Findings from the Survey

Respondents Who Had Sent Out

100.0% 100.0% 100.0%

Key Messages Communicated to Employees:

3. Introduction or enhancement of Work-for-Home (WFH) arrangements to reduce commuting to and

5. Analysing the impact on both company and employee at a townhall

Key messages employers are communicating to employees

Acknowledgment of the current situation 21%

Message of empathy, patience, appreciation and hope 14%

Introduction of initiatives 39%

Currently reviewing the impact 6%

Financial management suggestion to employees 6%

Sourcing of palliative ideas from employees 3%

Dissemination of information about subsidy 11%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

their response or what to communicate to staff:

Reasons for non-communication

76% of the companies yet to send out any communication to staff

Timing of Planned Communication with Staff

Companies Not Planning to Engage