Senate queries FG’s centralised payments over unpaid contractors

The Senate has urged the Federal Government to revert to the old payment system that allowed Ministries, Departments and Agencies (MDAs) to pay contractors directly, describing the current centralised arrangement as ineffective and responsible for delays in settling verified obligations.

The call was made by the Senate Committee on Finance during an interactive session with the Federal Government’s Economic Management Team led by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, on Thursday.

The session formed part of ongoing engagements on the 2026 budget framework and broader fiscal reforms, with lawmakers raising concerns over unpaid contractors and the effectiveness of the present budgeting model.

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Other officials at the meeting included the Minister of Budget and National Planning, Atiku Bagudu; the Accountant-General of the Federation, Shamseldeen Ogunjimi; and the Chairman of the Nigeria Revenue Service, Zacch Adedeji.

**What they are saying **

Chairman of the committee, Senator Sani Musa, said submissions by heads of agencies during ongoing budget defence sessions showed that government policies were yet to significantly impact ordinary Nigerians. He argued that structural changes were needed in both the budgeting and payment systems to ensure efficiency and accountability.

• _“Specifically, based on submissions made by heads of various agencies during the ongoing budget defence sessions, the envelope system of budgeting has failed and needs to be replaced by priority based model.” _
• _“The incremental allocation model has outlived its usefulness. It promotes routine expenditure expansion rather than strategic prioritisation.” _
• _“Similarly, the centralised system of payment, which has led to many contractors remaining unpaid for projects already executed, should be replaced with the old system which allows the various MDAs to pay contractors they gave jobs to.” _
• _“If, by December, we cannot assess ourselves realistically, then the system is failing. We must return to a disciplined budget cycle where one fiscal year ends before another begins.” _

He maintained that unless the fiscal cycle becomes more disciplined and project funding more strategic, the government would continue to struggle with implementation gaps and mounting liabilities.

Get up to speed

Concerns over delayed payments to federal contractors have persisted for years, particularly following the introduction of tighter centralised payment controls aimed at improving transparency and curbing leakages.

• Under the current system, payments are processed centrally rather than directly by MDAs, a shift designed to strengthen oversight but which critics say has created bottlenecks.
• Lawmakers have repeatedly raised complaints from contractors who claim to have executed projects without timely payment.
• The envelope budgeting system, which allocates funds based on historical spending patterns, has been criticised for limiting flexibility and strategic planning.

The incremental allocation model has also been faulted for encouraging routine expenditure growth instead of aligning spending with national priorities.

These longstanding issues have resurfaced as the National Assembly reviews the 2026 budget proposals and assesses the performance of current fiscal frameworks.

**More insights **

Responding to the lawmakers, members of the Economic Management Team expressed optimism about the outlook for the proposed 2026 budget and addressed concerns about the country’s rising debt profile.

The Finance Minister clarified that Nigeria’s N152 trillion public debt was not entirely the result of fresh borrowing.

• _“Currently, government debt in naira terms is N152 trillion. About N30 trillion came from Ways and Means inherited by this government and N9 trillion incurred from exchange rate adjustment. _
• _“So virtually half of that debt is made up of adjustments. It is not additional borrowing. Additional borrowing since 2023 is in the N20 trillion range. _
• _“Going forward is what matters most. Prioritisation will start with the MDAs, bringing forward growth-enhancing projects. Then the economic management team will review those projects, and finally, Mr. President will decide financing based on priorities, particularly for capital project_s.”

**What you should know **

Nairametrics previously reported that the Federal Government earmarked N100 billion in the 2026 budget to settle outstanding obligations owed to indigenous contractors nationwide.

In December 2025, President Bola Tinubu also constituted a multi-ministerial committee to address the lingering crisis of unpaid federal contractors, signalling ongoing efforts to resolve the issue.

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