FG targets unpaid contractors with N1.7trn allocation in 2026 budget

The Federal Government has earmarked N1.7tn in the 2026 Appropriation Bill to settle outstanding payments owed to contractors for capital projects executed in 2024.

Details of the proposed 2026 national budget show that the allocation appears under a line item titled “Provision for 2024 Outstanding Contractor’s Liabilities,” indicating official acknowledgment of delayed payments amid sustained protests by contractors over unpaid jobs.

The provision follows pressure from indigenous contractors and civil society groups who, throughout 2025, raised concerns over unpaid obligations estimated at more than N2tn.

Members of the All Indigenous Contractors Association of Nigeria had staged several demonstrations in Abuja, warning that delayed payments were crippling their operations and leaving many unable to service bank loans obtained to execute government projects.

Earlier, the Minister of Works, David Umahi, had pledged that verified arrears owed to federal contractors would be cleared before the end of 2025.

However, only partial payments were reportedly made due to revenue constraints, prompting the inclusion of the N1.7tn allocation in the 2026 budget as a catch-up measure.

In addition to the N1.7tn provision, the government has also budgeted N100bn under a separate line item titled “Payment of Local Contractors’ Debts/Other Liabilities.”

This amount is expected to cover legacy debts from previous years, smaller contract claims, or obligations not fully verified during the latest audit process.

Together, the N1.8tn allocation forms part of the proposed N23.2tn capital expenditure in the 2026 fiscal plan, which aims to boost infrastructure delivery while addressing accumulated liabilities.

Nigeria’s backlog of contractor debts has remained a recurring fiscal challenge, worsened by delayed capital releases, partial cash-backing of projects, and revenue shortfalls.

Speaking to journalists in December 2025, the National Secretary of the All Indigenous Contractors Association of Nigeria, Babatunde Seun-Oyeniyi, said contractors were owed more than N500bn for completed and commissioned projects.

He explained that despite repeated assurances from the Minister of Finance, Wale Edun, payments had not been made, forcing contractors to resume protests.

“After the National Assembly intervened, we were told the minister would be engaged on the issue, and we suspended the protest,” he said, adding that subsequent follow-ups yielded no results.

“We only see payment warrants; there is no cash backing.”

Oyeniyi alleged that officials were attempting to shift the payments into the 2026 fiscal year, a move he said contractors strongly opposed.

However, in August 2025, the Federal Government announced that it had cleared over N2tn in outstanding capital budget obligations from the 2024 fiscal year.

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, made the disclosure at a ministerial briefing in Abuja, stating that attention would then shift to timely releases for 2025 capital projects.

By December 2025, President Bola Tinubu reportedly expressed strong displeasure over the continued backlog of unpaid contractors and ordered the formation of a high-level committee to verify claims and resolve payment bottlenecks.

According to his Special Adviser on Information and Strategy, Bayo Onanuga, the President directed that a “one-stop solution” be implemented after learning that about 2,000 contractors were affected.

The provisions in the 2026 budget are expected to be guided by the outcome of the verification exercise, with payments likely to be made in tranches based on certified claims.

Overall, the proposed 2026 national budget stands at N58.47tn, comprising N23.2tn for capital expenditure, N15.9tn for debt servicing, N15.25tn for recurrent spending, and N4.09tn for statutory transfers.