THE Federal Government has earmarked ₦1.7 trillion in the proposed 2026 Appropriation Bill to settle outstanding debts owed to contractors for capital projects executed during the 2024 fiscal year, signalling an official move to address lingering payment backlogs that have triggered protests and public criticism.
News Point Nigeria reports that a breakdown of the 2026 national budget shows that the amount is captured under a specific line item titled “Provision for 2024 Outstanding Contractor’s Liabilities,” indicating formal acknowledgment of delayed payments to contractors despite earlier assurances that most arrears had been cleared.
The provision comes amid sustained pressure from indigenous contractors and civil society organisations, who throughout 2025 warned that unpaid contractual obligations across federal ministries, departments and agencies had climbed above ₦2 trillion.
Under the umbrella of the All Indigenous Contractors Association of Nigeria, affected contractors staged several demonstrations in Abuja, complaining that prolonged delays in payments had crippled their businesses and left many unable to service bank loans taken to execute government projects.
Earlier in the year, 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 made, largely due to revenue shortfalls and competing fiscal obligations.
The inclusion of the ₦1.7 trillion line item in the 2026 budget is therefore viewed as a catch-up mechanism aimed at clearing unpaid obligations that spilled over from the previous fiscal cycle.
In addition to the ₦1.7 trillion earmarked for 2024 liabilities, the Federal Government also allocated ₦100 billion for a separate budget line titled “Payment of Local Contractors’ Debts/Other Liabilities.”
Altogether, the ₦1.8 trillion allocation for contractors’ debts forms part of the broader ₦23.2 trillion capital expenditure proposed in the ₦58.47 trillion 2026 fiscal plan, which aims to accelerate infrastructure development while cleaning up outstanding obligations.
Nigeria’s contractor debt backlog has remained a recurring fiscal challenge, worsened by delayed capital releases, partial cash-backing of approved projects and persistent underperformance of revenue targets.
Speaking to journalists at the Federal Ministry of Finance in December 2025, the National Secretary of the All Indigenous Contractors Association of Nigeria, Babatunde Seun-Oyeniyi, said the government’s failure to release funds despite repeated assurances forced contractors to resume protests.
According to him, indigenous contractors alone were owed more than ₦500 billion for projects already completed and, in some cases, commissioned.
He said assurances from the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, had yet to translate into actual payments.
“After the National Assembly intervened, they told us that they will sit the minister down over this matter, and we immediately stopped the protest,” he said.
However, Seun-Oyeniyi lamented that follow-up engagements yielded no tangible results. “They have not responded to our request. In fact, more than six times we have come here,” he said, adding that contractors once waited overnight for the minister to address them.
He alleged that while payment warrants had been sighted, no funds had been released. “Specifically, when we collate, they are owing more than ₦500 billion for all indigenous contractors. We only see warrants; there is no cash-back,” he said.
He further accused government officials of attempting to roll the payments into the next fiscal year. “The problem is that they want to put us into a backlog. They want to shift us to 2026; that 2026, they are going to pay,” he alleged.
Meanwhile, government officials have maintained that significant progress has been made in clearing outstanding obligations.
In August 2025, the Federal Government announced that it had settled over ₦2 trillion in outstanding capital budget obligations from the 2024 fiscal year, pledging to prioritise the timely release of funds for 2025 projects.
At a ministerial press briefing in Abuja, Wale Edun said the payments were part of broader reforms aimed at restoring investor confidence.
“In the last quarter, we did pay contractors over ₦2 trillion to settle outstanding capital budget obligations. That is from last year,” Edun said. “At the moment, we have no pending obligations that are not being processed and financed.”
By December 2025, however, concerns over unpaid contractors had reached the Presidency.
President Bola Ahmed Tinubu was reported to have expressed grave displeasure over the backlog of unpaid claims and ordered the constitution of a high-level committee to resolve bottlenecks delaying repayments.
Briefing State House correspondents after a Federal Executive Council meeting, the President’s Special Adviser on Information and Strategy, Bayo Onanuga, said Tinubu was “upset” after learning that about 2,000 contractors were still owed.
“He made it very, very clear he is not happy and wants a one-stop solution,” Onanuga said.
The President directed that all claims be properly verified, with payments to be made based on certified obligations.
The ₦1.7 trillion provision in the 2026 budget is expected to be drawn from the outcome of that verification exercise and may be released in phases, depending on available cash flow.
The proposed ₦58.47 trillion 2026 budget includes ₦23.2 trillion for capital expenditure, ₦15.9 trillion for debt servicing, ₦15.25 trillion for recurrent spending and ₦4.09 trillion for statutory transfers.