Reported by: Agande Richard Aondofa | Edited by: Pierre Antoine
The Senate of Nigeria has formally called on the Federal Government to revert to a system of direct contractor payments for federal projects, criticising the current centralised payment framework as inefficient and responsible for widespread delays and unpaid contracts. The call was made by members of the Senate Committee on Finance during recent deliberations with the Federal Government’s Economic Management Team on the proposed 2026 budget and ongoing fiscal challenges.
During the session, senators expressed deep concern about how the current centralised payment system — under which payments to contractors are processed through a single, consolidated mechanism managed by the Ministry of Finance — has affected project implementation across Ministries, Departments and Agencies (MDAs). Lawmakers argued that the model has created bureaucratic bottlenecks, slowed disbursements for completed work and left many contractors unpaid for projects already executed.
Committee chairman Sani Musa stated that submissions from heads of various federal agencies consistently highlighted the delays caused by the present structure, which has forced contractors to wait long periods before receiving payments for work already delivered. He noted that the system has deterred efficient contract execution and jeopardised completion of key capital projects, saying the Senate believes the old payment regime — where MDAs directly paid contractors they engaged — was more responsive, less cumbersome and better suited to timely project delivery.
In justifying the position, senators also linked the payment system issue to broader budget implementation concerns. They argued that a direct payment model could help ensure that contractors are compensated promptly, thereby encouraging smoother project roll-outs and improving overall government service delivery. The committee went further to recommend that the Federal Government move away from the so-called envelope or incremental budgeting model and adopt a priority- or performance-based budgeting framework to improve fiscal discipline and focus on strategic capital investments.
The call by the Senate comes amidst mounting frustration from businesses and professional bodies over the centralised payment approach, which many stakeholders blame for contractual arrears that have stymied infrastructure development in some sectors. Parallel criticisms have also been voiced by federal officials, including the Lateef Fagbemi, who has described the centralised system as “fraught with difficulties” and called for a return to direct funding mechanisms that allow MDAs to release funds for capital projects they execute. Critics say the current approach has hampered project delivery and slowed down execution of 2025 budget capital allocations.
While the Federal Government’s economic team acknowledged the Senate’s concerns, it also highlighted its broader fiscal management strategy and reassured lawmakers that the proposed budget framework for 2026 seeks to prioritise financing for growth-enhancing projects. Government representatives maintained that ongoing reforms are aimed at improving transparency and fiscal discipline, even as they committed to consulting the legislature on ways to streamline payment and budget implementation processes.
Senate leaders have said they will formally communicate their recommendations to the Presidency and the relevant ministers as part of the budget negotiation and review process. The outcome could influence how capital expenditures and contractor payments are handled in the coming fiscal year, with implications for the efficiency of public project delivery and the government’s relationship with private sector contractors.
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