The Federal Government has included N1.7tn in the 2026 Appropriation Bill to address unpaid obligations owed to contractors for capital projects completed in 2024, indicating a renewed attempt to resolve long-standing payment delays.
Details from the proposed 2026 budget reveal that the allocation appears under a specific heading labelled “Provision for 2024 Outstanding Contractor’s Liabilities.” The entry signals formal acknowledgment of delayed settlements that have sparked protests and sustained complaints from contractors in recent times.
The decision follows increasing pressure from indigenous contractors and civil society groups who, throughout 2025, warned that unpaid government contracts had risen beyond N2tn. Members of the All Indigenous Contractors Association of Nigeria had staged protests in Abuja, warning that delayed payments were crippling their businesses. Several contractors were said to be struggling to repay bank facilities obtained to execute government-funded projects.
Earlier assurances by the Minister of Works, David Umahi, that verified contractor arrears would be settled before the close of 2025 were only partly fulfilled. Revenue limitations reportedly hindered full implementation, leading to incomplete payments and the eventual inclusion of the N1.7tn provision in the 2026 budget to offset the remaining liabilities.
Beyond the allocation for 2024 obligations, the government also proposed N100bn for another budget line tagged “Payment of Local Contractors’ Debts/Other Liabilities.” This amount is expected to cover older debts, minor contract claims, and financial commitments that were either unresolved or not fully cleared during the current verification process.
Combined, the N1.8tn earmarked for contractor-related payments forms part of the proposed N23.2tn capital expenditure in the 2026 fiscal framework. The capital budget is designed not only to boost infrastructure development but also to clear historical financial backlogs that have strained public finances.
Nigeria’s mounting contractor debt has remained a persistent fiscal concern, driven largely by delayed fund releases, partial funding of approved projects and repeated revenue shortfalls. These challenges have frequently disrupted project delivery and strained relations between contractors and government agencies.
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 contractors resumed protests after several government promises failed to translate into payments. He disclosed that indigenous contractors were collectively owed more than N500bn for projects already completed and officially commissioned.
He noted that despite assurances from the Minister of Finance, Wale Edun, no payments had been made. According to him, interventions by the National Assembly temporarily halted protests, but subsequent follow-up meetings yielded no results. He added that while payment warrants had been sighted, funds were yet to be released.
Oyeniyi accused officials of attempting to defer the payments to a future fiscal year, warning that contractors did not want their claims converted into long-term government debt.
In contrast, the Federal Government had earlier maintained that progress was being made. In August 2025, the Minister of Finance announced that more than N2tn in outstanding capital obligations from the 2024 budget had been settled, stating that attention would thereafter focus on the timely release of 2025 capital funds.
By December 2025, President Bola Tinubu publicly expressed dissatisfaction with the backlog of unpaid contractors and ordered the formation of a high-powered committee to verify claims and fast-track payments. Budgetary provisions in the 2026 proposal are expected to rely on the outcome of that verification exercise, with payments likely to be made in phases.
The proposed 2026 national budget stands at N58.47tn, including N23.2tn for capital spending, N15.9tn for debt servicing, N15.25tn for recurrent expenditure and N4.09tn allocated to statutory transfers.
