Senate queries contractors’ payment delays, seeks system change

The Senate on Thursday asked the Federal Government to return to the old payment system that allowed Ministries, Departments and Agencies to pay contractors directly, saying the current centralised arrangement is flawed.

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, Mr Wale Edun.

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

Chairman of the committee, Senator Sani Musa, said submissions made by heads of agencies during ongoing budget defence sessions showed that the impact of government policies was not being felt by ordinary Nigerians.

He said the envelope budgeting system should be replaced with a priority-based model.

“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,” he said.

Musa also stressed the need to return to a strict annual budget cycle.

“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 said.

In their response, members of the economic team assured the committee that the outlook for the proposed 2026 budget was positive.

The minister explained that the country’s N152tn debt profile was not entirely due to new borrowing.

He said, “Currently, government debt in naira terms, is N152tn. About N30tn came from Ways and Means inherited by this government and N9tn 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 20 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 projects.”