The Federal Government has moved to address the long-standing financial crisis facing indigenous contractors by earmarking N1.7 trillion in the 2026 Appropriation Bill specifically for outstanding capital project liabilities.
This catch-up mechanism, captured under the line item “Provision for 2024 Outstanding Contractor’s Liabilities,” follows intense protests in late 2025 by local firms who were pushed to the brink of collapse by unpaid invoices exceeding N2 trillion.
In addition to the N1.7 trillion for 2024 arrears, the budget includes a separate N100 billion allocation for “Payment of Local Contractors’ Debts/Other Liabilities.” This smaller fund is intended to settle legacy debts from previous years and smaller verified claims that fell outside the primary audit cycle.
Together, the N1.8 trillion total allocation reflects a significant shift in the administration’s fiscal policy, aiming to clear the books as President Bola Tinubu moves the country toward a single, non-overlapping budget cycle by April 2026.
The decision follows several months of escalating tension. In December 2025, the All Indigenous Contractors Association of Nigeria (AICAN) barricaded the Ministry of Finance in Abuja, protesting that over N760 billion in verified payment warrants had been issued without actual cash backing.
Contractors warned that the delays were causing widespread loan defaults and asset seizures by banks. In response, President Tinubu established a high-level ministerial committee—including the Ministers of Finance, Works, and Housing—to verify these claims and ensure that genuine contractors are prioritized in the 2026 disbursements.
For indigenous firms, the effectiveness of this budget item depends entirely on the “cash-backing” of these warrants. While the government claims to have cleared over N2 trillion in obligations during the last quarter of 2025, industry leaders remain cautious, noting that seeing a line item in the budget is only the first step.
The 2026 fiscal plan, which projects a total expenditure of N58.47 trillion, will be the litmus test for whether the government can finally break the cycle of “inherited obligations” that has historically stalled Nigeria’s infrastructure development.
