The Federal Government has earmarked ₦1.7 trillion in the 2026 Appropriation Bill to settle outstanding obligations owed to contractors for capital projects executed in 2024, in a move aimed at addressing a long-standing backlog of unpaid claims.
A breakdown of the proposed 2026 national budget shows that the allocation is captured under a specific line item titled “Provision for 2024 Outstanding Contractors’ Liabilities”, signalling official acknowledgement of delayed payments that have triggered sustained protests by contractors in recent years.
The provision follows mounting pressure from indigenous contractors and civil society groups who, throughout 2025, raised concerns over unpaid contractual obligations allegedly exceeding ₦2 trillion. Under the umbrella of the All Indigenous Contractors Association of Nigeria (AICAN), some contractors staged protests in Abuja, warning that prolonged delays were crippling their operations and leaving many unable to service bank loans taken to execute government projects.
Earlier, 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 reportedly made amid revenue constraints, prompting the inclusion of the ₦1.7 trillion provision in the 2026 budget as a catch-up measure.
In addition, the government has proposed ₦100 billion under a separate line item tagged “Payment of Local Contractors’ Debts/Other Liabilities”. This allocation is expected to address legacy debts from previous years, smaller contract claims, and unsettled financial commitments that were not fully verified during the latest audit cycle.
Together, the ₦1.8 trillion provision forms part of the broader ₦23.2 trillion capital expenditure proposed in the 2026 fiscal plan, which seeks to accelerate infrastructure delivery while cleaning up outstanding obligations from previous budget cycles.
Nigeria’s contractor debt backlog has remained a recurring fiscal challenge, exacerbated by delayed capital releases, partial cash-backing of approved projects, and persistent shortfalls in government revenue.
Speaking with journalists at the Federal Ministry of Finance in December 2025, the National Secretary of AICAN, Babatunde Seun-Oyeniyi, said the government’s failure to release funds despite repeated assurances had forced contractors to resume protests. He claimed that members of the association were owed more than ₦500 billion for projects already completed and commissioned.
According to him, interventions by the National Assembly had temporarily halted protests after assurances that the Minister of Finance would address the issue, but subsequent engagements yielded no tangible results. “They have not responded to our request. In fact, more than six times we have come here. Last week, we stayed here throughout the night before the Minister of Finance arrived,” he said.
Oyeniyi added that although payment warrants had been sighted, no actual funds had been released. “Specifically, when we collate, they are owing more than ₦500 billion to indigenous contractors. We only see warrants; there is no cash backing,” he said.
He accused officials of attempting to push the payments into the next fiscal year. “They want to shift us to 2026 and turn us into a backlog. We don’t want that. We won’t leave here until we are paid,” he alleged.
However, the Federal Government had earlier claimed progress in settling outstanding obligations. In August 2025, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, announced that over ₦2 trillion in unpaid capital budget obligations from the 2024 fiscal year had been cleared, with a pledge to prioritise timely releases for 2025 projects.
“In the last quarter, we paid contractors over ₦2 trillion to settle outstanding capital budget obligations from last year,” Edun said at a ministerial briefing in Abuja. “At the moment, we have no pending obligations that are not being processed and financed.”
By December 2025, President Bola Tinubu was reported to have expressed “grave displeasure” over the persistence of unpaid contractors’ claims and directed the establishment of a high-level committee to verify and resolve the backlog.
Briefing State House correspondents after a Federal Executive Council meeting, the President’s Special Adviser on Information and Strategy, Bayo Onanuga, said the President was “upset” after learning that about 2,000 contractors were still owed. Tinubu subsequently ordered a comprehensive verification of all claims to ensure a coordinated and final resolution.
The provisions in the 2026 budget are expected to draw from the outcome of that verification exercise, with disbursements likely to be made in tranches based on certified claims.
The total proposed 2026 national budget stands at ₦58.47 trillion, comprising ₦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.
