The Federal Government has rolled out a sweeping set of fiscal control measures designed to instil discipline in public finance management, reduce pressure on foreign exchange, and strengthen transparency in budget implementation. These reforms, contained in the 2025 Appropriation Act Implementation Guideline, place new restrictions on the operations of Ministries, Departments, and Agencies (MDAs), particularly with regard to contract financing, personnel management, and compliance reporting.
Naira-Only Contracting Rule Now Mandatory
A key highlight of the new directive is the ban on foreign currency-denominated contracts across all MDAs. According to the guidelines issued by the Budget Office of the Federation, all contracts must now be fully denominated in Nigerian naira. Exceptions will only be granted upon prior approval by the Minister of Finance and Coordinating Minister of the Economy.
“No MDA is authorised to enter into any contract denominated in a foreign currency without the prior approval of the Honourable Minister of Finance and the Coordinating Minister of the Economy,” the directive stressed.
The move is part of broader efforts to curtail forex exposure in public procurement, align expenditure with national currency priorities, and shield the economy from exchange rate volatility.
Enforcement Through Budget Access and Reporting Compliance
To ensure compliance with the new rules, the guideline also introduces a more stringent reporting framework. All MDAs are now required to submit monthly Budget Performance Reports to the Budget Office using a prescribed format—no later than the 15th of every month. Non-compliant agencies will be denied access to capital or recurrent releases until they fulfil these reporting obligations.
This mechanism, the document explains, is intended to tie funding to project execution and prevent fund misuse.
Crackdown on Personnel Cost Abuse
In a bid to clean up the public payroll and curb unjustified personnel costs, the guideline outlines new procedures for managing salary-related matters:
- No unauthorised payroll changes: MDAs are prohibited from initiating payments for promotions or arrears on the Integrated Personnel and Payroll Information System (IPPIS) without clearance from the designated committee.
- Regular audits: Monthly and quarterly nominal roll reviews will be conducted to weed out ghost workers and unjustified allowances.
- Discipline on new hires: No recruitment, staff replacement, or payment of new allowances is allowed without prior approval.
- Allowance accountability: Agencies must provide monthly reconciliations of non-regular allowances, detailing usage and any surplus.
The Auditor-General of the Federation is expected to take an active role in monitoring these compliance requirements.
Policy on Recruitment and Inclusion
To promote inclusive growth and efficiency in the public service, the guideline introduced new rules around recruitment. Agencies must now observe the statutory balance between academic and non-academic staff and uphold the five per cent employment quota for persons with disabilities. Any request for establishment or financial clearance must explicitly declare its compliance status with these policies.
Tightening Tax Exemption Practices
The Federal Government also issued a firm warning against the arbitrary granting of tax exemptions by MDAs. It reiterated that no agency has the legal authority to provide tax waivers or exemptions to contractors without going through the proper legal and fiscal approval processes.
MDAs were cautioned to remain within the annual tax expenditure cap outlined in the 2025 Appropriation Act. The warning targets agencies that frequently grant tax-related concessions without due process.
Guidelines on Foreign Support and Development Aid
In another bid to streamline fiscal transparency, the government has directed that all requests for support from development partners—whether in cash or kind—must be routed through the International Cooperation Department of the Ministry of Budget and Economic Planning. Additionally, such support must be reported monthly to both the ICD and the Office of the Accountant-General of the Federation.
This measure aims to ensure that foreign aid is accurately captured in national accounts and used in alignment with budget priorities.
"Nigeria First" Policy Gains Momentum
The new fiscal directive follows earlier policy shifts such as the Renewed Hope Nigeria First initiative approved by President Bola Tinubu in May. The policy mandates all federal entities to prioritise Nigerian-made goods, services, and expertise when spending public funds.
According to the Minister of Information and National Orientation, Mohammed Idris, this approach is designed to boost local industries and create jobs, mirroring protectionist policies seen in other nations.
“Any business to be done by the government must place Nigerians first. If a local option exists, there is no reason whatsoever to import,” he said, noting that an Executive Order is being drafted to give the policy legal force.
Experts Weigh In: Potential Gains and Pitfalls
Economic analysts have largely endorsed the foreign currency ban and accompanying measures. Lagos-based economist Adewale Abimbola described the move as a critical tool for curbing forex abuse in public procurement and reducing corrupt practices tied to dollar-denominated contracts.
“It's a fiscal control measure aimed at minimising misuse of foreign currency allocations. But for it to work, enforcement must be strict,” Abimbola warned.
Development economist Dr. Aliyu Ilias also praised the measure, noting that Nigeria’s forex crisis is partly driven by the culture of using foreign currencies in domestic transactions—including government contracts and, in some cases, salaries.
“Most of our forex pressure is self-inflicted. We must stop creating unnecessary demand for dollars. Even the exception clause—allowing ministerial approval—should be reconsidered,” Ilias said.
He further advocated that private firms, NGOs, and diaspora-linked activities begin to adopt the naira more fully in their transactions, saying such a shift would enhance local currency resilience and help Nigeria chart a path toward economic sovereignty.
Conclusion
With these fresh directives, the Federal Government appears set on reinforcing fiscal discipline, restoring confidence in public finance, and creating a framework that supports local industry and curbs forex dependence. The success of the reforms, however, will depend on consistent enforcement, inter-agency cooperation, and political will to hold defaulters accountable.