The Federal Government has stepped up its efforts to ease long-standing financial pressures on local contractors, confirming that it has processed payments exceeding N700bn in verified obligations over the past few months. A significant chunk of that figure—about N436.6bn—was disbursed in May alone, marking what officials describe as a sharp acceleration in settlement activity.
According to the Federal Ministry of Finance, the latest wave of payments is part of a broader strategy aimed at clearing inherited debts, restoring confidence in government contracts, and injecting liquidity into the real economy through indigenous businesses and small enterprises.
The ministry disclosed this in a statement issued on Monday by its Director of Information and Public Relations, Efe Ovuakporie.
Over 1,240 Contractors Receive Approval in Latest Batch
As part of the ongoing exercise, the government has approved payments to more than 1,240 contractors across various Ministries, Departments and Agencies (MDAs). Officials said the disbursements followed a rigorous verification and reconciliation process designed to ensure that only legitimate claims are settled.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, was said to have overseen approvals after the screening exercise.
“The Federal Ministry of Finance has approved payments to more than 1,240 contractors, providing immediate liquidity support to businesses across the country and reinforcing the Federal Government’s commitment to meeting its financial obligations,” the statement read.
Small Contractors Prioritised in Debt Clearance Strategy
A key feature of the latest payment cycle is the prioritisation of contractors with smaller verified claims, particularly those owed N100m or less. Officials explained that this approach was intended to spread economic impact more widely rather than concentrating disbursements among a few large beneficiaries.
“Contractors prioritised for payment in the most recent batch are those with verified claims in the region of N100m or less,” the ministry said. “The release of funds is expected to provide immediate relief to hundreds of businesses, enabling them to return to project sites, pay workers, settle suppliers, meet financial commitments, and support economic activity across the country.”
For many small and medium-scale contractors, the payments are expected to restore working capital, revive stalled projects, and ease pressure on supply chains that have been strained by delayed government obligations.
Fiscal Push to Unlock Liquidity and Restore Confidence
The Ministry of Finance described the ongoing disbursement programme as part of a broader commitment to resolving inherited liabilities in a transparent and fiscally responsible manner. It added that the policy is also designed to translate budgetary commitments into real economic outcomes.
“Over the past few months, the Federal Government has processed payments exceeding N700bn across various categories of verified obligations owed to local contractors,” the ministry stated. “Within the month of May alone, approximately N436.6bn in transactions were processed, demonstrating a significant acceleration in payment activity aimed at unlocking liquidity and supporting economic growth.”
Officials also stressed that spreading payments across a large number of contractors—rather than concentrating them among a few major firms—was intended to widen the reach of government spending and strengthen economic circulation across different sectors and regions.
Relief for Businesses and Push for Job Protection
The government said the disbursements are expected to do more than settle outstanding bills. By injecting liquidity into struggling firms, authorities believe the payments will help contractors retain workers, pay suppliers, and continue ongoing infrastructure projects that may otherwise stall.
It added that improved payment certainty would also strengthen trust between government and service providers, encouraging smoother execution of public projects going forward.
Commitment to Debt Reduction and Budget Discipline
Reaffirming its fiscal stance, the Ministry of Finance said it remains committed to ensuring that legitimate obligations are paid promptly while maintaining discipline in public financial management. The ongoing settlements, it added, are part of efforts to reduce the stock of outstanding liabilities and improve confidence in government contracting systems.
The development comes as earlier reporting indicated that the Federal Government has also budgeted N1.7tn in the 2026 Appropriation Bill specifically to clear outstanding debts owed to contractors for capital projects executed in 2024, signalling that the debt-clearing programme is expected to continue into the coming fiscal cycle.