Minister of Finance and Coordinating Minister of the Economy, Olawale Edun, on Thursday assured the Senate that the Federal Government’s payment system is undergoing improvements.
His assurance came as lawmakers called for a return to the former payment structure and the abandonment of the current envelope budgeting model, arguing that both frameworks have weakened service delivery and fiscal discipline.
The positions were articulated during an interactive session between the Senate Committee on Finance and the Federal Government’s Economic Management Team at the National Assembly.
Among those in attendance were the Minister of Budget and Economic Planning, Atiku Bagudu; Chairman of the Nigeria Revenue Service, Zach Adedeji; representatives of the Nigerian National Petroleum Company Limited; the Governor of the Central Bank of Nigeria; and the Comptroller-General of Customs.
Chairman of the Committee, Senator Mohammed Sani Musa, stated in his opening remarks that feedback from Ministries, Departments and Agencies during ongoing budget defence sessions indicated that the impact of government policies was not reaching ordinary Nigerians.
He stressed the need for urgent structural reforms as preparations begin for the 2026 fiscal cycle.
“This meeting is not routine. The 2026 fiscal cycle must reflect not only macroeconomic adjustments, but structural reforms capable of repositioning our economy for sustainable growth, fiscal resilience and development,” he said.
On budgeting, Musa declared that the envelope system had failed and should be replaced with a priority- or performance-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,” he stated.
He added, “You can see on paper that there is money, but where is the money? 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.”
Musa further stressed that Nigeria must align its budgeting process with global best practices.
“Nigeria cannot aspire to global competitiveness while operating a budgeting framework anchored in outdated assumptions. We need to do a new economic outlook. We need to go back like the advanced countries,” he said.
The committee also faulted the current centralised payment system, saying it has left many contractors unpaid for projects already executed.
“Similarly, the centralized 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 pay contractors they gave job to,” Musa said.
He warned that delayed fund releases, weak revenue remittances and under-execution of capital projects were eroding public confidence in the budgeting process.
“These patterns widen fiscal deficits, weaken service delivery and erode the credibility of the budgeting process,” he said, insisting that borrowing must translate into productivity, infrastructure development and long-term growth.
Other lawmakers echoed his concerns.
Senator Jimoh Ibrahim called for reforms in revenue management and data infrastructure, lamenting the absence of an integrated national revenue tracking platform.
“How do we monitor revenue when we do not even have a national server?” he queried.
“It is not good that we do not have a public service email system, not Gmail, not Yahoo, but official .gov addresses. Every public servant should have an official email, and we must build a central server and data bank. Any economy without data is too weak,” he added.
Senator Orji Uzor Kalu urged the economic team to focus more on improving the microeconomic sector to ensure that Nigerians at the grassroots feel tangible economic relief.
Similarly, Senator Victor Umeh questioned claims of economic improvement based on the strengthening of the naira.
“If the Naira is strong against the dollar, it shows that we don’t have money to buy the dollar. People don’t have money to buy the dollar, therefore, the monetary value of the dollar will be going down. If you pay contractors now, the demand for dollar will go up,” he said.
Umeh also queried the delayed implementation of the 2025 budget, noting that February was almost over without significant capital releases, leaving only a few months for the budget lifespan.
Responding, Edun acknowledged that although government revenue had improved, debt servicing remained a major burden.
“Though revenue has increased, the high interest on debt servicing is draining it. We are servicing debt running up to N152 trillion,” he said, adding that about N30 trillion was inherited from the previous administration, while the current government’s contribution was in the N20 trillion range.”
He explained further: “Currently, government debt in Naira terms is 152 trillion Naira. About 30 trillion Naira came from Ways and Means inherited by this government and N9 trillion 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.”
On the proposed shift to priority budgeting, Edun said: “The prioritisation will be from MDAs first, then the finance team, and then Mr President will have the final say.”
He added, “The payment method will be improved. We should not throw the baby away with the bath water but seek to improve it.”
Edun assured lawmakers that the outlook for the proposed N58.472 trillion 2026 budget was positive in terms of implementation, stressing that the government was intensifying efforts to boost revenue to the Federation Account, including through improved remittances by NNPCL as directed by President Bola Tinubu.
The committee maintained that strict adherence to the annual budget cycle and prompt payment of contractors were essential to restoring fiscal credibility and ensuring that government spending translates into measurable outcomes for Nigerians.
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