The Senate Committee on Finance on Thursday asked the Federal Government to jettison the centralised contract payment system.
Instead, the legislative body urged the government to reintroduce the old system in which the Ministry of Finance released funds directly to the various MDAs for onward payment to contractors for projects executed.
The committee said the existing arrangement, under which payments for capital projects are processed centrally by the Ministry of Finance, had left many contractors unpaid for jobs completed since 2024 and even those nearing completion in 2025.
The lawmakers also called for the replacement of the envelope budgeting system with a priority- or performance-based model.
The resolutions were reached during an interactive session with the Federal Government’s Economic Management Team, led by the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun.
They appeared before the committee to defend the 2026 budget proposal currently being processed by the National Assembly.
Other members of the team at the meeting included the Minister of Budget and National Planning, Senator Atiku Bagudu; the Accountant-General of the Federation, Dr Shamseldeen Ogunjimi; and the Chairman of the Nigeria Revenue Service, Mr Zacch Adedeji.
In his opening remarks, Chairman of the Committee, Senator Sani Musa, told the economic team that feedback from MDAs during ongoing budget defence sessions showed that the impact of government policies was yet to be felt by ordinary Nigerians.
He said the committee believed that collaboration between the executive and the legislature was necessary to reform what he termed “failed operational systems.”
According to him, the envelope budgeting system has outlived its usefulness and should be replaced with a priority-based model that promotes strategic allocation of resources.
“The incremental allocation model encourages routine expansion of expenditure rather than strategic prioritisation,” Musa said.
He added that the centralised payment system had worsened liquidity challenges for contractors.
“Many contractors remain unpaid for projects already executed. The old system, which allowed MDAs to pay contractors directly for jobs awarded, should be restored,” he said.
The committee chairman also stressed the need to return to strict adherence to the annual budget cycle, insisting that fiscal performance must be measurable within a defined timeframe.
“If by December we cannot realistically assess our performance, then the system is failing. One fiscal year must end before another begins,” he said.
Other members of the committee aligned with the chairman’s position, urging the economic team to improve budget planning, ensure effective implementation and prioritise prompt payment of contractors.
Responding, the Minister of Finance assured the lawmakers that the outlook for the proposed N58.472 trillion 2026 budget was positive in terms of implementation.
He clarified that the current public debt stock of about N152 trillion was not solely the result of fresh borrowings.
According to him, N30 trillion arose from Ways and Means advances inherited by the present administration, while N9 trillion resulted from exchange rate adjustments.
“Virtually half of the debt stock comprises adjustments and inherited obligations. Additional borrowing since 2023 is in the range of N20 trillion,” he said.
Edun added that going forward, capital projects would be strictly prioritised. He explained that MDAs would first identify growth-enhancing projects, which would then be reviewed by the Economic Management Team before final financing decisions are taken by the President.
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