FG pays 1,240 contractors as N700bn debt clearance accelerates

The federal government has approved fresh payments to more than 1,240 local contractors as the government seeks to inject liquidity into businesses, clear longstanding obligations and support economic activity amid ongoing fiscal reforms.

The Ministry of Finance said on Monday that the latest disbursements, approved by Taiwo Oyedele, the finance minister and coordinating minister of the economy, follow a verification and reconciliation process designed to ensure that only validated claims are settled.

The payments span contractors working for various Ministries, Departments and Agencies (MDAs) and are aimed primarily at indigenous firms and small and medium-sized enterprises that have faced delays in receiving government funds.

Contractors with verified claims of N100 million or less were prioritised in the latest round of payments, according to the ministry. The government said the release of funds is expected to provide immediate relief to businesses, enabling them to return to project sites, pay workers, settle supplier obligations and meet other financial commitments.

The move comes as President Tinubu’s administration attempts to restore confidence in public finances while stimulating growth in an economy grappling with elevated inflation, high borrowing costs and pressure on businesses.

The finance ministry said the federal government has processed payments exceeding N700 billion in verified obligations owed to local contractors over the past few months. In May alone, approximately N436.6 billion in transactions were processed, signalling a significant acceleration in efforts to clear outstanding liabilities.

The new strategy marks a shift toward broad-based disbursement, with authorities prioritising a large number of smaller contractors rather than concentrating payments among a handful of large beneficiaries.

Officials say the deliberate approach is intended to maximise the economic impact of the funds by supporting businesses across multiple sectors and regions of the country.

Delayed government payments have long been a source of strain for contractors, particularly smaller firms that depend heavily on public sector projects for revenue. Payment backlogs often force businesses to suspend projects, cut jobs or accumulate debt while waiting for government settlements.

By accelerating payments, authorities hope to improve cash flow within the private sector and support ongoing infrastructure and service delivery projects. The government also expects the disbursements to bolster confidence among contractors, suppliers and service providers that conduct business with public institutions.

The release of funds is expected to help preserve jobs, sustain operations and facilitate the completion of projects that have been slowed by funding constraints.

The finance ministry said it remains committed to maintaining fiscal discipline while ensuring legitimate obligations are settled promptly.

“The Ministry remains committed to maintaining fiscal discipline while ensuring that legitimate obligations are settled in a timely manner going forward to substantially reduce outstanding liabilities over time, strengthen confidence in public financial management, and support the effective delivery of public services and infrastructure,” it stated.

Onyinye Nwachukwu

Onyinye Nwachukwu is the Abuja Bureau Chief of BusinessDay, overseeing coverage across Abuja and Northern Nigeria. With more than two decades of experience in economic and financial journalism, she reports on business, policy, and market trends, linking local developments to the global economy. A fellow of the International Monetary Fund (IMF) and recipient of the P. Vishwanathan Memorial Award for Excellence in Financial Journalism, she is known for her insightful storytelling and interviews with senior policymakers, diplomats, and business leaders. Well traveled and globally minded, Onyinye brings depth and international perspective to her reporting.