Abuja, January 9, 2026 – The Federal Government of Nigeria has proposed a substantial N1.7 trillion allocation in the 2026 Appropriation Bill specifically to settle outstanding liabilities owed to contractors for capital projects completed in 2024, marking a significant step toward addressing a longstanding backlog of unpaid debts that has triggered widespread protests and economic hardship for local firms.
The provision, detailed under the line item “Provision for 2024 Outstanding Contractor’s Liabilities,” reflects the government's acknowledgment of delayed payments exacerbated by revenue shortfalls. An additional N100 billion has been budgeted under “Payment of Local Contractors’ Debts/Other Liabilities,” potentially covering legacy claims from prior years or unverified obligations, bringing the total dedicated to contractor settlements to approximately N1.8 trillion.
This forms part of the broader N23.2 trillion capital expenditure component in the proposed N58.47 trillion 2026 national budget, aimed at accelerating infrastructure development while resolving historical fiscal overhangs. The overall budget includes N15.9 trillion for debt servicing, N15.25 trillion for recurrent spending, and N4.09 trillion for statutory transfers.
The allocation comes in response to intense pressure from indigenous contractors throughout 2025. Groups affiliated with the All Indigenous Contractors Association of Nigeria (AICAN) staged multiple demonstrations in Abuja, including barricading the Ministry of Finance headquarters in December 2025, over claims exceeding N500 billion to N2 trillion in unpaid dues for completed and commissioned projects.
National Secretary of AICAN, Babatunde Seun-Oyeniyi, highlighted the dire consequences during one protest, stating that contractors were struggling to repay bank loans incurred to finance government works. "Specifically, when we collate, they are owing more than N500bn for all indigenous contractors," he told journalists outside the Federal Ministry of Finance. Despite sighted payment warrants and assurances from Minister of Finance Wale Edun, no actual funds had been released, prompting resumed protests after a brief pause following National Assembly intervention.
Earlier promises added to the frustration. Minister of Works David Umahi had committed to clearing all verified arrears for federal contractors by the end of 2025. However, revenue constraints limited disbursements to partial payments, necessitating the carryover into the 2026 fiscal plan. In August 2025, the government claimed to have settled over N2 trillion in 2024 obligations, pledging timely releases for subsequent funds, but contractors disputed the extent of actual payouts.
Nigeria's recurring contractor debt crisis stems from systemic issues: delayed capital releases, incomplete cash-backing of approved projects, and consistent underperformance against revenue targets. These factors have led to overlapping budgets, with capital components from previous years rolling over, straining execution and fostering abandoned sites.
The 2026 provision signals intent to break this cycle, enabling contractors to resume operations, service debts, and contribute to economic activity. Analysts view it as a pragmatic "catch-up" mechanism, though its effectiveness will depend on improved revenue realization and disciplined implementation.
As the National Assembly deliberates the bill, stakeholders emphasize the need for transparent verification processes to ensure equitable distribution and prevent further accumulation of liabilities. The move underscores the Tinubu administration's focus on infrastructure consolidation amid fiscal pressures, with hopes that timely settlements will restore confidence in public contracting and boost sectoral growth.
