FG Clears ₦700bn Contractor Debt, Approves Payments for 1,240 Local Firms

The Federal Government has approved payments to more than 1,240 local contractors across the country, as part of a major effort to clear outstanding obligations and inject fresh liquidity into businesses struggling with delayed government payments.

The Ministry of Finance disclosed that the latest round of payments forms part of a broader settlement programme through which over ₦700 billion in verified contractor debts have been processed in recent months.

According to the Ministry, the initiative is aimed at strengthening business confidence, supporting economic activity and ensuring that legitimate obligations owed by government institutions are honoured promptly.

In a statement issued on Monday by the Senior Special Assistant on Communication and Press Secretary to the Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, the Ministry said the payments followed a comprehensive verification and reconciliation process designed to ensure that only duly validated claims qualified for settlement.

The approved payments cut across contractors engaged by various Ministries, Departments and Agencies (MDAs) of the Federal Government.

Officials noted that priority was given to contractors with verified claims of ₦100 million or below, a move intended to broaden the impact of the intervention and provide relief to a larger number of indigenous businesses.

The Ministry explained that many of the beneficiaries are small and medium-sized enterprises whose operations had been constrained by prolonged payment delays.

By releasing the funds, government expects contractors to return to project sites, settle obligations to suppliers, pay outstanding salaries, service loans and expand business activities.

According to the statement, approximately ₦436.6 billion in payments were processed in May alone, representing a significant increase in the pace of disbursements.

The government said the strategy of prioritising smaller contractors was deliberately adopted to spread economic benefits across multiple sectors and geographical regions rather than concentrating resources among a handful of large firms.

Economic analysts note that delayed payments to contractors often create ripple effects across the economy, affecting employment, project delivery timelines, supplier networks and overall business confidence.

The Ministry stressed that beyond the immediate financial relief, the initiative is expected to strengthen trust between government and private sector operators by demonstrating a commitment to honouring verified contractual obligations.

“For many beneficiaries, the release of funds represents more than a financial transaction. It provides the certainty needed to sustain operations, preserve jobs, complete ongoing projects and contribute to economic recovery and growth,” the statement noted.

The Ministry further reaffirmed its commitment to fiscal discipline, transparency and prudent public financial management, while assuring stakeholders that efforts would continue to systematically reduce outstanding liabilities.

Officials expressed confidence that the ongoing settlement programme would improve confidence in government contracting, support infrastructure delivery and contribute to broader economic growth objectives under the administration’s reform agenda.

With more than ₦700 billion already processed and additional obligations under review, the government says it remains focused on creating a more predictable and efficient payment system that supports businesses and strengthens the nation's economic resilience.