2024 budget: Centre expresses concern over Nigerian Govt’s failure to pay contractors

An economic think-tank, The Centre for Economic Reforms in Africa, CERA, has expressed concern over the Federal Government’s failure to pay local contractors who completed projects under the 2024 budget.

The call is coming amid reports that the Federal Government failed to adequately fund capital projects in the 2024 budget.

In a statement signed by its Director, Dr Martins Tayo, CERA said the failure to pay local contractors is having severe implications for the economy, businesses, and Nigerian families.

The Centre specifically highlighted that the Federal Government’s failure to pay contractors has resulted in significant financial difficulties for the companies involved, including loan defaults and worker layoffs.

According to CERA, many contractors are struggling to stay afloat due to the government’s inability to meet its financial obligations, creating a ripple effect across various sectors and leading to a decline in economic activity.

“The impacts of this failure on the economy and businesses are far-reaching. The lack of payment to contractors has limited their ability to invest in new projects, expand their operations, and create jobs.

“This has also affected the livelihoods of thousands of workers employed by these contractors. The government’s failure to pay contractors for completed projects has eroded trust and confidence in the government’s ability to manage public finances.

“Furthermore, the failure to pay contractors has also affected the overall economy. The non-payment of contractors has reduced the amount of money in circulation, leading to a decline in economic activity.

“This has also affected the government’s ability to generate revenue, as many businesses are struggling to survive due to the government’s failure to pay its debts. The impacts on families and Nigerians are devastating.

“Many families are struggling to make ends meet due to the loss of jobs and income resulting from the government’s failure to pay contractors. The lack of payment has also affected the ability of many Nigerians to access basic necessities like food, healthcare, and education,” the economic think-tank said in the statement.

The Centre warned that if the situation is not addressed immediately, it may lead to a decline in investor confidence, as local and foreign investors may become wary of partnering with the government due to its poor track record of meeting financial obligations.

The Centre added that the government’s failure to pay local contractors may also lead to a rise in social unrest and protests. It observed that “as more businesses struggle to stay afloat and workers lose their jobs, the social fabric of the country may begin to fray”.

To address the problem, CERA recommended prioritising payment to local contractors for completed projects to boost liquidity and rebuild trust as well as a clear and transparent repayment framework, including a timeline, amount, and payment modalities.

DAILY POST reports that the Senate and House of Representatives committees on appropriation had at a meeting with the presidential economic team on 8th January, 2025, criticized the Federal Government for poor funding of capital projects in the 2024 budget.

Head of the presidential economic team, Minister of Finance and Coordinating Minister of the Economy, Wale Edun, had at the meeting reported that overall, the 2024 budget performance was 43 per cent, with recurrent expenditure achieving 100 per cent while capital expenditure was just 25 per cent.

“Non-release of funds for capital projects is a major issue in the performance of the 2024 budget so far and it is desirable that funds are released to prevent abandoned projects and ensure the success of the Renewed Hope Agenda of the President,” Chairman of Senate Committee on Appropriation, Senator Solomon Adeola said at the meeting.

2024 budget: Centre expresses concern over Nigerian Govt’s failure to pay contractors