Tunde Bakare
The Federal Government has announced the release of about N700 billion or ($514.2 million) to settle outstanding payments owed to more than 1,240 local contractors working across ministries, departments, and agencies. In a statement issued on June 8, the Ministry of Finance said about 436.6 billion naira of the total amount was disbursed in May 2026 alone.
The payments are intended to support local businesses and small and medium-sized enterprises (SMEs), many of which have faced cash-flow difficulties because of delays in government payments. The government also hopes the measure will help revive public projects that have slowed or stalled because of funding constraints.
Officials said the initiative will also help preserve jobs and support economic activity, particularly in infrastructure and service-related sectors.
The disbursements followed a verification and reconciliation process led by the Ministry of Finance to ensure that only validated claims were paid. Authorities also gave priority to contractors with claims of 100 million naira or less, a move designed to channel support toward smaller businesses and SMEs.
“By prioritizing a large number of smaller contractors rather than concentrating payments among a few large beneficiaries, the Government is broadening the economic impact of these disbursements, supporting businesses across different sectors and regions of the country,” the ministry said.
The contractor payments are part of a wider strategy to reduce government arrears, strengthen the state’s financial credibility, and improve the delivery of infrastructure projects nationwide.
In January 2026, the federal government raised about 501 billion naira through a bond issuance aimed at clearing long-standing debts in the power sector under the Presidential Power Sector Debt Reduction Program (PPSDRP).
The bond was fully subscribed by institutional investors, including pension funds, banks, and asset managers. The program seeks to settle arrears owed to electricity producers, a problem that has weighed on liquidity and investment in Nigeria’s power industry for more than a decade.
Beyond debt repayment, the initiative is intended to restore investor confidence and strengthen the stability of the electricity sector through a combination of financial settlement measures and structural reforms.