Senate urges FG to revert to old contractor payment system, replace envelope budgeting with priority-based model

The Senate, through its Committee on Finance, urged the Federal Government to revert to the old payment system for contractors instead of the current centralized arrangement, which it said has left the government indebted to many contractors, including for projects executed in 2024, not to mention those of 2025.

The committee also called for the replacement of the Envelope budgeting system with a priority- or performance-based model, and demanded the sack of the Registrar-General of the Corporate Affairs Commission (CAC), Hussaini Ishaq Magaji, SAN, for his persistent refusal to appear before it.
The resolutions were reached during an interactive session with the Federal Government’s Economic Management Team, led by the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun. Also in attendance were the Minister of Budget and National Planning, Senator Atiku Bagudu; the Accountant-General of the Federation, Dr Shamseldeen Babatunde Ogunjimi; and the Chairman of the Nigeria Revenue Service (NRC), Zacch Adedeji.
In his opening remarks at the session, the Chairman of the Committee, Senator Sani Musa (Niger East), told the economic team that realities on the ground, based on feedback from heads of various Ministries, Departments and Agencies (MDAs) during budget defence sessions, show that the impact of the economy is not being felt by ordinary Nigerians.
According to him, the economic team needs to collaborate with the National Assembly to find solutions, which he said requires replacing the current operational systems.
“Specifically, based on submissions made by heads of various agencies during the ongoing budget defence sessions, the Envelope system of budgeting has failed and needs to be replaced by a priority-based model.
“The incremental allocation model has outlived its usefulness. It promotes routine expenditure expansion rather than strategic prioritisation.
“Similarly, the centralized system of payment, which has led to many contractors remaining unpaid for projects already executed, should be replaced with the old system that allows various MDAs to pay contractors they awarded jobs to,” he said.
He further stressed the need to restore strict adherence to the annual budget cycle, insisting that budgets must be time-bound and measurable.
“If, by December, we cannot assess ourselves realistically, then the system is failing. We must return to a disciplined budget cycle where one fiscal year ends before another begins,” he said.
In their separate remarks, members of the committee aligned with the chairman, urging the economic team to improve budget planning and implementation, as well as ensure prompt payment of contractors.
In response, the economic team assured the committee and Nigerians that the outlook for 2026 is very positive in terms of implementing the proposed N58.472 trillion budget.
The minister explained that the current N152 trillion budget profile of the country was not accumulated through borrowing alone.
He said: “Currently, government debt in Naira terms is 152 trillion Naira. About 30 trillion Naira came from Ways and Means inherited by this government and N9 trillion incurred from exchange rate adjustment.
“So virtually half of that debt is made up of adjustments. It is not additional borrowing. Additional borrowing since 2023 is in the 20 trillion range.
“Going forward is what matters most. Prioritization will start with the MDAs, bringing forward growth-enhancing projects. Then the Economic Management Team will review those projects, and finally, Mr President will decide financing based on priorities, particularly for capital projects.”
Earlier, at the commencement of the engagement session with the economic team, the committee resolved to write President Bola Tinubu to sack the Registrar-General of the CAC for persistently refusing to appear before it.