FG changes payment priority to favour small contractors, targets bankable debt

The Federal Government has restructured its approach to settling outstanding debts owed to contractors, prioritising small and medium-sized businesses over large contractors with bigger claims, following a directive from President Bola Tinubu.

Speaking Friday in Abuja, the Minister of Finance and Coordinating Minister of the Economy, Mr Taiwo Oyedele, said the shift was informed by the reality that small and medium-scale Nigerian businesses depend directly on government payments to meet salaries, pay suppliers and cover other operating costs.

He said the first phase of the exercise targeted contractors owed N50 million or less, covering more than 2,000 contractors, before the government expanded the threshold to N100 million and below in a second phase that covered about 5,000 contractors.

Oyedele clarified that contractors owed above N100 million would not be left out, but that their claims would likely be handled differently depending on the size of the outstanding sums. For very large claims, such as N2 billion or N3 billion, he said affected contractors could be invited to negotiate payment arrangements with the government, which may include promissory notes.

“Your business is to do your work. It’s our business to ensure that you are paid,” he said, adding that contractors should not need to know the Finance Minister, the Accountant-General of the Federation or other senior officials to get paid.

He explained that promissory notes were unsuitable for small contractors, since a business owed N10 million needs cash immediately to pay workers and meet household needs, unlike larger contractors who can absorb negotiated arrangements.

A key medium-term objective, Oyedele said, is for verified government debt to become bankable, such that when the government tells a contractor it owes and will pay, the contractor can take that commitment to a bank with confidence.

The minister also warned contractors against paying commissions or illegal charges to officials or intermediaries to secure payment, saying the government would act against such practices if reported.

“We will not demand illegal payments from contractors,” Oyedele said, urging affected businesses to report any such demands.

Beyond clearing inherited debts, Oyedele said the government intends to prevent a fresh build-up of unpaid obligations by ensuring ministries and agencies do not commit to capital projects without clarity on funding sources, tying future capital expenditure commitments to realistic revenue and financing plans.