The Federal Government has initiated efforts to clear the backlog of payments owed to genuine contractors who executed projects for Ministries, Departments, and Agencies (MDAs)

This is coming amid rising concerns over delayed payments and impact on the economy.

In a statement in Wednesday in Abuja, the Director of Press and Public Relations at the Office of the Accountant General of the Federation (OAGF), Mr. Bawa Mokwa, disclosed that concrete steps are being taken to address outstanding obligations to contractors.

“The Federal Government has records of contracts executed by MDAs and is meticulous in the payment for these contracts to guarantee value for money spent,” the statement read. “Efforts are underway to pay for contracts duly awarded and completed according to specifications.”

Current estimates indicate that the Federal Government owes local contractor between N200 billion and N400 billion.

These unpaid debts are largely attributed to delayed budget releases, cash flow challenges, and procurement bottlenecks.

The exact figure is subject to change depending on government fiscal actions and policy decisions.

While acknowledging the backlog, the OAGF stressed that only contractors who followed the proper processes and delivered projects as specified will be eligible for payment.

“The Federal Government has laid down rules for the award and execution of contracts, and no payment would be made for contracts awarded without due process or contracts not executed according to specification,” Mokwa stated.

Industry players have often raised concerns about the ripple effects of delayed payments, including layoffs, stalled projects, and financial stress for small and medium-sized contractors.

The government, in previous years, has made attempts to improve the situation through reforms in payment verification and the work of the Debt Management Office. The federal government is also careful not to pump so much money into the system and eventually triggering another round of inflation.

In a related development, the OAGF confirmed that the Federal Government has started clearing the outstanding five-month arrears of the N35,000 wage award to workers. The payments commenced in May 2025, with a schedule in place to ensure consistent disbursement until the backlog is cleared.

“The next payment of the N35,000 wage award will be done in June 2025 after the payment of the June 2025 salary,” the statement said.

The wage award was part of the Federal Government’s temporary intervention to cushion the effects of fuel subsidy removal and the resulting economic strain on public sector workers. Though initially delayed, the phased payment plan has offered some relief to civil servants awaiting the arrears.

The ongoing efforts to settle contractor debts and wage awards come at a time when the government is trying to stabilize public finances, improve trust in its fiscal processes, and stimulate economic activity through improved liquidity in the private sector.

Stakeholders in the construction and services sectors will be watching closely to see how these measures unfold in the coming months, especially as many contractors continue to express concerns over the long wait for payments despite executing government-approved projects.