- The Federal Government has released approximately N700 billion ($514.2 million) to settle outstanding payments owed to 1,240 local contractors working across ministries, departments, and agencies. In a June 8 statement, the Ministry of Finance revealed that N436.6 billion of the total was disbursed in May 2026 alone.
The payments aim to support local businesses and small and medium-sized enterprises (SMEs), many of which have struggled with cash-flow problems due to delayed government payments. Authorities also expect the measure to revive public projects that have slowed or stalled because of funding constraints.
Officials said the initiative will help preserve jobs and stimulate 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 only validated claims were paid. Priority was given to contractors with claims of N100 million 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 infrastructure project delivery nationwide.
In January 2026, the federal government raised about N501 billion through a bond issuance to clear 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 aims to settle arrears owed to electricity producers, a problem that has weighed on liquidity and investment in Nigeria’s power industry for over a decade.
Beyond debt repayment, the initiative seeks to restore investor confidence and strengthen electricity sector stability through a combination of financial settlements and structural reforms.