The Nigerian Senate has directed the Federal Government to return to the old payment system for contractors, citing delays and unpaid obligations under the current centralized system that have left many contractors owed for projects executed in 2024 and 2025.
The Upper Chamber also called for the replacement of the Envelope budgeting system with a priority- or performance-based model to ensure strategic allocation of resources. Additionally, the Senate demanded the immediate dismissal of Hussaini Ishaq Magaji, Registrar-General of the Corporate Affairs Commission (CAC), for repeatedly refusing to appear before the Senate Committee on Finance.
The pronouncements were made during an interactive session between the Senate Committee on Finance, chaired by Sani Musa, and the Federal Government's economic management team led by Minister of Finance and Coordinating Minister of the Economy, Wale Edun. Also in attendance were Minister of Budget and National Planning Atiku Bagudu, Accountant General of the Federation, Dr. Shamseldeen Babatunde Ogunjimi, and the Chairman of the Nigeria Revenue Service, Zacch Adedeji.
Senator Musa told the team that feedback from heads of various Ministries, Departments, and Agencies (MDAs) during budget defense sessions indicates that the impact of the economy is not being felt by ordinary Nigerians. He stressed that collaboration with the National Assembly is needed to overhaul current operational systems.
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"Specifically, based on submissions by heads of various agencies, the Envelope system of budgeting has failed and must be replaced by a priority-based model," Musa said. "The incremental allocation model has outlived its usefulness. It promotes routine expenditure expansion rather than strategic prioritization. Similarly, the centralized payment system, which has left many contractors unpaid, should be replaced with the old system allowing MDAs to pay the contractors they engaged."
He further emphasized the need for strict adherence to the annual budget cycle, insisting that budgets must be time-bound and measurable.
Other members of the committee supported Musa's position, urging the economic team to improve budget planning, execution, and timely contractor payments.
In response, the Federal Government team assured the Senate that the outlook for the proposed ₦58.472 trillion 2026 budget is positive. They explained that the current total government debt of ₦152 trillion is not solely due to borrowing, with about ₦30 trillion inherited via Ways and Means and ₦9 trillion from exchange rate adjustments. Additional borrowing since 2023, they said, amounts to roughly ₦20 trillion.
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The team stated that going forward, priority will be given to growth-enhancing projects submitted by MDAs, which will then be reviewed by the Economic Management Team and approved by the President for financing, particularly capital projects.
At the outset of the session, the committee resolved to write to President Bola Tinubu urging the removal of CAC Registrar-General Hussaini Ishaq Magaji for his persistent failure to appear before the Senate Committee on Finance.
The Senate emphasized that immediate reforms in payment systems and budgeting approaches are necessary to ensure accountability, efficiency, and tangible economic benefits for Nigerians.
