Federal Government Mandates Stricter Financial Oversight For Contract Awards.
The Nigerian Federal Government has introduced a significant reform to enhance fiscal discipline across its Ministries, Departments, and Agencies (MDAs). In a directive announced on Wednesday, 13 August 2025, the government declared that no MDA may issue contract award letters without first obtaining a warrant or Authority to Incur Expenditure (AIE) from the Minister of Finance. This measure, unveiled by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, during a stakeholders’ engagement in Abuja, aims to ensure prudent management of public resources and align expenditure with available funds.
The new policy, part of the government’s Bottom-Up Cash Planning initiative, requires MDAs to secure warrants or AIEs as proof of funding availability before entering into any financial commitments. Speaking at the event organised by the Office of the Accountant-General of the Federation, Edun emphasised that this reform would prevent contracts from being awarded without confirmed financial backing. “Henceforth, no letter of award should be issued, no contract signed, nor any financial obligation entered into unless the corresponding warrants or AIEs covering the full or committed portion of the contract sum have been duly released,” he stated.
The directive addresses longstanding concerns about financial mismanagement, including the practice of awarding contracts based solely on budgetary provisions without regard for actual cash flow. The Accountant-General of the Federation, Shamseldeen Ogunjimi, highlighted that some MDAs had previously flouted procurement regulations, leading to commitments exceeding available funds. This, he noted, often forced contractors to borrow at high interest rates to execute projects, creating financial strain and delays. The new system aims to restore confidence in government contracts by ensuring prompt payments to contractors upon project completion, with funds channelled directly to beneficiaries without intermediaries.
Edun also outlined the government’s broader economic goals, noting that the reforms are already yielding results, with Nigeria’s GDP growth reaching 3.5%. However, he stressed the administration’s target of achieving a 7% annual growth rate to lift millions out of poverty through transparent and efficient spending. Measures are also being implemented to fund the extended 2024 and 2025 capital budgets, with a focus on priority projects. The Accountant-General assured stakeholders that existing contracts registered in the Government Integrated Financial Management Information System (GIFMIS) would be honoured, provided they followed due process.
This policy marks a pivotal step towards greater accountability and transparency in Nigeria’s public procurement system. By aligning contract awards with available funds, the government aims to eliminate wasteful spending and ensure that public resources are directed towards projects that drive economic growth and improve the lives of Nigerians.
