The Federal Government has stated that, henceforth, no Ministry, Department, or Agency (MDA) of the government should issue contract award letters without warrants or Authority to Incur Expenditure (AIE) issued by the Minister of Finance.
The new system, which serves as evidence of available funds, ensures that payments to end beneficiaries are made immediately after projects are completed. It is also to ensure that government funds are channelled only to priority government projects, while ensuring transparency and accountability in the implementation of capital budgets.
The Minister of Finance and the Coordinating Minister of the Economy, Mr Wale Edun, stated this on Wednesday in Abuja during the opening of a one-day stakeholder engagement with permanent secretaries and accounting officers of Ministries, Departments and Agencies on the implementation of the 2025 capital budget. Organised by the Office of the Accountant-General of the Federation (OAGF), Edun noted that the new approach to awarding contracts aligns with the government’s cash management and bottom-up cash planning policy, whereby contractors are paid directly without the need for an intermediary.
He said the policy was meant to make the system of payments more rigorous, more transparent, and more accountable by paying suppliers, contractors, and service providers directly.
He added that the insistence on the issuance of the warrant/AIEs was to serve as evidence of funds available for the contract.
The minister said while the reform policies of the present administration is already yielding positive results such as the increased funds going to the states and the economy growing by 3.5 per cent, the target of the administration is to have the economy grow by seven per cent per annum steadily and inclusively to ensure that millions of Nigerians are lifted out of poverty.
“That starts here with effective, honest, transparent and efficient spending,” he said.
“We are putting measures in place to fund the extended 2024 and 2025 capital budgets as they fall due, particularly in the priority projects of the government,” he noted. Newspaper subscription bundles
He charged the participants that it is their responsibility to prudently manage the limited resources allocated to their MDAs, as well as optimise revenue realisation as it falls due, adding that they must implement necessary controls to prevent discretionary spending.
The minister added that the present administration will continue to honour its obligations to contractors, provided that payment requests follow due process.
Earlier in his speech, the Accountant-General of the Federation, Mr. Samseldeen Ogunjimi, voiced concerns about the activities of some MDAs, who, he said, award contracts solely based on budgetary provisions without regard to existing laws and regulations.
“There is also a high propensity to award new contracts rather than completing ongoing projects, transferring funds to vendors’ accounts even before the contracts are executed and expending the independent revenue generated without necessary approvals,” he said.
He warned that the government will not fold its hands to watch institutions and individuals saddled with these responsibilities disregard extant laws and regulations in the award and execution of capital budget.
He said, “Henceforth, warrants/AIEs will be issued to MDAs prior to legal commitment to serve as evidence of funds available for the award of contracts or processing of payments for ongoing or completed projects.
“You are to ensure that no letter of award is issued, contract signed or that you enter into any financial obligation unless the corresponding warrants or AIEs covering the full or committed portion of the contract sum have been duly released.”
Responding to concerns raised by some participants that they had already awarded contracts for 2025 capital projects before the new order, the AGF assured them that the government will fund contracts that have already been awarded and have gone through the necessary processes. He added that the new system will be applied in the future.