FG Bars MDAs from Awarding Unfunded Contracts to Reduce Abandoned Projects
New Treasury Rules Require Full Funding Before MDAs Award Contracts
The Federal Government has directed all Ministries, Departments and Agencies (MDAs) to stop awarding contracts or entering into financial commitments without first obtaining budgetary approval and confirmed cash backing, in a major effort to improve fiscal discipline and reduce the growing number of abandoned public projects across the country.
/ You Might Also Like /
The directive was contained in a Federal Treasury Circular dated July 31, 2026, signed by the Accountant-General of the Federation, Dr. Shamseldeen Ogunjimi, and circulated to ministers, permanent secretaries, heads of agencies and other accounting officers. It strengthens existing cash management measures by introducing tighter controls over the execution of the 2026 capital budget.
New Conditions for Awarding Contracts
Under the new guidelines, no MDA may issue a letter of award, sign a contract or incur any financial obligation unless the corresponding Warrant or Authority to Incur Expenditure (AIE) has been issued by the Minister of Finance and transmitted to the Office of the Accountant-General.
The circular also requires MDAs to attach evidence of approved Warrants or AIEs generated through the Government Integrated Financial Management Information System (GIFMIS) before contracts are awarded or payments are processed. Financial commitments must remain within approved warrant balances to prevent the accumulation of unpaid liabilities.
Addressing Abandoned Projects
The government said the directive became necessary following repeated violations of the Public Procurement Act 2007 and other financial regulations governing public expenditure.
Authorities believe the new framework will improve compliance, reduce the practice of awarding contracts without available funding and ensure that capital projects proceed only when adequate financial resources have been secured. The Bureau of Public Procurement has also been instructed to process "No Objection" certificates only for projects supported by valid Warrants or AIEs.
Implications for Housing and Infrastructure
For Nigeria's housing and construction sector, the policy could significantly improve project delivery and payment certainty.
Federal housing estates, road projects, water infrastructure and urban development schemes have often experienced delays because contractors were mobilised before adequate funding was available. By ensuring that projects receive financial backing before contracts are awarded, the government aims to improve completion rates, reduce cost overruns and restore confidence among contractors, developers and financial institutions.
The directive could also enhance transparency in the procurement process, encouraging better planning and more efficient allocation of public resources for infrastructure development.
Industry Significance
The policy is expected to strengthen fiscal management while reducing the stock of abandoned projects that have tied up billions of naira in public investment.
For construction companies, the new approach offers greater assurance that government projects entering procurement have identified funding sources, potentially reducing payment delays and improving cash flow management.
If effectively enforced, the reforms could support more predictable infrastructure delivery, improve investor confidence and contribute to more sustainable public sector capital investment.
Outlook
The success of the directive will depend largely on strict enforcement across all MDAs and consistent adherence to procurement regulations. If implemented effectively, the policy could mark an important step towards improving budget execution, accelerating infrastructure delivery and reducing the incidence of abandoned projects that have long constrained Nigeria's housing and infrastructure sectors.
READ MORE
