MDAs cannot award unfunded contracts
The Federal Government has prohibited ministries, departments and agencies from awarding contracts or making financial commitments without approved budgetary provisions and confirmed funds.
The government said the directive was introduced to strengthen fiscal discipline, improve the implementation of capital budgets and reduce the growing number of abandoned projects across the country.
The order was contained in a Federal Treasury Circular dated July 31, 2026, and signed by the Accountant-General of the Federation, Dr Shamseldeen Ogunjimi.
The circular was addressed to ministers, permanent secretaries, heads of federal agencies, accounting officers, federal pay officers and other officials responsible for managing public funds.
Under the new operational guidelines, MDAs cannot award unfunded contracts or issue commitments that are not supported by budget approval, expenditure authorisation and adequate cash backing.
The government said the directive became necessary following repeated violations of the Public Procurement Act, financial regulations and other rules governing federal expenditure.
Government Moves Against Abandoned Projects
Nigeria has struggled for decades with thousands of incomplete and abandoned public projects.
Many contracts are awarded with publicity and political fanfare even when the government agency involved has no realistic funding plan for completing them.
Contractors may mobilise to project sites, carry out part of the work and later withdraw when payments stop. In other cases, agencies award contracts near the end of a budget cycle without sufficient time or money to implement them.
The result is a landscape of abandoned roads, hospitals, schools, water schemes and public buildings.
The latest order that MDAs cannot award unfunded contracts is intended to break that cycle by connecting procurement decisions directly to available funds.
A contract should not be issued merely because a project appears in a budget document. The responsible agency must also obtain the required financial approval and demonstrate that funds are available to meet the obligation.
This distinction is important because a budgetary allocation does not always translate into an immediate cash release.
BPP to Reject Unsupported Requests
The Federal Government also directed the Bureau of Public Procurement to process only requests for certificates of “No Objection” that are supported by valid warrants or Authorities to Incur Expenditure.
A certificate of “No Objection” is an important approval issued by the procurement regulator for qualifying public contracts after reviewing the procurement process.
Under the revised arrangement, an agency will not be able to complete a major contract award process simply by presenting procurement documents. It must also provide evidence that the expenditure has been properly authorised and funded.
The requirement reinforces the principle that MDAs cannot award unfunded contracts and later place pressure on the Treasury to find money for obligations that were created without proper financial planning.
The Bureau of Public Procurement was established under the Public Procurement Act 2007 to regulate, monitor and oversee federal procurement. Its responsibilities include promoting transparency, competitiveness and value for money in public contracting.
Unfunded Contract Awards Are an Offence
The Accountant-General reminded public officials that awarding a contract without adequate funding is not simply a breach of internal procedure.
It may amount to an offence under the Corrupt Practices and Other Related Offences Act.
Section 22(4) of the law prohibits a public officer from awarding or signing a contract without budgetary provision, approval and cash backing.
A convicted official may face a three-year prison term and a fine of ₦100,000 under the provision.
The circular therefore places direct responsibility on permanent secretaries, chief executives, directors of finance and other accounting officers.
They cannot claim that a political superior or another department authorised an unfunded commitment if their own offices participated in processing or signing it.
The warning that MDAs cannot award unfunded contracts must now be backed by enforcement.
Officials who knowingly violate the directive should face administrative sanctions and, where evidence supports prosecution, be referred to the appropriate anti-corruption agencies.
Without consequences, the circular may become another government document that is widely distributed but weakly enforced.
Agencies Ordered to Submit Cash Plans
The government directed every federal MDA to prepare and submit annual and quarterly cash plans covering its capital budget.
The annual plan is expected to outline when an agency will require funds, the projects to be financed and the expected sequence of implementation.
Quarterly plans will provide a more immediate picture of expenditure needs and allow the Treasury to match government commitments with available revenue.
The circular stated that the annual cash plan commencing from July 15, 2026, and the first quarterly cash plan were to be submitted by July 31.
Subsequent quarterly plans must be submitted on or before the 15th day of the first month of each new quarter.
This bottom-up cash-planning process means agencies must identify their priorities before committing the government to expenditure.
By insisting that MDAs cannot award unfunded contracts, the government is asking institutions to plan projects around realistic cash expectations rather than political pressure or optimistic revenue projections.
Priority Projects to Receive Attention
The circular instructed ministries and agencies to prioritise programmes that align with the Federal Government’s policy objectives.
This could mean that some projects included in the budget may not receive immediate funding if available revenue is insufficient.
The Cash Management Technical Committee will continue reviewing implementation plans and advising the Federal Cash Management Committee on projects that should receive priority.
Accounting officers and directors of finance will also be expected to ensure prudent cash management within their institutions.
The Office of the Accountant-General has described cash management, budget management, the Treasury Single Account and public accountability as central parts of its public-finance reform programme.
However, prioritisation must be transparent.
The government should publish clear criteria showing why one project receives funding while another is delayed. Otherwise, politically connected projects may be classified as priorities while essential community infrastructure remains neglected.
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Directive Builds on Earlier Cash Reforms
The latest circular strengthens the revised cash-management policy introduced in 2024.
That policy required MDAs to improve cash forecasting and align expenditure plans with government revenue and approved budget releases.
In August 2025, the Federal Government also directed MDAs not to issue contract award letters without warrants or Authorities to Incur Expenditure from the Ministry of Finance.
Officials said the requirement would serve as evidence that funds were available and would help ensure that contractors and service providers were paid after completing approved work.
In June 2026, the Director-General of the Bureau of Public Procurement, Dr Adebowale Adedokun, also said the government had decided that no further contract award should be issued without available resources.
The new Treasury Circular therefore appears to formalise and strengthen a policy direction that has been developing over the past two years.
The repeated declaration that MDAs cannot award unfunded contracts also raises an important question: why were existing procurement and anti-corruption rules not being enforced effectively?
Contractors Have Carried the Burden
Unfunded contracts do not affect government accounts alone.
Businesses that execute public projects often borrow money, purchase materials, employ workers and deploy equipment based on official contract awards.
When payment does not arrive, contractors may accumulate bank interest, owe suppliers and struggle to pay employees.
Some abandon the projects, while others repeatedly petition ministries, lawmakers and the Presidency for intervention.
The accumulation of unpaid contractual liabilities also makes future projects more expensive. Contractors who have experienced long payment delays may increase their bids to cover the risk of working for the government.
Ensuring that MDAs cannot award unfunded contracts could therefore improve confidence in federal procurement, provided agencies also pay promptly for properly executed work.
The reform should not become an excuse for withholding payment on contracts that were lawfully awarded, adequately funded and satisfactorily completed.
National Assembly Has a Role
The National Assembly also has a responsibility to support the policy.
Lawmakers regularly insert projects into federal budgets, sometimes without sufficient consultation with the ministries expected to implement them.
When numerous new projects are added without corresponding revenue, agencies may be left with capital budgets that are politically attractive but financially unrealistic.
Legislative oversight committees should examine whether ministries comply with the cash-planning requirement and whether contract awards are supported by valid warrants.
They should also resist pressuring agencies to commence projects that lack adequate funding.
The principle that MDAs cannot award unfunded contracts must apply regardless of whether the pressure comes from ministers, senior civil servants, lawmakers or politically influential contractors.
Public Procurement Must Become Transparent
The government should create a public platform showing major contract awards, approved amounts, funding status, contractors, payment milestones and implementation progress.
Such transparency would allow citizens, journalists and civil society organisations to identify projects awarded without visible funding.
It would also make it harder for officials to issue several contracts against one limited budget allocation.
The Bureau of Public Procurement already publishes procurement documents, regulations and information relating to approved contracts. This system should be expanded into a comprehensive and searchable contract-monitoring database.
Citizens should not have to wait until a project is abandoned before discovering that the government never had sufficient money to complete it.
Ogele News Perspective
The Federal Government’s decision to prevent ministries and agencies from awarding unfunded contracts is both necessary and overdue.
Nigeria cannot continue announcing projects that exist only in contract documents and political speeches.
Every abandoned project represents wasted planning, tied-down public funds and a service denied to the people.
An unfinished hospital cannot treat patients. An abandoned school cannot accommodate pupils. An incomplete road cannot improve transportation or commerce.
The policy that MDAs cannot award unfunded contracts will succeed only when public officers are held personally accountable for violations.
Circulars alone do not enforce fiscal discipline.
The Office of the Accountant-General, Bureau of Public Procurement, Ministry of Finance, Auditor-General, National Assembly and anti-corruption agencies must work together to track compliance.
Government should also publish the cash plans submitted by ministries, except where limited information must be protected for legitimate security reasons.
Most importantly, the policy must not be selectively applied.
Powerful ministries and politically connected agencies should not be permitted to bypass rules imposed on smaller institutions.
Nigeria needs fewer ceremonial contract awards and more completed projects.
The real measure of public procurement is not how many contracts the government announces. It is how many properly funded projects are completed on time, within budget and to the required standard.
