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Nigeria’s fiscal crisis has deepened as the implementation of key national projects stalls due to poor budget performance, delayed fund releases, and a muddled fiscal cycle. Three months after the 2025 budget was passed into law, the federal government is still struggling to implement the previous year’s spending plan, leaving critical infrastructure projects and contractors stranded.
Despite government claims that the budget is being implemented as planned, insiders reveal a different reality. Sources close to government agencies say the commitment to delivering on critical projects is being undermined by a lack of financial backing, with many contractors left unpaid, some for more than a year.
Several contractors, including politically connected firms, have taken to social media to express frustration, decrying slow governance and poor attention to urgent national priorities. The resulting fiscal gridlock has triggered severe spending cuts, delayed project executions, unpaid staff benefits, and widespread economic lethargy across ministries, departments, and agencies (MDAs).
The problem, observers say, is compounded by overlapping fiscal cycles. The 2024 budget implementation continues to run alongside the ambitious 2025 spending plan. This overlapping, likely to stretch till December, has created confusion within government circles and further slowed public spending.
Amid mounting concern over the 2024 budget’s poor performance, the Senate is now seeking to extend its capital component implementation till December 31, 2025. The capital vote was originally extended to June 30 after poor performance figures last December.
Chairman of the Senate Committee on Appropriations, Senator Olamilekan Adeola, presented the 2024 Appropriation Act (Amendment) Bill 2025, urging lawmakers to approve the extension. According to Adeola, without this measure, many critical infrastructure projects would be abandoned due to the inability of MDAs to utilise funds already released.
Some lawmakers, however, are demanding an investigation into the government’s failure to implement the capital budget, describing the situation as a growing embarrassment. Senate Minority Leader, Abba Moro, warned that the federal government’s indifferent attitude towards capital spending is damaging the economy and undermining national development.
“Unless we take it very seriously with the Ministry of Finance, this parliament will become an embarrassment itself. Even those who have funds to commit to projects will be unwilling to do so because they fear they won’t get paid,” Moro said during a heated plenary session.
The government’s inability to pay contractors has triggered wider financial distress in the private sector. Many contractors who obtained bank loans to fund government-awarded projects are now defaulting, burdened by mounting interest and pressure from lenders.
A banking sector source revealed that some contractors have had to restructure their loans multiple times, while others face asset seizures. One contractor reportedly restructured a ₦5 billion short-term loan twice but remains unable to settle the debt, as outstanding payments from government remain unpaid.
As a result, banks have grown increasingly reluctant to finance public sector contracts. With rising defaults on government-related loans, financial institutions are wary of new exposures, deepening the funding crisis for capital projects.
Data on budget implementation paints a grim picture. A half-year interim report on the 2023 capital budget showed that MDAs had spent just ₦1.3 trillion — 23 per cent of the prorated ₦5.6 trillion budgeted for the first six months.
Including grants, multilateral loans, and government enterprise projects, total capital spending stood at ₦2.4 trillion — representing a dismal 17.4 per cent performance. Analysts say this is the poorest capital budget implementation recorded in recent years.
Even with last December’s six-month extension, expectations of a turnaround have dimmed. Some insiders project that the final capital vote performance may barely reach 30 per cent, and when accounting for financial leakages, duplicated projects, and waste, effective performance could fall below 20 per cent.
Amid the fiscal paralysis, governance momentum has slowed, with much of the political establishment focused on partisan battles and 2027 election positioning. Analysts warn that politics has overtaken economic management.
Prof. Godwin Owoh, an applied economist, accused the political elite of prioritizing power plays over national interest. “The centre now directs the states to join the choristers, and that’s where the country is,” he said, alleging that non-payment of contractors may be a strategy to pressure sections of the elite ahead of future elections.
Similarly, economist Dr Chiwuike Uba linked the crisis to the government’s inability to maintain a coherent budget cycle. “We have multiple budgets being executed at the same time, which creates operational and financial chaos,” Uba said.
With project execution stalled, unpaid contractors in distress, and capital budget performance at historic lows, Nigeria’s fiscal crisis continues to weigh heavily on the economy. While the Senate moves to extend the lifespan of the 2024 capital budget for a second time, stakeholders remain skeptical about the government’s capacity to reverse the trend. The country risks further economic strain unless urgent reforms address the root causes of poor budget implementation and fiscal mismanagement.