The Nigerian Government has issued a directive to all Ministries, Departments, and Agencies (MDAs) to ensure strict adherence to its revised cash management and bottom-up cash planning policy.
Speaking at a stakeholders’ engagement on the implementation of the capital budget and related issues in Abuja, the Accountant General of the Federation, Shamsudeen Ogunjili, stated that the policy aims to improve transparency, accountability, and efficiency in the system.
“The Federal Government initiated the implementation of a cash management and bottom-up cash planning policy as a basis for the execution of the 2024 Capital Project. The policy provides a set of rules and general guidelines for the conduct of government business in the planning and management of cash resources to ensure effective and efficient service delivery.
“Efficient and prudent cash management is central to any meaningful development, particularly in a developing economy like ours. The policy is designed to provide strategies for cash flow planning and management such that inflows are realised, outflows are controlled, and value for money is achieved in line with public expectations—thereby avoiding discretionary spending, minimising deficits, and reducing unnecessary borrowing.
“It also ensures that payments to end beneficiaries are made immediately upon issuance.”
He lamented that MDAs continue to flout procurement processes, thereby creating payment challenges for the Office of the Accountant General of the Federation (OAGF).
“The implementation of the policy is hampered by gross non-compliance with the Public Procurement Act, 2007, and other extant regulations, leading to financial commitments that far exceed the Federal Government’s monthly projected cash flows.
“We have reviewed the trend where MDAs award contracts solely based on budgetary provisions, which contradicts the annual budget implementation plan from which cash plans and funding strategies are derived.
More worrisome is the situation where the cash needs uploaded by most MDAs are limited to employee payables and mobilisation fees, neglecting ongoing and completed projects provided for in the budget. This has forced some contractors to approach the Federal Ministry of Finance or the OAGF for intervention, claiming that the funds used to execute the projects were borrowed from banks at high interest rates.”
The revised policy is part of the government’s broader public finance management reform.
The Federal Government has declared a new era of fiscal discipline in capital project execution, warning MDAs against awarding contracts without proof of available funds.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, announced that Warrants and Authorities to Incur Expenditure (AIEs) must now be issued before any legal commitment is made.
Under the revised framework, MDAs must secure warrants before entering into contracts, aligning public expenditure with available cash and strict financial regulations.
“For the avoidance of doubt, no letter of award, contract signing, or financial obligation should be entered into unless corresponding warrants and AIEs covering the full or committed portion have been duly released,” Edun stated.
The Minister emphasised the critical role of transparent and efficient budget execution in President Bola Ahmed Tinubu’s growth agenda, which targets GDP expansion of at least 7% to lift millions out of poverty.
“Nigeria’s future growth depends on effective, honest, and targeted spending. We must ensure that public resources work harder for our people and our economy,” he added.
PIAK