Budget defence exposes deep funding crisis across MDAs

Ongoing budget defence sessions at the National Assembly have exposed a deepening cash crunch across ministries, departments and agencies (MDAs), despite improved revenue performance and sustained government borrowing.

During the hearings on the 2026 appropriation bill, several heads of agencies told lawmakers that capital releases have remained abysmally low, forcing them to defer projects, accumulate liabilities and operate far below approved budgetary provisions.

The disclosures triggered concerns among senators and members of the House of Representatives, who questioned the disconnect between reported revenue gains and the inability of MDAs to access funds.

During one of the sessions, the ministry of interior disclosed that it had received little to no capital releases in recent fiscal cycles, severely affecting infrastructure and operational upgrades across its paramilitary agencies.

Olubunmi Tunji-Ojo, the minister of interior, told lawmakers that projects approved by parliament remain stalled due to funding gaps, even as security demands continue to rise.

Similarly, the ministry of health and social welfare informed joint committees that only a fraction of its capital allocation had been released, undermining hospital upgrades, medical equipment procurement and ongoing public health interventions.

Ali Pate, the minister of health and social welfare, disclosed during the ministry’s 2026 budget defence before the house committee on healthcare services that out of the N218bn appropriated for capital projects in the 2025 fiscal year, only N36m, indicating just just 0.02% of the allocation was released.

He explained that while the personnel component of the ministry’s 2025 budget was fully released and utilised, the capital component suffered severe shortfalls due to cash flow constraints and systemic bottlenecks in the federal government’s budget execution process, particularly under the bottom-up cash planning system operated by the Office of the Accountant-General of the Federation.

Pate further disclosed that delays in Nigeria’s counterpart funding for donor-supported health programmes prevented the ministry from accessing additional external funds, compounding implementation challenges.

Members of the Joint National Assembly Committee on Solid Minerals Development also raised concerns over what they described as dismal budget releases to the ministry, revealing that despite substantial appropriations, no capital funds had been disbursed in 2025, while only 50 percent of its overhead allocation had been released as of January 31, 2026.

This was after Dele Alake, minister of solid minerals development, told lawmakers during a budget defence session that the zero release of the N865.06 billion earmarked for capital expenditure in the 2025 fiscal year had stalled critical infrastructure, exploration and broader sector development projects.

Alake warned that without first-line charge status — which guarantees automatic statutory releases from the federation account — the sector would continue to suffer from treasury delays and funding shortfalls.

“This is the most critical issue because inconsistent releases were undermining efforts to reposition mining as a key driver of economic growth, job creation and foreign investment,” Alake said.

Recall that the N1 trillion allocation to the sector in the 2025 budget had raised expectations within the industry and among investors, and according to lawmakers without corresponding cash releases, “the budget framework is rendered quite unattractive.”

Ekong Sampson, chairman of the joint committee, described the zero capital release as “worrisome,” asking, “How do you drive the harvest of the sector’s full potential with zero per cent release?”

The ministry of transportation also lamented minimal disbursements.

Saidu Alkali, the minister of transportation, told the Joint Senate and House Committees on Land Transport that the ministry received only about one per cent of its N256.73bn capital allocation under the 2025 Appropriation Act.

According to Alkali, nearly 70 per cent of projects had to be rolled over into the 2026 fiscal year because of funding shortfalls and delayed releases. He added that overhead utilisation stood at about 59 per cent, while capital releases were around one per cent and, in many cases, not backed by actual cash disbursements.

In the same vein, the ministry of marine and blue economy reported that it received only N202m out of its N3.53bn capital budget for 2025, representing 1.7 per cent.

The minister, Gboyega Oyetola consequently disclosed during his defence before a joint sitting of senate and house committees, about ongoing engagements with the ministry of budget and economic planning to address funding gaps in line with efforts to diversify the economy.

The ministry of women affairs also complained of poor releases.

Imaan Sulaiman-Ibrahim, the minister told the Senate committee on women affairs that of the N89.8bn approved for capital expenditure in 2025, only N394.8m was released, representing 0.44 per cent.

She warned that the development had stalled programmes targeted at vulnerable women and children, including shelters, empowerment schemes and advocacy campaigns.

Beyond core ministries, several agencies also recorded poor budget releases, including the Federal Character Commission, which lamented that persistent underfunding was limiting its ability to carry out its constitutional mandate of monitoring equitable representation in federal appointments.

Tensions heightened when lawmakers grilled Shamseldeen Ogunjimi, the Accountant-General of the Federation.

over zero capital allocations to several MDAs and mounting contractor debts.

Sani Musa, the chairman of the senate committee on finance committee, criticised the envelope budgeting system, arguing that it was not producing desired results and suggesting a shift toward performance-based budgeting.

Danjuma Goje described the situation as embarrassing and baffling, noting the surge in complaints from contractors over unpaid jobs.

“Impression given to Nigerians by the government is that with the removal of subsidy and harmonisation of forex market, more revenue or more money is available.

“Where is the money now? Why are contractors owed? And why was there zero allocation for capital votes of most of the MDAs in 2025?” Goje queried.

Responding, Ogunjimi attributed the crisis to indiscriminate contract awards by MDAs without confirmed funding and said his office could only disburse funds when available.

He noted that the use of ways and means advances in the past was no longer an option due to concerns about macroeconomic stability.

Security funding also came under review, with the Office of the National Security Adviser arguing that rigid envelope budgeting and irregular releases constrained effective planning.

Experts who spoke with BusinessDay warned that the situation has wider implications for the economy and Nigerians.

Tajudeen Tella, a professor of economics at Olabisi Onabanjo University, said underfunding capital projects would slow economic growth.

“Capital expenditure drives growth because it creates jobs and improves infrastructure.

“If ministries are not receiving funds, projects stall, contractors are not paid and economic activity weakens.”

He explained that the pattern suggested a cash flow problem, where government earnings were being largely consumed by debt servicing and fixed obligations.

“When most of your revenue goes into paying debts and recurrent expenses, very little is left for development projects. That affects growth and reduces the impact of borrowing.

He warned that if borrowing does not translate into visible infrastructure and improved public services, investor confidence could weaken.

Adding to the concerns, Akpan Ekpo, a renowned professor of economics and

former Vice-Chancellor, university of Uyo, warned that persistent underfunding of capital projects could gradually weaken Nigeria’s long-term economic competitiveness.

“When infrastructure projects are delayed year after year, the cost of doing business increases. Poor roads, weak transport systems, and underfunded health and education sectors reduce productivity. Investors look at these fundamentals before committing capital,” Akpan said.

He explained that beyond immediate fiscal strain, inconsistent budget implementation sends negative signals to both local and foreign investors.

“Budget credibility is extremely important. If what is approved is not implemented, it creates uncertainty. Businesses cannot plan properly, contractors cannot manage cash flow, and confidence in public finance management declines,” he added.

The economist stressed that the issue is not simply about revenue figures being announced but about effective cash management and prioritisation.

“What Nigerians want to see is impact. If borrowing is increasing and revenue is improving, there must be visible improvements in infrastructure and public services. (BusinessDay)