The Federal Government has issued a strict directive barring all Ministries, Departments, and Agencies (MDAs) from issuing contract award letters, signing agreements, or incurring financial commitments without prior budgetary approval and verified cash backing.
The decision, detailed in a Treasury Circular signed by the Accountant-General of the Federation, Dr. Shamseldeen Ogunjimi, is aimed at curbing the proliferation of abandoned projects across the country, ensuring fiscal discipline, and mandating strict adherence to public procurement laws.
Key Operational Highlights
-
Mandatory Cash Backing Requirement: MDAs are now strictly prohibited from initiating financial commitments unless an official Warrant or Authority to Incur Expenditure (AIE) covering the full or committed portion of the contract has been released by the Minister of Finance and Coordinating Minister of the Economy.
-
Verification via GIFMIS: Accounting officers are instructed to generate and attach evidence of available funds directly through the Government Integrated Financial Management Information System (GIFMIS) before any contract award or payment processing takes place.
-
BPP “No Objection” Enforcement: The Bureau of Public Procurement (BPP) has been directed to reject requests for certificates of “No Objection” unless accompanied by valid, verified Warrants or AIEs.
-
Legal Penalties for Non-Compliance: The circular issued a stern warning to Permanent Secretaries, Directors of Finance, and heads of agencies, noting that awarding unfunded contracts constitutes an offence under the Independent Corrupt Practices and Other Related Offences Commission (ICPC) Act of 2000.
┌────────────────────────────────────────────────────────────────────────┐
│ UNFUNDED CONTRACT BAN: COMPLIANCE MATRIX │
├────────────────────────────────────────────────────────────────────────┤
│ • Issuing Authority: Office of the Accountant-General of the Federation│
│ │
│ • Core Objective : Prevent abandoned infrastructure projects & stop │
│ accumulation of unpaid contractor liabilities. │
│ │
│ • Key Prerequisite : Official Warrant / AIE issued via GIFMIS platform.│
│ │
│ • Statutory Basis : Public Procurement Act 2007 & ICPC Act 2000 │
│ enforcement guidelines. │
└────────────────────────────────────────────────────────────────────────┘“Restoring Discipline to Capital Expenditure”
The Treasury Circular noted that the new operational guidelines were necessitated by observed non-compliance with statutory expenditure rules:
“No MDA shall issue letters of award, sign contracts, or enter into any financial obligations unless the corresponding Warrant/AIE covering the full or committed portion of the contract sum has been duly released… Accounting Officers are invited to note that it is an offence under the ICPC Act 2000 to award or sign any contract without budgetary provision, approval, and cash backing.” — Office of the Accountant-General of the Federation
Under the updated implementation guidelines, all federal agencies are required to submit structured annual and quarterly cash flow plans to align project execution directly with actual government revenue inflows.
Ayodele Quadri
Correspondent
