The Federal Government has tightened its payroll verification procedures for newly recruited workers as its personnel expenditure surged to N1.96tn in the first quarter of 2026, exceeding capital spending by about N267bn.
The development highlights mounting pressure on public finances, with salaries, pensions and debt servicing consuming an increasingly large share of government revenue while funding for critical infrastructure remains constrained.
An analysis of the Federal Government's first-quarter budget implementation figures for 2025 and 2026 shows that personnel expenditure rose by N133.94bn, representing a 7.35 per cent increase from N1.82tn recorded in the corresponding period of 2025.
In a directive that takes immediate effect, the Office of the Accountant-General of the Federation has introduced stricter conditions for admitting newly recruited employees into the Integrated Personnel and Payroll Information System.
Under the new rules, no newly employed federal worker will be enrolled on the government payroll without first appearing on the nominal roll of the relevant ministry, department or agency and passing all prescribed verification checks.
The directive, announced in a statement signed by the Director of Press and Public Relations at the OAGF, Bawa Mokwa, applies to all ongoing and future payroll admission processes.
The office said the measures were designed to strengthen payroll integrity, eliminate irregularities and ensure that only duly appointed and verified employees receive salaries from public funds.
The latest spending figures, however, reveal the scale of the fiscal challenge confronting the government.
Between January and March 2026, personnel costs stood at N1.96tn, compared with N1.69tn spent on capital expenditure.
This means the government spent approximately N267bn more on salaries and related personnel obligations than on capital projects during the three-month period.
Personnel expenditure accounted for 20.05 per cent of total Federal Government spending of N9.76tn, while capital expenditure represented 17.32 per cent.
A breakdown shows that personnel costs for ministries, departments and agencies increased from N1.57tn in the first quarter of 2025 to N1.70tn in the corresponding period of 2026, an increase of N133.94bn or 8.54 per cent.
Spending by government-owned enterprises remained unchanged at N254.35bn, indicating that the entire reported increase in the wage bill came from MDAs.
On average, the Federal Government spent N652.37bn monthly on personnel costs during the quarter, up from N607.73bn in the same period last year.
Despite the increase, actual spending remained below the quarterly budget projection.
The 2026 budget provided N8.35tn for MDAs' personnel costs, translating to a quarterly projection of N2.09tn. However, only N1.70tn was released during the first quarter, leaving a shortfall of N385.78bn, or 18.47 per cent.
Capital projects suffer as spending falls short
While the government's wage obligations continued to climb, capital expenditure remained significantly below budget expectations.
The Federal Government recorded total capital expenditure of N1.69tn against a prorated quarterly projection of N8.07tn, representing a staggering shortfall of N6.38tn, or 79.06 per cent.
More concerning was the absence of fresh releases for the implementation of the 2026 capital budget by MDAs during the quarter.
Despite a prorated allocation of N3.92tn, implementation of the MDAs' 2026 capital budget remained at zero as of March 31.
The Budget Office attributed the situation to the continued utilisation of funds released under the 2025 capital budget, whose implementation period had been extended to December 31, 2026.
Other capital expenditure components recorded spending during the period. Government-owned enterprises accounted for N740.32bn, while the Tertiary Education Trust Fund spent N393.56bn.
Multilateral and bilateral project-tied loans contributed N287.44bn, while grants and donor-funded projects accounted for N249.50bn.
The figures also revealed a sharp increase in non-debt recurrent expenditure, which rose from N2.24tn in the first quarter of 2025 to N2.77tn in 2026, an increase of approximately N523.49bn.
Personnel costs alone accounted for 70.73 per cent of non-debt recurrent expenditure.
Pension and gratuity payments also recorded a dramatic increase, climbing from N161.60bn to N330.72bn, representing a 104.65 per cent rise.
When combined, personnel costs and pension obligations reached N2.29tn in the first quarter of 2026, compared with N1.98tn in the corresponding period of 2025.
Revenue shortfall deepens fiscal pressure
The growing expenditure burden comes against the backdrop of weak revenue performance.
The Federal Government generated approximately N5.08tn in the first quarter of 2026, falling significantly short of its quarterly revenue target of N9.22tn. The shortfall stood at 44.93 per cent.
Personnel expenditure alone was equivalent to 38.56 per cent of actual revenue, compared with approximately 36.80 per cent in the corresponding period of 2025.
In practical terms, nearly N39 out of every N100 generated by the Federal Government went towards personnel costs.
Debt servicing placed an even heavier burden on government finances, reaching N4.63tn, equivalent to 91.18 per cent of actual revenue.
Combined personnel costs and debt-service payments amounted to N6.58tn, exceeding actual revenue by approximately N1.51tn.
The Federal Government consequently recorded a fiscal deficit of N4.69tn during the period.
The Budget Office acknowledged the need to contain recurrent expenditure, noting that restrictions on unauthorised recruitment remained part of the government's spending-control strategy.
It said the government had continued to pursue measures aimed at curbing recurrent expenditure under the 2026-2028 Medium-Term Expenditure Framework and Fiscal Strategy Paper.
Recruitment and payroll enrolment requests, according to the report, must first obtain clearance from the Budget Office, while efforts to extend IPPIS coverage across federal establishments are ongoing.
New payroll rules target irregular appointments
Under the revised verification arrangement, MDAs seeking to enrol newly recruited workers must submit formal applications supported by recruitment approvals, appointment letters, applicable waivers and other relevant documents.
The OAGF will examine the submissions alongside salary structures, grade levels, salary steps, allowances and other financial entitlements to establish the legitimacy of appointments and the accuracy of payroll obligations.
The verification exercise will also cover statutory information, including Pension Fund Administrator details, pension identification numbers, National Housing Fund registration and tax records.
After the initial screening, employee records will be forwarded to the relevant MDA for confirmation and endorsement by the Accounting Officer, Director of Human Resources, Director of Finance and Accounts, and designated Payroll Validating Officer.
The documents will subsequently return to the OAGF for final processing.
The office stressed that admission into the Federal Government payroll would only be granted after all verification procedures had been satisfactorily completed and approved by the Accountant-General of the Federation.
Permanent Secretaries, heads of agencies and other responsible officials have been directed to ensure strict compliance.
It warned that incomplete documentation and unresolved discrepancies would delay payroll admission, adding that officials responsible for processing or approving irregular entries would be held accountable.
N70,000 allowance adds to wage burden
The government's payroll challenge could become more pronounced following its approval of a monthly N70,000 transport allowance for public servants beginning in November.
The intervention followed a conciliation meeting with the Nigeria Labour Congress in Abuja and is expected to run for six months across all levels of the public service.
Although the government did not disclose the number of eligible beneficiaries or the total cost of the programme, estimates based on 1.1 million employee records on its payroll system suggest that the six-month intervention could cost approximately N465.7bn if all listed workers qualify.
The proposal has also generated disagreement within the labour movement.
While the Nigeria Labour Congress participated in the agreement, the Trade Union Congress rejected the N70,000 wage award, insisting that workers needed an immediate salary increase and implementation of outstanding agreements involving health workers under the Joint Health Sector Unions.
Economists have meanwhile called for more sustainable interventions to reduce transportation costs and ease the financial burden on households.
Economists warn against neglect of infrastructure
Reacting to the figures, Nigerian economist and Chief Executive Officer of CSA Advisory, Dr Aliyu Ilias, warned that the growing imbalance between personnel expenditure and capital spending could undermine the country's development prospects.
He described the situation as an anomaly, arguing that infrastructure investment remained essential to improving education, healthcare, transportation and other critical services.
Ilias said the government's spending priorities were particularly concerning because salaries and debt servicing were consuming resources that could otherwise support economic development.
He acknowledged that salary payments and debt obligations were unavoidable, especially given the declining purchasing power of workers, but maintained that the government needed to pay greater attention to infrastructure investment.
The economist also criticised repeated extensions of budget implementation periods, arguing that the practice weakened transparency, planning and accountability.
He called on the National Assembly to strengthen its oversight responsibilities and demand explanations for the government's expenditure decisions.
Ilias further argued that improved revenue collection and potential gains from higher crude oil prices should create room for increased infrastructure spending.
Also expressing concern, investment banking and financial policy expert and Chief Executive Officer of CFG Advisory, Dr Tilewa Adebajo, warned that Nigeria's fiscal position was becoming increasingly difficult to sustain.
He said rising recurrent expenditure and debt-service obligations were restricting the resources available for productive investment.
According to him, the figures reflected the severe fiscal pressure facing the government and raised questions about the sustainability of its economic reform programme.
Adebajo stressed that macroeconomic reforms alone would not translate into improved living standards without stronger economic growth, fiscal discipline and investment in productive sectors.
He warned that persistent failure to fund capital projects could undermine the country's growth prospects, noting that infrastructure investment was essential to expanding productive capacity.
The financial expert urged the government to redirect its attention towards productivity, private-sector investment, export diversification and improvements in household welfare.
He also called for a credible strategy to deliver economic growth of between eight and 10 per cent, arguing that macroeconomic stability should serve as the foundation for economic prosperity rather than its ultimate goal.
Adebajo further raised concerns about government borrowing plans and the transparency of public expenditure, insisting on stronger scrutiny of compliance with fiscal regulations.
With personnel costs approaching N2tn in just three months, revenue falling nearly 45 per cent below target and MDAs recording zero releases for their 2026 capital budgets, the latest figures have placed renewed attention on the government's ability to balance its growing obligations with the urgent need to invest in the country's future.
FG Tightens Payroll Checks as Wage Bill Hits ₦1.96tn
