FG Directs MDAs to Submit Establishment Acts With 2027 Personnel Budget Proposals

The Federal Government has directed all Ministries, Departments and Agencies (MDAs) to submit copies of their establishment Acts alongside their 2027 personnel budget proposals, in a move aimed at preventing agencies without a valid legal basis from being included in the federal budget.

The directive is contained in the 2027 Personnel Costs Budget Call Circular dated September 4, 2026, signed by the Director-General of the Budget Office of the Federation, Tanimu Yakubu.

According to the circular, MDAs are required to provide the relevant legal documents establishing their institutions when submitting their personnel-cost proposals for the 2027 budget cycle.

The Budget Office warned that failure to provide the required establishment Act could result in the rejection of an MDA’s budget proposal.

What you should know

An establishment Act is the legal instrument that creates a government agency or institution and defines its mandate, functions and, in many cases, its powers and staffing structure.

By requiring MDAs to submit these Acts before their personnel budgets are considered, the government is effectively asking a basic question:

Does this institution have a legal basis to receive personnel funding from the federal government?

This creates an additional verification layer before salary and staffing costs are incorporated into the national budget.

The directive targets unestablished agencies

The move is particularly significant because government institutions can sometimes emerge through administrative decisions, executive directives or other arrangements without the same statutory foundation as agencies created by legislation.

The new requirement is designed to prevent such institutions from automatically securing personnel allocations simply because they have submitted a budget proposal.

An agency that cannot demonstrate the legal instrument establishing it could therefore face difficulty securing funding through the federal personnel budget.

Why personnel costs matter

Personnel expenditure represents a recurring commitment for government.

Unlike many capital projects, salaries, allowances and related employee costs have to be funded repeatedly once government workers are employed.

This makes payroll particularly important for fiscal management.

If government expands the number of agencies and employees without a corresponding assessment of their legal mandate and necessity, personnel expenditure can continue rising even when revenue growth is weak.

The establishment-Act requirement therefore provides a mechanism for checking whether proposed staffing costs are tied to legally recognised government institutions.

It could improve budget credibility

A federal budget is not simply a list of spending requests. It is a legal and financial framework for allocating public resources.

Requiring supporting legislation for personnel proposals could make the budgeting process more rigorous by linking proposed expenditure to an institution’s statutory mandate.

This could also make it easier for budget authorities to identify overlapping institutions or agencies performing similar functions.

Where multiple government bodies have substantially similar mandates, the government could potentially examine whether maintaining all of them represents an efficient use of public resources.

The measure could support public-sector reform

The directive also fits into the broader question of how Nigeria manages the size and structure of its public sector.

Reducing duplication among government institutions can potentially lower administrative costs, simplify government operations and allow resources to be redirected toward higher-priority areas.

However, the establishment-Act requirement by itself does not automatically reduce the size of government.

An agency with a valid Act can still have excessive personnel costs, while an institution without an Act could potentially be performing functions the government considers necessary.

The effectiveness of the policy will therefore depend on what happens after the verification process.

It could affect agencies seeking new funding

For MDAs preparing their 2027 budgets, the directive introduces another requirement that cannot easily be treated as administrative paperwork.

Agencies will need to ensure that their legal documents are available and correspond with the institution for which personnel funding is being requested.

Where documentation is incomplete, unclear or unavailable, proposed personnel allocations could face scrutiny or rejection.

This could be particularly important for newer institutions or government bodies whose legal status has changed over time.

What investors and businesses should watch

Although the directive is focused on government personnel budgets, it has wider implications for Nigeria’s fiscal outlook.

Businesses and investors should watch whether the government follows the documentation requirement with broader measures to control the growth of recurrent expenditure.

Key areas include:

• Growth in federal personnel costs
• Number of MDAs receiving budgetary allocations
• Government efforts to merge overlapping agencies
• Changes in the size of the federal civil service
• Recurrent expenditure as a share of government spending
• Progress on public-sector restructuring
• Growth in government revenue relative to personnel costs

If these measures result in slower growth in recurrent expenditure, they could strengthen the government’s ability to allocate more resources toward infrastructure and other productive investments.

The bigger picture

The Federal Government’s decision to require MDAs to submit their establishment Acts alongside their 2027 personnel budget proposals introduces a stronger legal verification step into the federal budgeting process.

At its core, the policy is about ensuring that government personnel spending is connected to institutions with a recognised legal mandate.

The immediate impact may be felt by agencies whose legal documentation is incomplete or whose status is unclear. The broader significance, however, lies in whether the government can use the process to identify duplication, control payroll expansion and improve the efficiency of public spending.

For Nigeria, where fiscal space remains an important policy constraint, controlling recurring government costs is just as important as increasing revenue.

The establishment-Act requirement is therefore a relatively administrative-looking measure that could become part of a wider effort to make the federal budget more disciplined, transparent and sustainable.