The Federal Government of Nigeria is on the verge of forfeiting $10 million in funding from the World Bank due to critical shortcomings in project execution, including failure to meet audit standards, delay in launching a national budget portal, and setbacks in rolling out a key revenue assurance system.
This potential forfeiture is tied to the $103 million Fiscal Governance and Institutions Project (FGIP), financed by the International Development Association (IDA)—the World Bank’s concessional lending arm. The project is aimed at strengthening Nigeria’s public financial management and transparency.
A restructuring document issued by the World Bank and addressed to the Federal Ministry of Finance (FMF), highlights the reasons behind the stalled disbursement and outlines the areas where Nigeria fell short.
Audit Failures and Fund Cancellations
A major setback arose from the Revenue Assurance Audit covering the Federal Inland Revenue Service (FIRS) and Nigeria Customs Service (NCS) for 2018–2021. The audit reports were deemed non-compliant with international standards, leading to the classification of the project milestone as “not achieved.”
In response, the FMF requested the cancellation of:
1. $0.9 million in unused Technical Assistance funding, and
2. $9.5 million linked to 10 performance-based conditions unlikely to be fulfilled before the project’s closing date—June 30, 2025.
Among the cancelled components is a $4 million audit initiative targeting FIRS and NCS, which also failed to meet required audit criteria.
Missed Infrastructure Goals Stall Project Execution
The Office of the Auditor-General for the Federation (OAuGF) was responsible for several deliverables that were assessed as unachieved by the Independent Verification Agent (IVA). Reports submitted for assessment failed to meet required standards, further compounding the project’s delays.
Key infrastructure-related components were also left unimplemented:
The National Budget Portal, designed to publish capital budgets for the federal government and at least 20 states, was not delivered—despite a $1 million allocation.
The Revenue Assurance and Billing System (RABS), a major reform tool funded with $4.5 million, suffered implementation delays. Only 27 out of 55 Federal Government-Owned Enterprises (FGOEs) set up Treasury Single Account (TSA) sub-accounts for foreign revenue deposits—falling short of expectations.
Additional delays were linked to contract management bottlenecks, pending vendor negotiations, and unresolved indemnity issues involving the Central Bank of Nigeria (CBN).
As a result, the RABS system is now projected to be completed by August 2025—two months after the FGIP’s scheduled closure.
Revenue Reforms Show Promising Gains
– Despite the setbacks, the FGIP has achieved notable milestones in revenue performance and fiscal transparency:
– Non-oil revenue in 2024 reached 153% of the budgeted target, a significant jump from 64.9% in 2018.
The revenue boost was driven by reforms such as exchange rate unification, improved tax administration via TaxProMax, and automated remittances from ministries and agencies.
Nigeria published 10 reconciled economic and fiscal datasets, exceeding the project’s goal of six.
However, capital expenditure execution remained suboptimal at 50%, below the 65% target.
The World Bank rated the project’s monitoring and evaluation (M&E) system as “moderately unsatisfactory,” highlighting ongoing weaknesses in oversight and implementation.
What This Means for Nigeria
The looming $10 million forfeiture underscores persistent gaps in project delivery, governance, and financial accountability despite Nigeria’s impressive strides in revenue reform and transparency.
1. To avoid similar pitfalls and maximize future funding opportunities, the federal government must:
2. Strengthen audit and reporting standards in line with global benchmarks,
3. Accelerate project implementation, particularly in infrastructure and digital transparency,
4. Resolve inter-agency coordination issues, and
5. Build robust monitoring systems to track reform progress.
By addressing these systemic challenges, Nigeria can unlock greater financial support from development partners and reinforce its commitment to credible, transparent fiscal governance.
Credit: Nairametrics
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