The Federal Government of Nigeria may forfeit $10 million from a World Bank credit facility by June 30, 2025, due to audit shortcomings, delays in launching a national budget portal, and slow implementation of a revenue assurance system, according to a restructuring paper issued by the World Bank.
The fund is part of the $103 million Fiscal Governance and Institutions Project (FGIP), a public financial management initiative backed by the International Development Association (IDA), the lending arm of the World Bank.
The restructuring paper, addressed to the Federal Ministry of Finance (FMF) and obtained by Nairametrics, highlights issues that have led to the potential forfeiture of funds.
Audit Failures and Project Setbacks Lead to Fund Cancellation
The revenue assurance audit covering the Federal Inland Revenue Service (FIRS) and Nigeria Customs Service (NCS) for 2018–2021 was assessed as not achieved, as the submitted reports did not meet international auditing standards.
Additionally, the FMF has requested the cancellation of $0.9 million in unused funds allocated for Technical Assistance (TA) and $9.5 million for 10 performance-based conditions (PBCs) that will not be met before the project’s closure on June 30, 2025.
Among the cancelled items is a $4 million audit of the FIRS and NCS, which also failed to meet international auditing standards.
Unmet Infrastructure Commitments Delay Project Completion
“These Intermediate Results (IRs) to be implemented by the Office of the Auditor-General for the Federation (OAuGF) were assessed as not achieved by the independent verification agent (IVA) because the reports submitted for verification did not meet the requisite international auditing standards.”, the restructuring paper reads.
Furthermore, commitments such as the deployment of a National Budget Portal to publish capital budgets for the Federal Government and at least 20 states were left unfulfilled, despite an allocation of $1 million.
Similarly, the implementation of the Revenue Assurance and Billing System (RABS), which received $4.5 million in funding, faced setbacks. The report notes that out of 55 Federal Government-Owned Enterprises (FGOEs), only 27 set up a Treasury Single Account (TSA) sub-account for foreign earned revenues, falling short of requirements.
Additional delays have been attributed to contract management challenges, pending negotiations with vendors, and unresolved indemnity issues requested by the Central Bank of Nigeria (CBN).
As a result, the RABS implementation is now expected to be completed by August 2025, two months after FGIP officially closes.
Despite Setbacks, FGIP Records Progress in Revenue Reforms
Although several targets were missed, the FGIP project recorded significant advancements in revenue performance.
According to the World Bank report:
- Nigeria’s non-oil revenue reached 153% of the budgeted target in 2024, up from a baseline of 64.9% in 2018.
- The increase in revenue was attributed to Nigeria’s exchange rate unification policy, enhancements in tax administration through the TaxProMax system, and automated revenue remittances from government ministries and agencies.
- Capital expenditure execution remains below expectations at 50%, compared to the 65% target.
- Nigeria exceeded expectations in publishing reconciled economic and fiscal datasets, achieving 10 publications, surpassing the project’s target of six.
However, the project’s monitoring and evaluation system was rated as “moderately unsatisfactory” by the World Bank, reflecting challenges in execution and oversight.
What this means
- Despite the imminent forfeiture of $10 million, Nigeria has demonstrated progress in financial reforms, particularly in revenue performance and fiscal transparency.
- However, delays in project execution and auditing inefficiencies highlight persistent challenges in governance and financial management.
- Moving forward, resolving structural hurdles, strengthening accountability mechanisms, and enhancing project implementation efficiency will be critical to ensuring Nigeria maximizes funding opportunities and improves fiscal governance.
