The Nigerian government is set to lose $4 million from a $103 million World Bank loan after failing to meet crucial audit standards required for the Fiscal Governance and Institutions Project. This loss stems from an unfulfilled revenue assurance audit, which was part of a broader initiative to improve public financial management.
According to a World Bank document obtained by The PUNCH, the revenue assurance audit for the Federal Inland Revenue Service (FIRS) and Nigeria Customs Service (NCS) for the 2018-2021 financial years was found to be non-compliant with international auditing standards. The World Bank’s restructuring paper, dated June 2025, stated that the audit reports submitted for verification did not meet the expected criteria, leading to the forfeiture of the allocated $4 million.
This fund was part of the $103 million Fiscal Governance and Institutions Project, financed through a credit facility from the International Development Association (IDA). The project, which began in 2019, aimed to improve Nigeria’s public finance and statistics credibility through reforms in revenue administration, budget transparency, and data systems. The funds allocated to the revenue assurance audit were earmarked to monitor income-generating agencies like the FIRS and NCS.
The failed audit was one of the ten performance-based conditions (PBCs) under the project, and the government could not meet the requirements before the project’s closing date on June 30, 2025. In response, the Federal Ministry of Finance (FMF) formally requested the cancellation of a total of $10.4 million from the project. This cancellation included the $4 million for the revenue audit failure, $4.5 million tied to an uncompleted Revenue Assurance and Billing System, and $1 million allocated to the development of a National Budget Portal.
According to the World Bank’s document, the Budget Office of the Federation, which was responsible for the National Budget Portal, did not submit any evidence of achievement. Furthermore, the $0.9 million in technical assistance funds also went uncommitted and was subsequently canceled.
This new adjustment follows a restructuring in June 2024, when the original project amount of $125 million was reduced by $22 million. With the latest cancellation, the total funding for the Fiscal Governance and Institutions Project now stands at $92.6 million, a significant reduction from its initial allocation.
The World Bank’s evaluation noted that while Nigeria missed key targets, the project recorded notable successes in some areas. Revenue performance, for instance, saw a significant improvement, with non-oil revenue outturn reaching 153% of the budgeted target in 2024, up from 64.9% in 2018. This progress was attributed to reforms such as the unification of Nigeria’s exchange rate, improved tax administration via the TaxProMax system, and automated revenue remittances from ministries and agencies.
In other areas, the government exceeded expectations in publishing reconciled economic and fiscal datasets, with 10 publications achieved against the target of six. Additionally, the Corporate Affairs Commission launched the Electronic Register of Beneficial Owners, which now covers 40% of registered businesses. The Ministry of Finance Incorporated also published a National Asset Registry and financial reports.
Despite these achievements, capital expenditure execution remained below expectations at 50%, well short of the 65% target. Project monitoring and evaluation were also rated as moderately unsatisfactory, pointing to continued challenges in the effective implementation of the reforms.
The final disbursement for the project is now projected at $96.04 million, representing 93% of the pre-cancellation total of $103 million. This reflects both the achievements and setbacks encountered in the course of the project’s implementation.
As Nigeria continues to navigate its public financial management reforms, the cancellation of these funds highlights the critical need for enhanced transparency and accountability in the country’s fiscal operations. It also serves as a reminder of the importance of meeting international standards to fully benefit from global financial support.