The World Bank has raised alarm over $32 million in unaccounted funds in a Nigerian water sector project, citing concerns of potential embezzlement and mismanagement. This discovery was revealed in the FY2024 Sanctions System Annual Report after a forensic review conducted by the bank’s Integrity Vice Presidency (INT). The funds, originally allocated to enhance water infrastructure, have prompted urgent actions to safeguard the project’s integrity.
In response to the discrepancies, the World Bank engaged with Nigeria’s Task Team Leader, Operations Manager, and Financial Management Specialist to recommend measures for recovering the funds and curbing further losses. Following these recommendations, the Central Bank of Nigeria has been instructed to reimburse $22 million, while $6 million remains in the project account to cover anticipated operational costs. To mitigate risks, the bank has restricted the project’s financial operations to direct payments.
An investigation into related fraudulent practices led the World Bank to impose a 1.5-year debarment with conditional release on a Nigerian engineering firm and its managing director. The firm was found to have engaged in fraudulent practices during the Nigeria Erosion and Watershed Management Project (NEWMAP), which aimed to combat soil erosion in Nigeria. The investigation uncovered that the firm misrepresented the availability of key personnel and falsely claimed contributions from a joint venture partner.
The NEWMAP project, launched in 2013 with an initial financing agreement of $500 million and subsequent additional funding, was designed to reduce erosion vulnerability in targeted Nigerian sub-watersheds. The engineering firm under scrutiny was awarded a $1.22 million contract in 2015 for erosion control services in Abia State. However, it was revealed that key staff listed in the project proposal were unavailable during implementation, and a joint venture partner cited in the bid did not contribute to the project.
The World Bank deemed these acts as fraudulent misrepresentation under its Consultant Guidelines. Both the firm and its managing director have been barred from participating in any World Bank-financed projects for a minimum of 1.5 years, with the sanction extending to other multilateral development banks under a cross-debarment agreement. Reinstatement is contingent on the firm implementing an integrity compliance program.
Further investigations revealed that Diyokes Consultants Limited, based in Enugu State, and its representative, Innocent Diyoke, were declared ineligible by the World Bank for the same 1.5-year period due to fraudulent practices linked to the NEWMAP project.
The report also highlighted the Federal Government’s increasing reliance on World Bank loans, totaling $6.45 billion under President Bola Tinubu’s administration within 16 months. With 36 approved loan requests amounting to $24.09 billion over five years, concerns about Nigeria’s escalating debt profile and the long-term sustainability of these financial commitments persist. Despite some acknowledging the need for such borrowing to address the country’s infrastructure challenges, widespread dissatisfaction remains over the perceived lack of accountability and results from past loans.
