Nigeria faces the possibility of forfeiting $10 million in unused credit from the World Bank unless it takes urgent steps to address serious project shortcomings by June 30, 2025. This amount forms part of the $103 million Fiscal Governance and Institutions Project (FGIP), which aims to strengthen transparency, enhance revenue generation, and improve budget execution across key government institutions.
However, a recent World Bank restructuring report delivered to the Federal Ministry of Finance reveals troubling setbacks. The report outlines multiple missed targets, failed audits, and delays that threaten the project’s success—and Nigeria’s credibility in managing international development assistance.
Audit Failures and Canceled Funds Threaten Reform Efforts
One of the most significant red flags involves the failure to conduct internationally compliant audits. The audit of revenue-generating agencies—namely the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS)—for the period from 2018 to 2021 did not meet global standards. The World Bank concluded that the submitted audit reports failed to comply with internationally recognized benchmarks.
As a result of these audit deficiencies, the Ministry of Finance canceled $4 million originally allocated for the auditing process. Additionally, the World Bank marked $0.9 million in Technical Assistance funding and $9.5 million tied to ten unmet performance-based targets for cancellation.
These failures underscore deep institutional weaknesses. Without the ability to conduct reliable audits that meet international norms, Nigeria risks undermining the foundation for receiving future global financial support.
Infrastructure Targets Missed as Project Deadlines Approach
Beyond audits, Nigeria also fell short in deploying essential technological infrastructure aimed at enhancing fiscal transparency and revenue assurance. One key initiative, the National Budget Portal, was expected to publicly release federal and state capital budgets. Although the project received a $1 million allocation, the portal remains incomplete.
In parallel, the Revenue Assurance and Billing System (RABS), a critical tool funded with $4.5 million, failed to deliver on its primary goal: ensuring foreign-earned revenues automatically flow into government accounts. Only 27 out of 55 Federal Government-Owned Enterprises (FGOEs) succeeded in opening the required Treasury Single Account (TSA) sub-accounts—far below the project’s expectations.
According to the World Bank’s report, delays stemmed from unresolved contract negotiations, vendor-related disputes, and indemnity issues involving the Central Bank of Nigeria. While the RABS system is now expected to be ready by August 2025, this date overshoots the project’s official end date of June 30, 2025. As a result, the project’s full success remains uncertain.
Progress in Revenue Reforms Provides a Silver Lining
Despite these setbacks, the FGIP has driven meaningful improvements in Nigeria’s revenue generation efforts. The World Bank noted a remarkable surge in non-oil revenues, which reached 153% of the 2024 budget target—up from just 64.9% in 2018.
This success stems from several bold policy reforms. Notably, the unification of exchange rates, the introduction of the TaxProMax platform for streamlined tax processing, and the automation of revenue remittance by government ministries and agencies have all played vital roles.
In terms of fiscal transparency, Nigeria exceeded expectations by publishing 10 reconciled fiscal and economic datasets—well above the target of six. These achievements demonstrate the country’s potential when reforms are properly designed and diligently implemented.
However, challenges remain. The World Bank rated the project’s monitoring and evaluation (M&E) framework as “moderately unsatisfactory.” This rating indicates that while key revenue indicators have improved, the overall management and oversight of the project continue to fall short.
Consequences of Forfeiting World Bank Funds
The potential loss of $10 million in development credit carries serious consequences for Nigeria’s already strained finances. At a time when the government is grappling with budget shortfalls and mounting debt, losing international funding weakens its ability to finance ongoing reforms and maintain investor confidence.
Moreover, forfeiting these funds could harm Nigeria’s reputation in future dealings with global institutions like the World Bank. If the country continues to fall short on performance-based conditions, it may find itself excluded from similar credit arrangements or face stricter conditions in future loan agreements.
The restructuring of the FGIP serves as a stark reminder that Nigeria must strengthen its accountability systems. Failure to implement internationally compliant audits and digital transparency tools sends the wrong message to international partners, casting doubt on Nigeria’s commitment to reform.
Key Areas That Require Immediate Government Action
To salvage the remaining funds and avoid similar problems in future initiatives, the government must act decisively. Several critical areas demand urgent attention:
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Audit Compliance and Institutional Capacity
The Office of the Auditor-General for the Federation (OAuGF) must be properly resourced and trained to conduct audits that align with global standards. Without this capability, Nigeria’s credibility in managing international projects will remain in question. -
Timely Project Execution
Ministries and agencies must streamline contracting procedures and eliminate bureaucratic delays. Engaging vendors quickly and efficiently is essential to meet project timelines. -
Full Deployment of Digital Infrastructure
The government must prioritize the rollout of tools like the National Budget Portal and RABS. These platforms play a crucial role in promoting transparency and improving revenue monitoring. -
Stronger Interagency Coordination
Effective collaboration among the Ministry of Finance, FIRS, Customs, the Central Bank of Nigeria, and other key stakeholders is vital. Only through coordinated action can Nigeria achieve project milestones on time. -
Improved Accountability in Fund Management
The government must enhance its capacity to track and report the use of donor funds. Transparent, accurate, and timely reporting that meets audit requirements is non-negotiable for sustaining development partnerships.
Conclusion: A Crucial Moment for Nigeria’s Fiscal Governance
Although Nigeria has made commendable strides in increasing non-oil revenues and improving fiscal transparency, the risk of losing $10 million in World Bank funding highlights persistent shortcomings. Weak project oversight, audit failures, and unfulfilled infrastructure goals continue to hinder the country’s public financial management.
This situation should serve as a wake-up call. The tools, funds, and reforms needed for progress are already in place. However, unless Nigeria develops stronger institutional capacity and prioritizes timely execution, even the most well-funded initiatives will fail to deliver meaningful outcomes.
To protect future development assistance and build trust with both citizens and global partners, Nigeria must not only embrace reform but also execute it with urgency, integrity, and accountability.
