Nigeria Loses $4m World Bank Loan Over Audit Lapses

Nigeria is set to forfeit $4 million from a World Bank-funded loan after failing to meet required auditing standards tied to a key fiscal reform involving the Federal Inland Revenue Service (FIRS) and Nigeria Customs Service.

The fund was part of the $103 million Fiscal Governance and Institutions Project, supported through a credit facility by the International Development Association. 

The project aimed to enhance public financial management and institutional reforms.

A recent restructuring document released by the World Bank in June 2025 revealed that Nigeria’s revenue assurance audit for the 2018–2021 fiscal years was declared unsatisfactory. 

Reports submitted by the Office of the Auditor-General of the Federation did not align with international auditing benchmarks, prompting the World Bank’s Independent Verification Agent to mark the performance target as unmet.

The document noted that $4 million was earmarked for auditing the FIRS and Customs, but due to substandard reporting, the objective was not achieved.

This audit shortfall is one of ten performance indicators the Federal Government failed to deliver on before the project’s closure scheduled for June 30, 2025. 

Consequently, the Ministry of Finance requested the cancellation of $10.4 million in project funds.

According to the World Bank, the cancelled amount includes $0.9 million in unused technical assistance funding and $9.5 million linked to unfulfilled performance-based targets.

Among the abandoned components was a $4.5 million Revenue Assurance and Billing System and $1 million allocated to the creation of a National Budget Portal. 

The Budget Office of the Federation reportedly failed to provide any proof of progress on the portal.

The World Bank document confirmed the proposed cancellation of $10.4 million, following an earlier adjustment in June 2024 that slashed $22 million from the initial $125 million funding, reducing it to $103 million. With this new cancellation, the project’s effective funding now stands at $92.6 million.

Launched in June 2018 and effective from May 2019, the Fiscal Governance and Institutions Project was established to strengthen public finance credibility and national statistics through revenue, budget, and data system reforms.

Despite missed targets in certain areas, the project saw notable improvements in others. 

Non-oil revenue in 2024 reached 153 percent of the projected target, a sharp rise from 64.9 percent in 2018. 

This performance has been attributed to the unification of exchange rates, tax administration enhancements through the TaxProMax platform, and automated revenue remittances by ministries and agencies.

Additionally, the government surpassed its goal in publishing reconciled economic and fiscal data, delivering 10 reports compared to the original target of six.

Still, capital project execution lagged, achieving only 50 percent against a 65 percent benchmark, while the overall monitoring and evaluation component of the project received a “moderately unsatisfactory” rating.

Other positive developments include the Corporate Affairs Commission’s launch of an electronic register of beneficial owners—now covering approximately 40 percent of registered entities—and the publication of a National Asset Registry and financial statements by the Ministry of Finance Incorporated.

Final disbursements on the project are expected to total $96.04 million, representing 93 percent of the $103 million post-restructuring allocation.