FG to Lose $4 Million from World Bank Loan Over Audit Failures

The Federal Government is anticipated to forfeit $4 million from a World Bank loan due to its failure to adhere to auditing standards linked to a significant revenue reform involving the Federal Inland Revenue Service and the Nigeria Customs Service. 

This funding was part of the $103 million Fiscal Governance and Institutions Project, a public financial management initiative funded by a credit facility from the International Development Association.

According to the World Bank’s restructuring document from June 2025, the revenue assurance audit for the FIRS and Customs covering the financial years 2018 to 2021 was deemed not achieved as the submitted reports failed to meet international auditing standards.

The World Bank document stated, “The revenue assurance audit of the Main Income Generating Agencies, including the Federal Inland Revenue Service and the Nigeria Customs Service for FY 2018 – 2021 was allocated $4 million.”

The Office of the Auditor-General of the Federation was expected to implement these Intermediate Results, but the Independent Verification Agent assessed them as unmet due to the inadequate quality of the reports submitted for verification.

This unsuccessful audit was one of ten performance-based conditions that the government failed to satisfy by the project’s closing date of June 30, 2025. Consequently, the Federal Ministry of Finance formally requested a cancellation of $10.4 million in project funds.

The request included $0.9 million in unused Technical Assistance funds and $9.5 million associated with the ten Performance-Based Conditions that would not be met before the project concluded on June 30, 2025.

 Additionally, $4.5 million was linked to the incomplete Revenue Assurance and Billing System, and $1 million was designated for developing a National Budget Portal, for which the Budget Office of the Federation did not provide evidence of achievements.

Along with this, $0.9 million in technical assistance funding remains uncommitted and has also been canceled.

The document indicated, “The proposed adjustment is to cancel the $10.4 million, consisting of $9.5 million for PBCs that will not be achieved and verified by the closing date, and $0.9 million of uncommitted funds from the technical assistance component.”

This latest alteration follows a prior restructuring in June 2024, where $22 million was removed from the original $125 million envelope, reducing the project’s total to $103 million. After the new cancellation, the total funding now stands at $92.6 million.

The Fiscal Governance and Institutions Project, which was approved in June 2018 and became effective in May 2019, aimed to enhance public finance credibility and national statistics through reforms in revenue management, budget transparency, and data systems. While the government did not achieve key targets, the project made progress in other areas, such as revenue generation.

The World Bank reported a non-oil revenue performance at 153 percent of the budgeted target in 2024, compared to a baseline of 64.9 percent in 2018.

This improvement was attributed to unifying Nigeria’s exchange rate, enhancing tax administration through the TaxProMax system, and implementing reforms that automated revenue remittances from various ministries and agencies.

Moreover, the government surpassed expectations regarding the publication of reconciled economic and fiscal datasets with ten publications against the project target of six.

Despite these advancements, capital expenditure execution fell short at 50 percent, below the 65 percent target, while project monitoring and evaluation were rated as moderately unsatisfactory.

Other achievements include the launch of the Electronic Register of Beneficial Owners by the Corporate Affairs Commission, which now encompasses around 40 percent of registered businesses, along with the publication of a National Asset Registry and financial reports by the Ministry of Finance Incorporated.

The final disbursement for the project is anticipated to reach $96.04 million, representing 93 percent of the pre-cancellation total of $103 million.