Nigeria to Forfeit $10 Million World Bank Loan Over Audit Failures and Budget Portal Delays

Abuja, Nigeria – Nigeria is set to lose $10 million in World Bank funding due to audit deficiencies, delays in meeting key reform milestones, and the slow implementation of critical financial transparency systems. The affected amount is part of the $103 million Fiscal Governance and Institutions Project (FGIP), financed by the International Development Association (IDA), the concessional lending arm of the World Bank.

A recent restructuring paper from the World Bank to the Federal Ministry of Finance (FMF) dated June 2025 outlined that the Nigerian government requested the cancellation of $0.9 million allocated for technical assistance (TA) and $9.5 million linked to performance-based conditions (PBCs) that will not be met before the project’s close on June 30, 2025.

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Audit Failures and Missed Deadlines

The World Bank cited multiple reasons for Nigeria’s inability to meet performance targets, including the substandard audit of major revenue-generating agencies, namely the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS). The audits, which were to be conducted by the Office of the Auditor-General for the Federation (OAuGF), did not comply with international auditing standards, leading the Independent Verification Agent (IVA) to classify them as “not achieved.”

Another key reform missed was the launch of a National Budget Portal intended to display federal and at least 20 state-level capital budgets. The Budget Office of the Federation (BOF) failed to submit verifiable evidence of progress, resulting in the forfeiture of $1 million tied to that milestone.

Revenue Assurance System Delays

The largest tranche of the canceled funding—$4.5 million—was tied to the Revenue Assurance and Billing System (RABS), which aims to improve transparency and accountability in how revenue from government-owned enterprises (FGOEs) is collected and transferred to the Consolidated Revenue Fund (CRF).

However, the project suffered setbacks due to:

• Poor contract management and delayed vendor onboarding.
• The Central Bank of Nigeria (CBN) requiring an indemnity letter from the FMF before enabling automatic fund transfers from FGOEs to the CRF.
• Only 27 of 55 FGOEs having set up Treasury Single Account (TSA) sub-accounts for foreign revenue, well below target.

These issues pushed the expected completion of RABS to August 2025, a month after the FGIP is scheduled to close.

Mixed Project Outcomes Despite Setbacks

Despite the missed benchmarks that led to the forfeiture, the World Bank acknowledged areas of progress within the FGIP. Notable achievements include:

• Non-oil revenue performance exceeded targets, reaching 153% of the 2024 budget, compared to 64.9% in 2018. This success was attributed to exchange rate unification, TaxProMax reforms, and enhanced automation of remittances.
• Improved data transparency, with Nigeria surpassing its goal by publishing 10 reconciled fiscal and economic datasets instead of the targeted six.
• The Corporate Affairs Commission (CAC) launched an electronic register of beneficial owners, now covering about 40% of registered businesses.
• The Ministry of Finance Incorporated (MOFI) published national asset registries and financial reports.

However, project monitoring and evaluation were rated “moderately unsatisfactory” due to implementation delays and incomplete reforms.

What the $10 Million Loss Means

The $10 million forfeiture, equivalent to ₦15.77 billion at the current exchange rate of ₦1,568 per US dollar, represents a significant missed opportunity. According to a Daily Trust analysis, this amount could have provided critical infrastructure to underserved communities, including:

• 40 Primary Healthcare Centres at a cost of ₦120 million each = ₦4.8 billion
• 300 boreholes at ₦20 million per unit = ₦6 billion
• 500 transformers (33kVA) at ₦10 million each = ₦5 billion

These investments would have addressed deficits in healthcare, water access, and electricity in various parts of the country.

New $50 Million Impact Fund Launched

In contrast to the FGIP setback, the federal government has announced a new $50 million commitment to launch the Nigeria Wholesale Impact Investment Fund (WIIF), aimed at boosting sustainable economic growth. The fund, anchored at a first close of $100 million, will focus on sectors like agriculture, infrastructure, and digital innovation.

Finance Minister Wale Edun, alongside representatives from the Impact Investors Foundation (IIF), Global Steering Group (GSG), and private stakeholders, said the initiative will help generate jobs, support micro, small, and medium enterprises (MSMEs), and align with the African Development Bank-backed Youth Entrepreneurship Bank.

Edun stated:

“This partnership exemplifies the power of public-private collaboration in advancing Nigeria’s economic priorities. We are committed to ensuring transparency, efficiency, and measurable impact in deploying these resources to benefit all Nigerians.”

Expert Reaction: Nigeria Must Be Proactive

Development economist Joseph Momoh criticized Nigeria’s reactive approach to international finance agreements, emphasizing that audit and portal requirements had long been known.

“We couldn’t meet audit standards and develop a portal which was part of the requirements all the while. There is a need for custodians of our economy to sit up and do their jobs well so as to avoid future occurrences.”

He stressed that such missed opportunities not only undermine fiscal reform but directly deny citizens vital infrastructure and services.

As Nigeria forges ahead with new financing initiatives, the lessons from the FGIP forfeiture may serve as a wake-up call for better project planning, transparency, and proactive governance.