Audit Failure Costs Nigeria $4m in World Bank Loan Amid Broader Project Setbacks

Nigeria is set to forfeit $4 million from a World Bank loan after failing to meet international auditing standards on a critical revenue audit covering the Federal Inland Revenue Service (FIRS) and Nigeria Customs Service. The audit, part of the Fiscal Governance and Institutions Project funded by a $103 million credit from the International Development Association, was assessed as “not achieved.” The reports submitted by the Office of the Auditor-General were rejected by the World Bank’s Independent Verification Agent for not meeting global standards.

The lost $4 million was one of ten performance-based conditions (PBCs) tied to the World Bank project. Nigeria’s inability to deliver on these PBCs prompted the Ministry of Finance to formally request the cancellation of $10.4 million in total funding. This includes $0.9 million in unspent technical assistance funds and $9.5 million for unmet project conditions, such as the failed audit and unimplemented systems like the National Budget Portal and Revenue Assurance and Billing System.

The breakdown shows further lapses in project execution. A total of $4.5 million was allocated to the Revenue Assurance and Billing System, which remains incomplete, and $1 million for the National Budget Portal, for which the responsible Budget Office failed to submit any supporting documentation. These failures come after an earlier restructuring in 2024 had already cut $22 million from the project, reducing the initial $125 million allocation to $103 million.

Despite these setbacks, the project did record some successes. Notably, Nigeria’s non-oil revenue collection outperformed targets, reaching 153% of its 2024 budget goal, thanks to reforms such as exchange rate unification, the TaxProMax system, and automated remittance processes. The country also exceeded transparency goals by publishing more economic and fiscal data than originally planned.

However, challenges persist. Capital expenditure execution fell short at 50% compared to a 65% target, and project monitoring and evaluation were rated as moderately unsatisfactory. While initiatives like the Electronic Register of Beneficial Owners and the publication of a National Asset Registry show progress, the audit failure and fund forfeiture highlight persistent governance and implementation issues within Nigeria’s public finance management framework.

Source: Punch