The federal government is set to lose $4 million from a World Bank loan for failing to meet auditing standards on a crucial revenue reform affecting the Federal Inland Revenue Service and the Nigeria Customs Service.
The fund was part of the Fiscal Governance and Institutions Project, a $103 million public financial management programme funded by the International Development Association’s credit facility.
According to the World Bank’s restructuring paper dated June 2025, the revenue assurance audit encompassing the FIRS and Customs for the fiscal years 2018-2021 was deemed unsuccessful because the papers submitted did not match international auditing standards.
A World Bank document obtained by Chronicle NG reads, “Revenue assurance audit of Main Income Generating Agencies, including the Federal Inland Revenue Service and the Nigeria Customs Service for FY 2018 – 2021 with an allocation of $4m.
“These intermediate results to be implemented by the Office of Auditor-General of the Federation were assessed as not achieved by the Independent Verification Agent because the reports submitted for verification did not meet the requisite international auditing standards.”
The failed audit was one of ten performance-based requirements under the project that the government was unable to complete by the project’s deadline of June 30, 2025. As a result, the Federal Ministry of Finance officially demanded the cancellation of $10.4 million in project money.
“The FMF has requested cancellation of $0.9m of unused funds for Technical Assistance and $9.5m, which is the amount allocated to 10 Performance-Based Conditions, which will not be achieved by the close of the project on June 30, 2025,” the document read.
The breakdown also reveals that $4.5 million was earmarked for the unfinished Revenue Assurance and Billing System, while $1 million was dedicated to the creation of a National Budget Portal.
According to the paper, the Federation’s Budget Office, which was in charge of the portal, failed to produce any evidence of achievement. In addition, $0.9 million in technical assistance funds was left uncommitted and has been terminated.
The document read, “The proposed change is to cancel the $10.4m, constituting $9.5m for PBCs that will not be achieved and verified by the closing date and $0.9m uncommitted funds from the technical assistance component.”
This new change follows a previous reorganisation in June 2024, when $22 million was removed from the initial $125 million budget, reducing the project to $103 million. With the current cancellation, the total funding now stands at $92.6 million.
The Fiscal Governance and Institutions Project, approved in June 2018 and implemented in May 2019, aimed to strengthen the credibility of public finance and national statistics by reforming revenue administration, budget transparency, and data systems.
Although the government missed critical benchmarks, the project made improvements in other areas, such as revenue performance. According to the World Bank, non-oil revenue in 2024 was 153% of the planned objective, up from 64.9% in 2018.
The bank ascribed the gain to the unification of Nigeria’s exchange rate, better tax administration through the TaxProMax system, and reforms that automated revenue flows from ministries and agencies.
Furthermore, the government outperformed expectations in terms of publishing reconciled economic and fiscal information, with ten publications compared to the project’s aim of six.
However, capital expenditure execution continues below expectations at 50%, falling short of the target of 65%, and project monitoring and evaluation were rated moderately unsatisfactory.
Other developments include the Corporate Affairs Commission’s launch of the Electronic Register of Beneficial Owners, which now includes around 40% of registered enterprises, and the Ministry of Finance Incorporated’s release of a National Asset Registry and financial reports.
The project’s final distribution is expected to be $96.04 million, accounting for 93% of the $103 million pre-cancellation total.
