FG TO LOSE $4M WORLD BANK LOAN OVER FAILED AUDIT ON FIRS, CUSTOMS OPERATIONS
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By Aishat Momoh. O.
The Federal Government is on track to lose $4 million in World Bank funding after failing to meet key audit requirements under a revenue reform initiative targeting the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service. The fund was part of the $103 million Fiscal Governance and Institutions Project, a public financial management programme supported by the International Development Association, a World Bank affiliate.
According to a World Bank restructuring paper dated June 2025, the audit reports submitted by the Office of the Auditor-General of the Federation covering the 2018 to 2021 financial years did not meet international auditing standards. As a result, the Independent Verification Agent deemed the performance indicator unachieved, disqualifying the government from accessing the allocated $4 million for that reform.
The failed audit was one of ten performance-based conditions the government failed to deliver on before the project’s closing date of June 30, 2025. In light of these shortcomings, the Federal Ministry of Finance formally requested the cancellation of $10.4 million in project funds. This includes both the $4 million tied to the revenue audit and other unachieved deliverables, such as the incomplete Revenue Assurance and Billing System and the lack of evidence for the development of a National Budget Portal.
In addition to the funds tied to unmet performance indicators, $0.9 million in technical assistance money was also left uncommitted and subsequently cancelled. The total cancellation reduces the overall project value from $103 million to $92.6 million, following an earlier restructuring in 2024 that had already shaved $22 million off the original $125 million envelope.
Despite these setbacks, the project achieved notable successes in revenue performance and transparency. The World Bank reported that non-oil revenue collection exceeded expectations, with 2024 figures reaching 153 percent of the budgeted target, a substantial improvement from the 64.9 percent baseline in 2018. This progress was linked to reforms including exchange rate unification, the introduction of the TaxProMax platform for improved tax administration, and automated revenue remittance processes.
The government also outperformed expectations in the publication of economic and fiscal data, issuing ten reconciled datasets—well above the project target of six. Additional milestones included the rollout of an Electronic Register of Beneficial Owners by the Corporate Affairs Commission, which now covers about 40 percent of registered businesses, and the publication of a National Asset Registry and financial reports by the Ministry of Finance Incorporated.
Nonetheless, certain key objectives remained unmet. Capital expenditure execution was below the 65 percent target, with only 50 percent achieved, and project monitoring and evaluation were rated as moderately unsatisfactory. Final disbursement under the project is expected to total $96.04 million, which represents 93 percent of the pre-cancellation total.
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