The Federal Government risks losing $4 million from a World Bank loan after failing to meet auditing standards tied to a major revenue reform initiative involving the Federal Inland Revenue Service and the Nigeria Customs Service.
The forfeited amount is part of the $103 million Fiscal Governance and Institutions Project, a public financial management programme funded through a credit facility from the International Development Association.
According to the World Bank’s restructuring paper dated June 2025, the revenue assurance audit of the FIRS and the Nigeria Customs Service for the 2018 to 2021 financial years was rated as “not achieved.” The assessment cited that the audit reports submitted did not comply with international auditing standards.
The World Bank document read, “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 conditions under the project that the government was unable to meet before the closing date of June 30, 2025. As a result, the Federal Ministry of Finance formally requested the cancellation of $10.4 million in project funds.
“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 further reveals that $4.5 million was tied to the uncompleted Revenue Assurance and Billing System, while $1 million was allocated for the development of a National Budget Portal.
According to the document, the Budget Office of the Federation, which was responsible for the portal, failed to submit any evidence of achievement. Additionally, $900,000 in technical assistance funding remained uncommitted and has also been cancelled.
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 latest adjustment follows a previous restructuring in June 2024, during which $22 million was removed from the original $125 million project envelope, reducing it to $103 million. With the new $10.4 million cancellation, the total project funding now stands at $92.6 million.
The Fiscal Governance and Institutions Project, approved in June 2018 and effective from May 2019, was aimed at strengthening the credibility of public finance and national statistics through reforms in revenue administration, budget transparency, and data systems.
Although the government missed several key targets, the project achieved progress in other areas, particularly in revenue performance. According to the World Bank, non-oil revenue outturn reached 153% of the budgeted target in 2024, a significant rise from 64.9% in 2018.
The Bank attributed this improvement to the unification of Nigeria’s exchange rate, enhanced tax administration through the TaxProMax system, and automated revenue remittances from ministries and agencies as part of broader fiscal reforms.
In addition, the government surpassed expectations in the publication of reconciled economic and fiscal datasets, delivering 10 publications compared to the project target of six.
However, capital expenditure execution fell short, reaching only 50% against a target of 65%, and project monitoring and evaluation were rated moderately unsatisfactory by the World Bank.
