Nigeria will forfeit $4 million in World Bank funding after failing to meet international auditing standards required under a key fiscal reform initiative, dealing a setback to its broader push for public sector accountability.

The funding loss is tied to the $103 million Fiscal Governance and Institutions Project, a World Bank-supported public financial management program financed through the International Development Association (IDA).

The initiative is aimed at improving transparency, efficiency, and fiscal responsibility within Nigeria’s public sector through performance-based disbursements.

According to a World Bank restructuring document released in June 2025, the government fell short on a core target: conducting revenue assurance audits of the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service in line with international best practices.

The audits submitted, covering fiscal years 2018 to 2021, failed to meet the required standards.

“This milestone was not achieved,” the report stated, confirming that the $4 million linked to this result will not be disbursed.

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The World Bank’s findings highlight inadequacies in the audit reports from both FIRS and Customs, two of Nigeria’s most critical revenue-generating agencies.

The setback lands at a difficult moment for Nigeria, which is contending with high debt servicing costs, persistent revenue shortfalls, and pressure to strengthen fiscal governance.

The audit failure not only cost the government much-needed funds but also casts doubt on the credibility of its reform agenda.

Still, the World Bank acknowledged some progress.

Nigeria’s Non-oil revenue outperformed expectations, hitting 153% in 2024, up from 64.9% in 2018.

The country also published 10 validated economic datasets, exceeding project targets.

In addition, there were gains in transparency, including the launch of a National Asset Registry and an Electronic Register of Beneficial Owners.

Despite these achievements, challenges remain in Capital Spending and Project Monitoring.

With the $4 million deduction due to unmet audit conditions, the final disbursement under the program stands at $96.04 million, 93% of the original allocation.

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