The Nigerian Federal Government is on the verge of losing $4 million from a critical World Bank loan due toFailure to meet international auditing standards during a key revenue reform review. The setback is tied to the incomplete and substandard revenue assurance audit of the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service (NCS), covering financial years 2018 to 2021.

Part of the larger $103 million Fiscal Governance and Institutions Project—an initiative aimed at bolstering Nigeria's public financial management through reforms in revenue collection, budget transparency, and data systems—the failed audit casts a shadow over Nigeria’s progress. The World Bank's recent restructuring document, dated June 2025, reveals that the revenue assurance component did not meet stipulated benchmarks, preventing the disbursement of the funds allocated for this purpose.

According to the World Bank’s report, obtained exclusively by The PUNCH, the audit intended to assess the integrity of revenue-generating agencies, but the submitted reports fell short of international auditing standards. The failure marks a significant setback for Nigeria’s efforts to modernize its revenue administration, with the audit reports deemed inadequate by an independent verification agent.

The project allocated $4 million specifically for auditing the revenue systems of the FIRS and NCS. This allocated sum was managed by the Office of the Auditor-General of the Federation. However, the reports submitted for verification did not meet the World Bank’s rigorous standards, leading to the non-achievement of this phase of the project.

This unresolved issue is one of ten performance-based conditions tied to the project that Nigeria failed to meet before the June 30, 2025, deadline. Consequently, the Federal Ministry of Finance has formally requested the cancellation of $10.4 million in remaining project funds. This amount includes $0.9 million in unused technical assistance funds and $9.5 million earmarked for the undelivered performance-based conditions.

The breakdown indicates that part of the forfeited funds—$4.5 million—was designated for a Revenue Assurance and Billing System that remains unimplemented. Additionally, $1 million allocated to develop a National Budget Portal has also been canceled, as the Budget Office of the Federation failed to submit evidence of progress.

“The proposed change is to cancel the $10.4 million, constituting $9.5 million for PBCs that will not be achieved and verified by the closing date, and $0.9 million uncommitted funds from the technical assistance component,” the World Bank document clarified.

This latest development follows a previous restructuring in June 2024, which resulted in a $22 million cut from the initial $125 million project budget, bringing the total to $103 million. With the latest cancellation, the project’s total funding now stands at approximately $92.6 million.

Initiated in June 2018 and officially launched in May 2019, the Fiscal Governance and Institutions Project was designed to improve Nigeria’s public financial management frameworks by enhancing revenue collection, increasing transparency, and modernizing data systems. Although some milestones were missed, the project recorded notable successes.

Significant progress was observed in revenue performance, with non-oil revenue exceeding targets in 2024, reaching 153% of the projected goal—an impressive climb from just 64.9% in 2018. The improvements were attributed to the unification of Nigeria’s exchange rates, adoption of the TaxProMax system for tax administration, and automation reforms that enhanced revenue remittance processes across ministries and agencies.

In addition, Nigeria surpassed expectations by publishing ten reconciled economic and fiscal datasets—exceeding the target of six—demonstrating increased transparency. Conversely, capital expenditure execution remains incomplete, with only 50% of planned capital projects realized against a target of 65%. Monitoring and evaluation processes were also rated as moderately unsatisfactory.

Other positive developments include the launch of the Electronic Register of Beneficial Owners by the Corporate Affairs Commission, now covering about 40% of registered businesses, and the publication of a National Asset Registry alongside financial reports from the Ministry of Finance Inc.

While the project’s final disbursement is projected at roughly $96 million—comprising 93% of the original $103 million—its future hinges on Nigeria’s ability to address the outstanding issues in revenue auditing and project implementation.