The World Bank has flagged $32 million in missing funds from a water project in Nigeria, in its Sanctions System Annual Report for the 2024 fiscal year, FIJ has gathered.

Officially released at the end of October, the report revealed that the Central Bank of Nigeria has been instructed to return $22 million of the allocated funds.

It also noted than an extra $6 million was found unused in a local project account, which slightly exceeds the expected costs of the Project Implementation Unit (PIU) for the rest of the project.

The World Bank identifies the discrepancies as pointers to embezzlement and has collaborated with local stakeholders to put measures in place to curb it, according to the report.

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“INT followed up on risks identified regarding a project in Nigeria’s water sector and flagged to Operations the risk, which was associated with $32 million of unaccounted funds. INT met with the Task Team Leader, Operations Manager, Program Leader, and Financial Management Specialist to identify steps to reduce the risk of embezzlement”, the report reads in part.

Although the World Bank Report did not state the exact project it flagged, FIJ found that the issue is part of a wider trend of unsatisfactory performance in World Bank-funded water projects in Nigeria.

In 2021, for instance, the World Bank approved a loan of $875 million for the Nigeria Sustainable Urban and Rural Water Supply, Sanitation, and Hygiene Program-for-Results.

But an October World Bank implementation report on the project rated the progress as “moderately unsatisfactory”, just three years into its six-year duration. The report cited operational inefficiencies and slow reforms as the main reasons for the project’s poor performance.

The National Urban Water Sector Reform Project (NUWSRP), designed for implementation between 2004 and 2014, also faced similar and even worse challenges.

The first phase of the NUWSRP, which ran from 2004 to 2013 with a $202 million loan, was rated “moderately unsatisfactory” in 2017, largely due to poor state-level implementation.

A World-Bank sponsored independent review of the project cited sluggish reforms by the states in Nigeria and the implementing committee for the unsatusfactory rating.

“Reforms progressed slowly and there were often mixed
signals communicated within states regarding the need to achieve cost recovery… Performance varied and was often due to a mix of factors including the placement of SWAs within the state civil services.

This reduced accountability and empowerment. SWAs remained dependent on state governments in terms for financing throughout the project, and were unable to achieve self-sufficiency”, the report recorded.

Similarly, the second phase of the NUWSRP, which focused on Cross River and Lagos states, faced corruption issues. In 2016, the World Bank flagged and barred a contractor (name redacted) for submitting fake certificates for contract projects. This phase had a budget of approximately $210 million.

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The third phase, NUWSRP III, which began in 2014 with $250 million funding, also rated to be moderately unsatisfactory. The implementation report for this project pointed at ongoing issues like slow reforms, leadership, parallel financing and slow implementation, as reasons for the ‘unsatisfactory outcome’.