The World Bank has uncovered a $32 million funding discrepancy in a Nigerian water sector project, raising concerns over possible embezzlement and financial mismanagement.
The funds, earmarked for improving water infrastructure, were flagged in the Bank’s FY2024 Sanctions System Annual Report following a forensic audit by its Integrity Vice Presidency (INT).
To address the issue, the World Bank called for immediate action, engaging with Nigeria’s Task Team Leader, Operations Manager, and Financial Management Specialist. The Bank recommended that $22 million be reimbursed by the Central Bank of Nigeria, while $6 million remains in the project’s account for anticipated operational expenses. To prevent further irregularities, financial operations for the project have been restricted to direct payments.
“INT flagged to operations the risk associated with $32 million of unaccounted funds,” the report noted. It added, “The project team took steps to mitigate risks, including requesting reimbursement from the Central Bank and limiting financial transactions to direct payments.”
This revelation is part of the broader Nigeria Erosion and Watershed Management Project (NEWMAP), launched in 2013 with $900 million in funding from the International Development Association and other partners. The initiative aimed to combat soil erosion in Nigeria’s vulnerable sub-watersheds but has faced implementation challenges, including fraudulent practices by contractors.
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An investigation into one engineering firm, part of a joint venture contracted for a $1.22 million project in Abia State, uncovered misrepresentation and breach of contract. The firm falsely claimed the availability of key staff during bidding and replaced personnel without informing project authorities. These actions led to a 1.5-year debarment of the firm and its managing director, with conditional release.
The World Bank emphasized the importance of transparency in implementing large-scale development projects. “Safeguarding funds ensures these projects benefit the communities they’re meant to serve,” a World Bank representative said.
The NEWMAP project, which closed in June 2022, had received additional financing of $400 million in 2019 to expand its scope. However, such setbacks underscore the challenges of managing large-scale projects in environments with weak oversight systems.
