CBN Ordered to Refund $22 Million as World Bank Uncovers Missing Funds

The World Bank has uncovered $32 million in unaccounted funds related to a Nigerian water project, raising concerns about transparency and financial management in the country’s water sector. This revelation was disclosed in the 2024 Sanctions System Annual Report.

Breakdown of the Missing Funds  

Of the missing $32 million:  

– $22 million must be refunded by the Central Bank of Nigeria (CBN).  

– $6 million was found idle in a local account, sufficient to complete the project.  

The World Bank suspects that part of the unaccounted funds may have been embezzled. To mitigate further risks, the Bank collaborated with local officials and financial specialists to ensure remaining funds are safeguarded.

History of Troubled Water Projects in Nigeria  

This is not the first time Nigerian water projects have faced scrutiny. Past initiatives funded by the World Bank also encountered issues of mismanagement and inefficiency:  

1. The 2021 Water and Sanitation Project  

• Budget: $875 million.  

– Goal: Improve water access and sanitation in urban and rural areas.  

– Progress: Rated “moderately unsatisfactory” due to poor management and delays.  

2. National Urban Water Sector Reform Project (NUWSRP)  

• 2004-2014 Phase 1: Received $202 million but was poorly rated in 2017.  

  – Key Challenges: Lack of accountability and reliance on state government financing.  

• Phase 2: Focused on two states with a $210 million budget.  

  – Issue: Corruption, with contractors flagged for using fake certificates.  

• Phase 3: Launched in 2014 with $250 million.  

  – Problem: Recurring inefficiencies such as slow reforms, weak leadership, and lack of measurable progress.  

Statements from the World Bank  

An independent review highlighted the root causes of these challenges. It emphasized that Nigerian State Water Agencies (SWAs) failed to achieve cost recovery or financial independence, relying heavily on state governments. This dependence hampered their ability to implement reforms or improve service delivery.

Addressing these systemic issues will require:  

1. Stronger Oversight: Improved accountability mechanisms to track fund usage.  

2. Leadership Reform: Appointing competent leaders to drive project goals.  

3. Capacity Building: Empowering SWAs to operate independently from state governments.  

4. Financial Transparency: Ensuring real-time auditing of projects to avoid misuse.