Nigeria’s Fiscal Reform Landscape

Symbolic Photo

The World Bank’s recent review of Nigeria’s fiscal reforms reveals a stark divide: while many states advanced transparency and accountability under the SFTAS program, 16 states failed to meet the necessary criteria and consequently received no performance-based grants.

This outcome underscores both the progress made and the persistent governance gaps that threaten Nigeria’s fiscal sustainability. 

Nigeria’s Fiscal Reform Landscape

The State Fiscal Transparency, Accountability and Sustainability (SFTAS) Program, launched in 2018, was designed to strengthen fiscal governance across Nigeria’s 36 states. With $1.5 billion in performance-based grants, the program incentivized reforms in four critical areas:  

- Fiscal transparency and accountability  

- Domestic revenue mobilization  

- Public expenditure efficiency  

- Debt management and sustainability 

By 2022, notable progress was recorded: all states published budgets and audited financial statements, 33 states passed procurement laws, and 35 enacted debt management legislation. Internally generated revenue rose from 19.6% in 2017 to 29.2% in 2022, though inflation eroded real gains. 

The 16 States That Fell Short

Despite these achievements, 16 states failed to qualify for grants because they did not meet the program’s benchmarks. Their shortcomings included:  

- Failure to publish credible fiscal data  

- Weak budget credibility with inflated figures  

- Limited adoption of Treasury Single Account systems  

- Poor procurement practices, including reliance on direct contracting  

- Neglect of debt sustainability analyses 

This failure highlights the uneven reform trajectory across Nigeria’s federal system, where political autonomy often undermines accountability.

Implications for Nigeria

The exclusion of 16 states from grant disbursement is not merely a financial penalty; it signals deeper structural weaknesses. Without reforms, these states risk:  

- Persistent fiscal mismanagement leading to unsustainable debt burdens.  

- Reduced citizen trust in governance due to opaque financial practices.  

- Missed opportunities for improved service delivery and infrastructure investment.  

Conversely, states that embraced reforms are better positioned to attract investment, manage debt responsibly, and deliver public goods more effectively.

Editorial Perspective

The World Bank’s findings should serve as a wake-up call. Nigeria cannot afford a two-speed fiscal system where some states modernize governance while others remain entrenched in opacity. The federal government must intensify oversight, while civil society should demand accountability from lagging states. Reform is not optional, it is the bedrock of sustainable development.

Ultimately, the lesson is clear: financial incentives can drive reform, but political will determines its depth and durability. Nigeria’s path forward depends on ensuring that all states, not just the reform-minded majority, commit to transparency, accountability, and fiscal discipline.