World Bank Reviews Nigeria’s SFTAS Reforms, Citing Big Gains in Fiscal Governance

Introduced at a time of severe fiscal strain, SFTAS was designed to incentivize states to undertake reforms aligned with the Federal Government’s Fiscal Sustainability Plan.

The World Bank has released a comprehensive new report titled “Fiscal Governance Reform in Nigeria: Lessons from the State Fiscal Transparency, Accountability and Sustainability Program (SFTAS)”, providing the most detailed assessment to date of one of Nigeria’s most impactful subnational fiscal reform initiatives. Implemented between 2018 and 2022, the SFTAS Program significantly strengthened fiscal transparency, accountability, and sustainability across all 36 Nigerian states.

Introduced at a time of severe fiscal strain, SFTAS was designed to incentivize states to undertake reforms aligned with the Federal Government’s Fiscal Sustainability Plan. The program offered $1.5 billion in performance-based grants, rewarding states that improved governance and reduced fiscal risks in four key areas:

1. Fiscal transparency and accountability

2. Domestic revenue mobilization

3. Public expenditure efficiency

4. Debt management and sustainability

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Major Achievements Across Nigeria’s States

The report reveals that SFTAS triggered transformative changes in the fiscal practices of Nigerian states:

Transparency and Reporting

• By the program’s third year, all 36 states published annual budgets and audited financial statements on time and in line with international standards.

• Thirty states consistently published quarterly budget implementation reports.

• Citizen engagement in budget preparations and public consultations grew significantly, deepening democratic participation.

Domestic Revenue Mobilization

• 17 states achieved over 80% coverage of a Treasury Single Account (TSA).

• 29 states adopted consolidated revenue codes to simplify and formalize revenue administration.

• 34 states updated urban property records, helping modernize property taxation systems.

• Internally generated revenue (IGR) rose from 19.6% of total revenues in 2017 to 29.2% in 2022. Although inflation dampened real gains, the structural improvements remain significant.

Expenditure Efficiency

• 33 states linked 95% of civil servants and pensioners to biometric and BVN (Bank Verification Number) databases, drastically reducing payroll fraud.

• Nearly all states enacted procurement laws aligned with global standards.

• 18 states introduced e-procurement systems to increase transparency and reduce corruption.

Debt Management

• All but one state enacted debt management laws.

• 33 states submitted quarterly debt reports, strengthening financial oversight and responsible borrowing.

Despite these achievements, the report stresses that reforms threatening entrenched political patronage—such as controlling budget deviations or enforcing procurement transparency—were harder to implement and sustain.

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Expert Reflections on Progress and Remaining Challenges

World Bank Country Director for Nigeria, Mathew Verghis, emphasized the importance of SFTAS as a catalyst for sustainable reform:

“The SFTAS Program demonstrates that even in challenging contexts, incremental progress in fiscal governance is possible. States have laid foundations for improved fiscal management and service delivery. The next step is connecting these reforms to real improvements in citizens’ lives.”

Lead authors Deborah Isser and Diane Zovighian highlighted the program’s lasting influence:

“SFTAS made Nigeria’s fiscal environment more legible and predictable. Even after the incentives ended, 20 states have continued biometric and BVN linkage, showing that targeted reforms can stick.”

They noted, however, that the shift from transparency to full accountability will require sustained political will and stronger institutions.

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Path Forward: Strengthening Future Fiscal Governance

The report recommends several steps to ensure reform continuity:

• Continued financial incentives through new World Bank–supported programs such as SABER (State Action on Business Enabling Reforms) and HOPE-Gov

• Enhanced capacity within state-level finance institutions

• Stronger citizen-led accountability and public participation

• Linking fiscal reforms directly to improvements in health, education, infrastructure, and service delivery

As Nigeria grapples with fiscal pressures and strives for improved public service outcomes, SFTAS provides both a roadmap and a proof of concept: well-designed, incentive-driven reforms can strengthen governance, increase transparency, and deepen public trust.