Abuja: Lessons from the State Fiscal Transparency, Accountability and Sustainability Program (SFTAS) have been highlighted in a new report, reviewing one of Nigeria’s significant subnational fiscal reform initiatives. The report provides an analysis of how the SFTAS Program, implemented from 2018 to 2022, enhanced fiscal transparency, accountability, and sustainability across Nigeria’s 36 states.

According to World Bank, the SFTAS Program was launched during a period of severe fiscal stress to encourage states to adopt reforms aligned with the Federal Government’s Fiscal Sustainability Plan. The program used performance-based grants amounting to $1.5 billion to motivate states to implement measures that improved fiscal governance and reduced fiscal risks. Key areas of reform included fiscal transparency and accountability, domestic revenue mobilization, public expenditure efficiency, and debt management and sustainability.

The report highlights that the program achieved notable progress in establishing soun
d fiscal governance foundations. By the third year, all states were publishing annual budgets and audited financial statements on time, complying with international standards. Thirty states consistently published quarterly budget implementation reports, and citizen engagement in budget processes increased. States also improved revenue management, with seventeen achieving over 80% Treasury Single Account coverage, twenty-nine adopting consolidated revenue codes, and thirty-four updating urban property records. Internally generated revenue increased from 19.6% of total revenues in 2017 to 29.2% in 2022, although inflation eroded real gains.

The SFTAS Program shows that incremental progress in fiscal governance is achievable even in challenging contexts. By incentivizing transparency and accountability, states have laid the groundwork for better fiscal management and service delivery. The focus now is to deepen these reforms and link them to tangible improvements in citizens’ lives, stated Mathew Verghis, World
Bank Country Director for Nigeria.

Progress was also observed in expenditure efficiency. Thirty-three states linked 95% of civil servants and pensioners to biometric and Bank Verification Number data, reducing payroll fraud. Nearly all states passed procurement laws aligned with international standards, and eighteen introduced e-procurement systems. In debt management, all but one state enacted debt legislation, and thirty-three states submitted quarterly debt reports, enhancing fiscal oversight. However, the report notes that reforms disrupting entrenched patronage networks, like reducing budget deviations and sustaining procurement transparency, were the most challenging to implement and maintain. The sustainability of reforms will depend on continued incentives, institutionalization, and civil society engagement.

SFTAS made Nigeria’s fiscal environment more predictable. Although reforms were uneven and sometimes slow, they established new norms and tools that can be utilized during opportunities. For ins
tance, even after the program and its financial incentives ended, 20 states maintained biometric and BVN linkage for civil servants and pensioners, a crucial reform that reduces payroll fraud and safeguards public funds. This achievement shows how targeted reforms can deliver results and strengthen trust in public financial management, said Deborah Isser and Diane Zovighian, Lead Authors of the Report. The challenge now is to transition from transparency to accountability, ensuring reforms result in better fiscal outcomes.

The report concludes that sustaining progress will require financial incentives under new programs like States Action on Business Enabling Reforms (SABER) and HOPE-Gov, stronger institutional capacities, and enhanced citizen engagement. Future reforms should focus on linking fiscal governance improvements to service delivery outcomes in health, education, and infrastructure.