In April 2022, the Federal Government of Nigeria allocated $1.5 billion to state governments through the States Fiscal Transparency, Accountability, and Sustainability (SFTAS) program, a World Bank-assisted initiative aimed at promoting fiscal discipline at the sub-national level. This significant funding, channeled over four years from 2018 to 2022, underscores efforts to enhance transparency, accountability, and efficient resource management across Nigeria’s states.
Overview of the SFTAS Program
The SFTAS program, launched with a $750 million concessional loan from the World Bank in June 2018 and effective from May 2019, was designed to support states in implementing critical fiscal reforms. According to Stephen Okon, the National Programme Coordinator, the initiative operates as a Programme for Results (PforR), providing performance-based grants to states that meet specific eligibility criteria and achieve Disbursement Linked Indicators (DLIs). The initial loan comprised $700 million for these grants and $50 million for technical assistance to ensure no state is left behind.
In December 2020, the World Bank approved an additional $750 million to expand the program, enabling states to address fiscal challenges posed by the COVID-19 pandemic through the National Economic Council’s COVID-19 Plan. The DLIs are aligned with the 22-point Fiscal Sustainability Plan (FSP) and the Open Government Partnership (OGP) commitments, focusing on key areas such as fiscal transparency, domestic revenue mobilization, public expenditure efficiency, and debt sustainability.
Objectives and Impact of SFTAS
The SFTAS program aims to foster trust in government by improving the management of public resources and reducing opportunities for corruption. Okon highlighted that the disbursements have driven “increased fiscal transparency and accountability” through better quality, timeliness, and transparency in state budgets. This includes greater public consultation and citizen engagement to enhance budget credibility.
Additionally, the program has encouraged timely preparation and publication of annual state audited financial statements and quarterly implementation reports. These measures have strengthened accountability, particularly in managing funds allocated for COVID-19 response and recovery efforts. By promoting these reforms, SFTAS seeks to create a more resilient and transparent fiscal environment at the state level.
Performance-Based Disbursements
To access the performance-based grants, states must achieve verifiable results, independently assessed by the Office of the Auditor-General for the Federation and an external audit firm. This rigorous process ensures that funds are allocated based on measurable progress in meeting the program’s criteria. The focus on results-driven funding has incentivized states to adopt reforms that enhance fiscal discipline and public trust.
The additional $750 million financing in 2020 further supported states in addressing the economic fallout from the pandemic, aligning with efforts to strengthen debt transparency and ensure sustainable fiscal policies. This funding has been critical in helping states navigate fiscal constraints while maintaining essential services.
Strengthening State-Level Governance
The SFTAS program represents a strategic effort to address long-standing challenges in Nigeria’s sub-national fiscal management. By tying funding to specific reform outcomes, the initiative encourages states to adopt best practices in budgeting, revenue generation, and expenditure management. The technical assistance component ensures that states have the capacity to implement these reforms effectively, fostering a culture of accountability and efficiency.
As the program progresses through 2022, its impact on improving fiscal governance and reducing mismanagement of public resources is expected to strengthen Nigeria’s economic resilience at the state level.
