OECD Report: Nigeria Failing to Reflect Foreign Aid in National Budgets

Says only 35% of devt indicators can be tracked with govt data

***Nigeria pledges to record all flows in 2027 budget ***

Emmanuel Addeh in Abuja

Nigeria currently records none of its development cooperation flows on the national budget, limiting formal scrutiny of external resources, according to a new report by the Organisation for Economic Co-operation and Development (OECD) and the United Nations Development Programme (UNDP).

The report, Making Development Co-operation More Effective Progress Report 2026, also found that only 17 per cent of development partners provide Nigeria with forward-spending plans, down from 22 per cent in 2018, restricting the government’s ability to plan development expenditure over the medium term.

It further showed that development partners’ overall use of Nigeria’s public financial management (PFM) systems had fallen to 63 per cent, from 79 per cent in 2018, despite improvements in some components of the system.

“Effectiveness challenges of note identified in Nigeria relate to transparency and accountability. This includes the current absence of development co-operation flows recorded on the national budget, a gap that limits formal fiscal integration and oversight,” it stated .

The report was based on the 2023-2026 monitoring round of the Global Partnership for Effective Development Co-operation and included Nigeria among 44 partner-country governments covered by the exercise. The Nigeria process was led by the federal ministry of budget and economic planning.

According to the report, the absence of development cooperation flows from the national budget represents a sharp deterioration from the 49 per cent recorded in 2018, and severely restricts formal legislative scrutiny of external resources.

The OECD said the problem was particularly significant because Nigeria has strong stakeholder engagement in the formulation of national development strategies, priorities and results, but external development resources are not being fully integrated into the country’s formal budgeting process.

The report also found a significant gap between the predictability of funds already scheduled for disbursement and the visibility of future development financing.

While 96 per cent of development assistance was disbursed predictably on an annual basis, only 17 per cent of development partners provided forward-spending plans to Nigeria, compared with 22 per cent in 2018.

The Nigeria country results brief accompanying the report, however, recorded 100 per cent annual predictability under its specific measurement of funding scheduled to the public sector and disbursed within the same fiscal year, compared with 97 per cent in 2018.

It also stated that Nigeria received three-year forward-spending plans from 49 per cent of its development partners under that particular indicator.

The report also highlighted a gap between development partners’ stated alignment with Nigeria’s development priorities and their use of national systems.

It found that 99 per cent of development partners’ project objectives were aligned with country-owned results frameworks, but only 51 per cent of their project indicators were drawn from those national frameworks.

More significantly, only 35 per cent of the indicators could be monitored using data from government systems, pointing to a disconnect between development projects and Nigeria’s own data and monitoring infrastructure.

On public financial management, the OECD said development partners’ overall reliance on Nigerian systems had declined from 79 per cent in 2018 to 63 per cent in the latest monitoring round, with the decline covering areas including budget execution, financial reporting, procurement and auditing.

The accompanying country results brief provided a separate measure, showing that 56 per cent of funding disbursed to Nigeria’s public sector used PFM systems, compared with 28 per cent in 2018. It said the largest improvements under that measure were recorded in budget execution and auditing procedures.

The report said Nigeria has now proposed a series of measures to address the weaknesses, including recording all development cooperation flows on the national budget with quarterly breakdowns by the 2027 fiscal cycle.

“The Government of Nigeria proposes to…Record all development co-operation flows on budget with quarterly breakdowns consistent with national requirements by the 2027 fiscal cycle,” it stressed.

The government also proposed integrating development cooperation reporting into parliamentary budget sessions, publishing annual reports covering financial flows and results, and achieving 100 per cent quarterly reporting compliance through the national development cooperation information management system by 2027.

In addition, Nigeria aims to increase the coverage of disaggregated data for vulnerable groups from 17 per cent to 60 per cent by 2028, while development partners have proposed increasing their use of Nigeria’s PFM systems to 75 per cent by 2028.

The development partners also committed to securing three-year forward-spending plans from at least 80 per cent of partners by 2027, while maintaining 100 per cent annual disbursement predictability from 2026.

The OECD/UNDP report said the findings formed part of a wider assessment of development cooperation effectiveness across 44 partner countries, with the monitoring exercise drawing on governments, development partners, civil society organisations, trade unions and private-sector representatives.