SFTAS Program Scope, Duration and Components

The Program comprises of two components of activities that support Nigerian states to achieve the key result areas of the Program:

(1) A performance-based financing component for state governments, which will be implemented using the Program for Results (PforR) instrument; and

(2) A technical assistance (TA) component for states and selected national-level institutions, which will be implemented using the Investment Project Financing (IPF) instrument.

The performance-based financing component is open ex-ante to all 36 states and FCT in Nigeria. The FSP and OGP set of reforms are relevant to all states, as fiscal management and performance are weak across the board, and all states still face considerable fiscal pressures. There is a very strong consensus across FMoF and all states that out of fairness, relevance and need, no states should be ex-ante excluded from the Program. However, states must meet the annual eligibility criteria (EC) and achieve disbursement-linked results (DLRs) to access PforR financing. 

The technical assistance component will support all states based on need and demand (not performance), including states that currently do not receive any capacity building in program-related areas from ongoing World Bank or development partners.

The Program will support the full and sustained implementation of a strategic subset of reforms from the FSP and the OGP commitments that are implemented at the state-level. The selected reforms are considered the most critical and impactful for strengthening fiscal transparency, accountability and sustainability and contributing to the achievement of the PDO. The selected reforms form the basis of the eligibility criteria and the DLIs. The formulation of the DLIs are designed to address gaps in the FSP and OGP identified in the technical assessment carried out by the Bank during preparation of the Program and strengthen the impact of the FSP and OGP programs. 

The duration of the Program will be four years with the program end date in December 2022. The PforR will cover the fiscal performance of states over four fiscal years: 2018 to 2021. Capacity building activities will commence after program effectiveness and most are expected to be completed by the end of 2021. 

Implementing Agencies and Partners:

  • The Nigeria Governors’ Forum (NGF): Because of NGF’s unique capabilities and extensive experience in organizing and delivering capacity building and learning activities to states, the NGF has been engaged by the PCU as a project management firm to support the PCU to implement specific capacity building and learning activities to states. The Forum will serve as the project management firm through a single source procurement process, under terms of reference acceptable to the Bank. NGF will develop and disseminate guidelines/knowledge “How to” notes, run technical workshops, provide customized, just-in-time, on-the-ground advisory services to individual states through mobile teams of experts, organize state peer learning forums and state exchange visits, and conduct state reform experience studies. NGF’s activities will be focused on content areas supporting states to achieve the EC and DLIs 1, 3, 4, 5 and 6.
  • The Debt Management Office (DMO) will provide guidelines, templates and tools, run technical workshops, and provide customized, just-in-time, on-the-ground advisory services to individual states to help states achieve DLIs 7-9 under KRA 4 on debt management and sustainability. The activities will be led by the Strategic Programmes Department within the DMO which has a mandate to strengthen debt management at the state level and has supported states to set up their debt management departments (DMDs), adopt legislation and best-practices concerning public debt management, and has provided regular training and hands on support to the state DMDs since 2008.
  • The Public Service Institute of Nigeria (PSIN) will design and deliver curriculum-based, structured face-to-face and then e-learning courses covering content areas related to the EC and DLIs 1-6.
  • The Nigerian OGP secretariat will conduct advocacy visits, provide guidelines, templates and tools, run technical workshops, and provide just-in-time advisory services to individual states to help states to achieve DLI#2 as well as help states to implement the larger set of OGP action points.
  • The Office of the Auditor-General of the Federation (OAuGF) will design and deliver structured face-to-face training courses to state auditors through their Training Academy to strengthen the quality of audited state financial statements, which are required for the EC as well as for the verification of DLIs. These activities will be carried out separately from those carried out under their IVA role and from the audit activities for the Program.

Performance-based financing (PforR) component

Performance-based financing (PforR) component with total resource envelope of US$700 million (equivalent): This component will provide performance-based financing in the form of grants on an annual basis to states which have been verified through the annual performance assessments (APA) as having: 1) complied with the annual eligibility criteria; and 2) achieved the annual disbursement-linked results (DLRs). 

  • Eligibility Criteria (EC): For each year of the Program, states will need to publish on a timely basis the annual approved state budgets and annual audited financial statements. In years 3 and 4 of the Program, states are further required to align with international best practices through: (1) the use of the national chart of accounts/budget classification system, which is GFS compliant, to prepare the states’ annual budgets and thus foster comparability of budget classifications across the federation; and (2) states’ audited financial statements are prepared in accordance with International Public Sector Accounting Standards (IPSAS). To ensure that all states participating in the Program do so for at least 2 years, states need to achieve the EC by year 3 to participate in the Program.
  • Disbursement-linked indicators and results (DLIs and DLRs): There are nine DLIs under the four key result areas (KRAs). Each of the DLIs has specific annual disbursement-linked results (DLRs) to be achieved by states for each year of the Program. Each DLR has a specific amount of performance-based financing attached to its achievement per state per year. The DLRs are defined in detail in the DLI verification protocol which has been established upfront, disseminated since September 2018 to all participating states and is attached as Annex 2. 
  • The APAs will be carried out by the independent verification agent (IVA) for the Program, which is the Office of the Auditor General of the Federation (OAuGF). The IVA will work with a third-party external firm (contracted by FMOF Home Finance Department as the Program Coordination Unit (PCU)) to carry out the APAs using the detailed DLI verification protocol established for the Program. 
  • States that have been verified through the APA to have achieved the EC and (at least some) DLRs, will receive a performance-based grant that is the sum of the values of all the DLRs achieved by them in that performance year. This will provide resources to the states to finance budgeted recurrent expenditures that are necessary for implementing the Program. 
  • Technical assistance (IPF) component

    Technical assistance (IPF) component with total resource envelope of US$50 million (equivalent): This component will support key state government institutions responsible for fiscal management to strengthen their capacity to achieve the EC and DLRs.

    • The support will involve a mixture of modalities: curriculum-based structured learning; central and regional technical workshops; customized, on-the-ground just-in-time advisory support to individual states; peer learning forums and state exchange visits. The different modalities allow for training on areas that are common to all states as well as customized training to individual states addressing specific needs. 
    • The capacity building support to states will be delivered through a set of in-country institutions: the Nigerian OGP secretariat (OGP); Public Service Institute of Nigeria (PSIN); the Debt Management Office (DMO); the Nigeria Governors Forum (NGF) and the Office of the Auditor-General for the Federation (OAuGF). 
    • This component will also provide support to the HFD and the OAuGF to enable them to perform their respective roles of the PCU and IVA. A third-party external firm will be engaged by the PCU to work alongside the IVA to carry out the APAs.
    • This component can also be used to provide support to the PCU to engage with other institutions to strengthen FGN-State policy coordination.

    Eligibility Criteria (EC)

    For each year of the Program, states will need to publish online on a timely basis the annual approved state budgets and annual audited financial statements. The increased availability of timely and credible fiscal data will enable state governments to improve fiscal management, facilitate demand-driven oversight of public finances by citizens and CSOs, and provide more reliable data for monitoring fiscal performance and risks by the FGN. There is a very strong consensus across states that these are the two priority FSP actions, requiring mostly behavioral change and achievable by all states committed to the reforms, and therefore appropriate to be the minimum common performance standard for all states participating in the PforR. In years 3 and 4 of the Program, states are further required to align with international best practices through: (1) the use of the national chart of accounts/budget classification system, which is GFS compliant, to prepare the states’ annual budgets and thus foster comparability of budget classifications across the federation; and (2) states’ audited financial statements are prepared in accordance with International Public Sector Accounting Standards (IPSAS). To ensure that all states participating in the Program do so for at least 2 years, states need to achieve the EC by year 3 to participate.

    Eligibility Criteria (2018-2021) Table

    Year 1 – 2018Year 2 – 2019Year 3 – 2020Year 4 – 2021
    FY19 state budget approved by the State Assembly and published online by end Feb 2019 

    AND 
    FY17 audited financial statement submitted to the State Assembly and published by Dec 2018
    FY20 state budget approved by the State Assembly and published online by end Jan 2020

    AND
    FY18 audited financial statement submitted to the State Assembly and published by Sept 2019
    FY21 state budget, prepared under national Chart of Accounts, approved by the State Assembly and published online by end Jan 2021 
    AND
    FY19 audited financial statement, prepared in accordance with IPSAS, submitted to the State Assembly and published by Aug 2020
    FY22 state budget, prepared under national Chart of Accounts, approved by the State Assembly and published online by end Jan 2022 
    AND
    FY20 audited financial statement, prepared in accordance with IPSAS, submitted to the State Assembly and published by Jul 2021

    1. Disbursement-Linked Indicators (DLI) Matrix

    Table Notes: 

    1. Disbursement-linked results (DLRs) are the specific results to be achieved in each Program under a DLI. States’ performance will be assessed during the annual performance assessment against the DLRs.
    2. The DLR value shown in the DLI Matrix Table is per year per state. This value is the amount of performance-based financing to be received by a state if a state is assessed as having achieved the DLR.
    3. DLIs 1, 2, 4, 5, 6 and 7 each contain 2 DLRs that are separately assessed and valued. These are indicated by the sub-numbering, e.g., 1.1 and 1.2; 2.1 and 2.2 etc. Separately valued means that states can receive the performance-based financing even if they only achieve one of the two DLRs under the DLI.
    4. DLRs which have distinct but related components that must be all achieved in order to receive financing are indicated by the use of ‘AND’ in the description
    5. DLRs 4.2, 8, and 9 have a basic target with a lower financing value and a stretch target with a higher financing value attached to it. States need to at least achieve the basic target to receive performance-based financing.

    Disbursement-Linked Indicator (DLI) Matrix 

    Disbursement-Linked Indicator Disbursement-Linked Results
    Year 1 – 2018Year 2 – 2019Year 3 – 2020Year 4 – 2021
    DLI 1: Improved financial reporting and budget reliability


    1.1 FY18 quarterly budget implementation reports published on average within 6 weeks of quarter-end to enable timely budget management                1.2 FY18 deviation for total budget expenditure is < 30%1.1 FY19 quarterly budget implementation reports published on average within 6 weeks of quarter end to enable timely budget management1.2 FY19 deviation for total budget expenditure is < 25%1.1 FY20 quarterly budget implementation reports published on average within 4 weeks of quarter end to enable timely budget management1.2 FY20 deviation for total budget expenditure is < 20%1.1 FY21 quarterly budget implementation reports published on average within 4 weeks of quarter end to enable timely budget management1.2 FY21 deviation for total budget expenditure is < 15%
    DLR 1.1 value$0.3m per state$0.3m per state$0.3m per state$0.3m per state
    DLR 1.2 value$1m per state$1m per state$1m per state$1m per state
    DLI 2 Increased openness and citizens’ engagement in the budget process2.1 Citizens’ inputs from formal public consultations are published online, along with the proposed FY19 budget
    2.1 Citizens’ inputs from formal public consultations are published online, along with the proposed FY20 budget2.2 Citizens’ budget based on approved FY19 state budget published online by end April 2019
    2.1 Citizens’ inputs from formal public consultations are published online, along with the proposed FY21 budget AND Citizens’ budget based on approved FY20 state budget published online by end April 2020 with functional online feedback mechanisms 2.2 Citizens accountability report based on audited financial statements/reports published online for FY19 no later than Sept 20202.1 Citizens’ inputs from formal public consultations are published online, along with the proposed FY22 budget AND Citizens’ budget based on approved FY21 state budget published online by end April 2021 with functional online feedback mechanisms 2.2 Citizens accountability report based on audited financial statements/reports published online for FY20 no later than Sept 2021
    DLR 2.1 value$0.3m per state $0.3m per state$0.5m per state$0.5m per state
    DLR 2.2 valueN/A$0.3m per state$0.3m per state$0.3m per state
    DLI 3: Improved cash management and reduced revenue leakages through implementation of State TSATSA, based on a formally approved cash management strategy, established and functional, and covering a minimum of 50 percent of state government financesTSA, based on a formally approved cash management strategy, established and functional, and covering a minimum of 60 percent of state government finances.TSA, based on a formally approved cash management strategy, established and functional, and covering a minimum of 70 percent of state government finances.TSA, based on a formally approved cash management strategy, established and functional, and covering a minimum of 80 percent of state government finances.
    DLR 3 value$1.5m per state$1.5m per state$1.5m per state$1.5m per state
    DLI 4: Strengthened Internally Generated Revenue (IGR) collection4.1 Consolidated state revenue code covering all state IGR sources and stipulating that the state bureau of internal revenue is the sole agency responsible for state revenue collection and accounting approved by the state legislature and published (one-time payment for year in which DLR is first achieved, up to 2020/Year 3)4.1 N/A
    4.2 2018-2017 annual nominal IGR growth rate meets target:
    Basic target: 20%-39%
    Stretch target: 40% or more
    4.2 2019-2018 annual nominal IGR growth rate meets target:
    Basic target: 20%-39%
    Stretch target: 40% or more
    4.2 2020-2019 annual nominal IGR growth rate meets target:
    Basic target: 20%-39%
    Stretch target: 40% or more
    4.2 2021-2020 annual nominal IGR growth rate meets target:
    Basic target: 20%-39%
    Stretch target: 40% or more
    DLR 4.1 value$2m per state (one-time payment)$2m per state (one-time payment)$2m per state (one-time payment)N/A
    DLR 4.2 Basic value$1m per state$1m per state $1m per state$1m per state
    DLR 4.2 Stretch value$2m per state$2m per state$2m per state$2m per state
    DLI 5: Biometric registration and bank verification number (BVN) used to reduce payroll fraud5.1 Biometric capture of at least 60 percent of current civil servants completed and linked to payroll, and identified ghost workers taken off the payroll 
    5.2 Link BVN data to at least 60 percent of current civil servants on the payroll and payroll fraud addressed
    5.1 Biometric capture of at least 75 percent of current civil servants and pensioners completed and linked to payroll, and identified ghost workers taken off the payroll 
    5.2 Link BVN data to at least 75 percent of current civil servants and pensioners on the payroll and payroll fraud addressed
    5.1 Biometric capture of at least 90 percent of current civil servants and pensioners completed and linked to payroll, and identified ghost workers taken off the payroll 
    5.2 Link BVN data to at least 90 percent of current civil servants and pensioners on the payroll and payroll fraud addressed 
    5.1 Biometric capture of at least 90 percent of current civil servants and pensioners completed and linked to payroll, and identified ghost workers taken off the payroll 
    5.2 Link BVN data to at least 90 percent of current civil servants and pensioners on the payroll and payroll fraud addressed
    DLR 5.1 valuePer State $0.5mPer State $0.5mPer State $0.75mPer State $0.75m
    DLR 5.2 valuePer State $0.5mPer State $0.5mPer State $0.75mPer State $0.75m
    DLI 6: Improved procurement practices for increased transparency and value for money 6.1 Existence of public procurement legal framework and procurement regulatory agency. Said legal framework should conform with the UNCITRAL Model Law and provide for: 1) eProcurement; 2) establishment of an independent procurement board and 3) cover all MDAs receiving funds from the state budget. (one-time payment for year in which DLR is first achieved, up to 2020/Year 3) 6.1 N/A
    6.2 Publish contract award information above a threshold set out in the Operations Manual for 2018 on a monthly basis in OCDS format on the state website6.2 Publish contract award information above a threshold set out in the Operations Manual for 2019 on a monthly basis in OCDS format on the online portal 

    6.2 Publish contract award information above a threshold set out in the Operations Manual for 2020 on a monthly basis in OCDS format on the online portal
    AND 
    Implement e-procurement in at least 3 MDAs (incl. Education, Health and Public Works) for goods and works program expenditure
    6.2 Publish contract award information above a threshold set out in the Operations Manual for 2021 on a monthly basis in OCDS format on the online portal
    AND 
    Implement e-procurement in at least 4 MDAs (incl. Education, Health and Public Works) for goods and works program expenditure
    DLR 6.1 value$2m per state (one-time payment)$2m per state (one-time payment)$2m per state (one-time payment)N/A
    DLR 6.2 value$0.5m per state$0.5m per state$1.5m per state $1.5m per state
    DLI 7: Strengthened public debt management and fiscal responsibility framework7.1 Approval of state-level legislation, which stipulates: 1) responsibilities for contracting state debt; 2) responsibilities for recording/reporting state debt; and 3) fiscal and debt rules/limits (one-time payment for year in which DLR is first achieved, up to 2020/Year 3)
    7.1 N/A
    7.2 Quarterly state debt reports accepted by the DMO on average two months or less after the end of the quarter in 20187.2 Quarterly state debt reports accepted by the DMO on average two months or less after the end of the quarter in 20197.2 Quarterly state debt reports accepted by the DMO on average two months or less after the end of the quarter in 2020
    AND Annual state debt sustainability analysis published by end of December 2020
    7.2 Quarterly state debt reports accepted by the DMO on average two months or less after the end of the quarter in 2021
    ANDAnnual state debt sustainability analysis and Medium-term debt management strategy published by end of December 2021
    DLR 7.1 value$2m per state (one-time payment)$2m per state (one-time payment)$2m per state (one-time payment)N/A
    DLR 7.2 value $0.5m per state$0.5m per state$0.5m per state$0.5m per state











    DLI 8: Improved clearance/reduction of stock of domestic expenditure arrears Domestic arrears as of end 2018 reported in an online publicly-accessible database, with a verification process in place and an arrears clearance framework established. Domestic arrears as of end 2018 and end 2019 reported in an online publicly-accessible database, with verification process in place.AND 
    Percentage decline in the verified stock of domestic arrears at end 2019 compared to end 2018 meets target and is consistent with the state’s arrears clearance framework.                   –Basic target: At least a 5 percent decline or maintain stock below 5 billion naira
    Stretch target: More than 20 percent decline
    Domestic arrears as of end 2019 and end 2020 reported in an online publicly-accessible database, with verification process in place. AND
    Percentage decline in the verified stock of domestic arrears at end 2020 compared to end 2019 meets target and is consistent with the state’s arrears clearance framework.                      –Basic target: At least a 5 percent decline or maintain stock below 5 billion naira
    Stretch target: More than 20 percent decline
    Domestic arrears as of end 2020 and end 2021 reported in an online publicly-accessible database, with verification process in place.AND
    Percentage decline in the verified stock of domestic arrears at end 2021 compared to end 2020 meets target and is consistent with the state’s arrears clearance framework.                      –Basic target: At least a 5 percent decline or maintain stock below 5 billion naira
    Stretch target: More than 20 percent decline
    DLR 8 Basic value $1m per state$1m per state $1m per state $1m per state
    DLR 8 Stretch value $2m per state$2m per state$2m per state






    DLI 9: Improved debt sustainabilityAverage monthly debt service deduction is < 40% of gross FAAC allocation for FY2018
    AND
    Total debt stock at end of December 2018 as a share of total revenue for FY2018 meets target: 
    -Basic target: < 150%
    -Stretch target: < 125% 
    Average monthly debt service deduction is < 40% of gross FAAC allocation for FY2019
    AND 
    Total debt stock at end of December 2019 as a share of total revenue for FY2019 meets target: 
    -Basic target: < 140%
    -Stretch target: < 115%
    Average monthly debt service deduction is < 40% of gross FAAC allocation for FY2020
    AND
    Total debt stock at end of December 2020 as a share of total revenue for FY2020 meets target: 
    -Basic target: < 130%
    -Stretch target: < 105%
    Average monthly debt service deduction is < 40% of gross FAAC allocation for FY2021
    AND
    Total debt stock at end of December 2021 as a share of total revenue for FY 2021 meets target: 
    -Basic target: < 120%
    -Stretch target: < 95%
    DLR 9 Basic value $1m per state $1m per state $1m per state $1m per state
    DLR 9 Stretch value$1.5m per state$1.5m per state$1.5m per state$1.5m per state