The U.S. Government Accountability Office (GAO) has issued a report indicating that the risk assessment processes of the U.S. Agency for International Development (USAID) for countries affected by violent conflict, including Nigeria, are insufficient. This deficiency leads to a "heightened risk of corruption, fraud, mismanagement or unauthorized use of U.S. aid funds" and "fraudulent financial reporting." The GAO released its report on April 30 after examining USAID's risk management in Nigeria, Somalia, and Ukraine at the behest of the House Foreign Affairs Committee.
According to the GAO's report, USAID obligated $730 million in assistance to Nigeria during fiscal year 2023. USAID is an independent government agency guided by the Secretary of State and is expected to have processes in place to assess certain types of risks in regions receiving their assistance. These include risks related to fraud, security, and sanctions. However, the GAO found that "contrary to leading practices, USAID did not comprehensively assess or document, in fraud risk profiles, the relevant fraud risks affecting its assistance in the three conflict-affected countries GAO selected for its review—Nigeria, Somalia, and Ukraine," according to the report. Consequently, "USAID cannot ensure it has identified and is mitigating all relevant fraud risks in these countries."
The GAO pointed out that due to violent conflicts in Nigeria, Somalia, and Ukraine these nations carry a heightened risk of corruption, fraud mismanagement or unauthorized use of U.S. aid funds as well as fraudulent financial reporting and activity from terrorists or sanctioned entities. The report further highlighted that Nigeria specifically faces risks such as piracy, ethno-religious conflicts including Islamist extremist activity, corruption, weapons and narcotics trafficking, "misrule," and armed banditry which result in "serious social, economic and security challenges" undermining the Nigerian government's legitimacy. It also stated that there is "widespread and complex corruption" affecting Nigeria's political and security sectors, including instances of extortion.
According to the report, the GAO recommended that USAID strengthen and improve its risk assessment processes for Nigeria and other conflict-affected countries. While USAID agreed with the recommendations made by the GAO, it did not provide a timeline for implementing corrective actions. The GAO emphasized that it is crucial for USAID to "take immediate steps to comprehensively assess and document relevant fraud risks."
The U.S. State Department website highlights that the relationship between the U.S. and Nigeria "is built on shared interests and values," adding that both nations "enjoy a deep and enduring partnership that spans more than six decades." The U.S. provided nearly $1.2 billion in foreign assistance resources to Nigeria in fiscal year 2022, making Nigeria the second-largest African trading partner with the U.S. The website also stated, "The United States is proud to be one of the largest foreign investors in Nigeria with foreign direct investment totaling $5.6 billion in 2022."
The GAO, according to its website, provides nonpartisan reporting to government agencies, Congress, and the public to support government improvements and efficient use of taxpayer funds. Congressional committees and subcommittees typically request GAO's reports. The agency was established in 1921.
