The World Bank has hailed the return of Sani Abacha's funds from Swiss banks as an important precedent. But Nigeria criticised the delay in making the move.
The Swiss government officially returned $290 million (SFr377 million) to Nigeria. This total is part of the funds stolen by the late dictator from his country.
"The message is that there is no safe haven for looted funds or corrupt activities," commented the new World Bank president Paul Wolfowitz.
Nigeria and Switzerland have agreed on a process to return $458 million stolen by Abacha. The balance will come when Abacha possessions are transferred into liquid assets.
"We appreciate the willingness of the Swiss government to act on this issue," said Nigerian Finance Minister Ngozi Okanjo-Iweala.
"It is just a first step. We are committed to ensuring that all the funds stolen from Nigeria are returned."
The bank and Nigeria are to conduct a joint review to ensure that the repatriated funds are used to support key sectors, such as education, health, HIV/Aids and basic infrastructure.
One of the main conditions set by Switzerland was for the bank to monitor how Nigeria spends the funds.
Nigeria says Abacha looted oil-rich Nigeria of more than $2.2 billion from when he seized power in 1993 until his death in 1998. The hunt for the money began in earnest after a restored democracy elected Olusegun Obasanjo president in 1999.
Okanjo-Iweala said Nigeria was searching for funds Abacha may have sent to other countries but did not name them.
She said Obasanjo was determined to fight corruption. "There are no sacred cows," she said.
Jean-Daniel Gerber, a senior official at the Swiss economics ministry, said Switzerland was "the first and so far the only country where a court of law ordered the transfer of Abacha funds back to Nigeria".
He said repatriating illegally-acquired funds was an important tool in the fight against corruption because it closed safe havens for such funds and promoted greater accountability.
Gerber said previous cases of repatriation of funds from Switzerland by former leaders included the Philippines and Peru.
World Bank President Wolfowitz said the move served as a "useful precedent in the fight against corruption... and helps channel more resources to poverty-reduction programmes".
He said the Swiss government had made an important contribution in the struggle against the misappropriation of public funds.
But Swiss non-governmental organisations (NGOs) are doubtful about the effectiveness of the cooperation between the World Bank and Nigeria.
"There are NGOs in the field which would be much more experienced to supervise spending of the funds," commented Andreas Missbach from the Berne Declaration.
The organisation said it had suggested that the Swiss State Secretariat for Economic Affairs (Seco) and the Swiss Agency for Development and Cooperation as well as Nigerian NGOs should take on this watchdog role.
"The deprived Nigerian people must be compensated. That's why the use of this money is so important," added Missbach.
However, the Nigerian side has expressed the view that the accord with the World Bank is "legitimate".
"It will allow us to establish for certain that the funds are used for projects that Nigeria has designated," commented the lawyer in Switzerland representing Nigerian interests, Enrico Monfrini.
But he criticised the Swiss authorities for dragging their feet over the repatriation of the money.
A spokesman for the Swiss justice ministry has answered by saying it was in Switzerland's own interest to pay it back as soon as possible.
swissinfo with agencies
Between 1993 and 1998, Sani Abacha is said to have plundered more than $2.2 billion from the coffers of Nigeria.
About $700 million was frozen in Switzerland.
More than $200 million of that amount was returned to Nigeria in a first payment in December 2003.
The World Bank confirmed on Tuesday that Switzerland had repatriated a further $290 million.
The balance is $170 million. Nigeria has to prove that a further $40 million belongs to the state.