Using a traffic light rating system, the ICAI rated the scheme as amber-red - the second-lowest - which indicates "significant improvements" were required.
It found that around a third of the eligible children - an estimated 3.7 million - were still not in school, while those that were received little by way of education.
"We are concerned by the very high numbers of out-of-school children and the very poor learning outcomes in nine of the 10 Nigerian states supported by Dfid," it said.
It said that, as a result of British aid, a seven-year-old Nigerian girl could be learning in a new school where the teacher had been trained with UK funding, but she still might leave education not knowing how to read or write.
The UK aid goes to 10 of Nigeria's 36 states, but a Dfid spokesman responded: "This was a limited inquiry in that the team only visited 1% of schools, most of which were in only one state in Nigeria, and they did not take into account the most recent evidence of the project's progress.
"However, we will carefully review the report's recommendations and respond in due course."
- Ikhide
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