The Asset Recovery Agreement to return the funds was sealed on Monday by the governments of Jersey and Nigeria and the US Department of Justice.

The deal calls for the Nigerian government to fund projects in the country to be administered by the Nigeria Sovereign Investment Authority and independently audited.

A statement by the government of Jersey, which is part of the Channel Islands between the UK and France, said: "The Federal Republic of Nigeria will establish a monitoring team to oversee the implementation of the projects and to report regularly on progress.

"The Nigerian government, in consultation with the other parties, will also engage Civil Society Organisations, who have expertise in substantial infrastructure projects, civil engineering, anti-corruption compliance, anti-human trafficking compliance, and procurement to provide additional monitoring and oversight."

The funds were laundered through the US banking system and then held in bank accounts in Jersey in the name of Doraville Properties Corporation, a British Virgin Islands company, and in the name of the son of Gen Abacha.

In 2014 a US Federal Court in Washington DC seized the money as property involved in the illicit laundering of the proceeds of corruption in Nigeria between 1993 and 1998 when Gen Abacha was head of state.

After his death, it was discovered that hundreds of millions of dollars of public money had been stolen and laundered by a number of Gen Abacha's close associates and family, including his sons, Ibrahim and Mohammed.

The laundering operation extended to the US and European jurisdictions including the UK, France, Germany, Switzerland, Lichtenstein and Luxembourg.

At the time the case was filed as part of the US Department of Justice's Kleptocracy Asset Recovery Initiative in 2013, it was the largest action ever taken by the US to retrieve stolen state funds.

Nigeria's Attorney General, Abubakar Malami, said: "This agreement has culminated in a major victory for Nigeria and other African countries as it recognises that crime does not pay and that it is important for the international community to seek for ways to support sustainable development through the recovery and repatriation of stolen assets."

He added that the Nigerian government would spend the funds on three major infrastructure projects: the Lagos–Ibadan Expressway, Abuja–Kano Road and the Second Niger Bridge. 

These projects "will boost economic growth and help alleviate poverty by connecting people and supply chains from the East to the West and to the Northern part of Nigeria, a vast area covering several kilometres with millions of the country's population set to benefit from the road infrastructures".

He called for "greater cooperation and mutual respect among countries" to make better use of "measures already set out in the United Nations Convention Against Corruption and in the implementation of the Global Forum on Asset Recovery principles on the repatriation of stolen assets".

Jersey's Solicitor General, Mark Temple, said: "This Agreement represents the culmination of two decades of intensive work by Law Officers in Jersey, the United States and Nigeria.

"The return of the assets to Nigeria had been delayed by a number of hard-fought challenges by third parties which were defeated in the Courts in Jersey and the United States.

"The Agreement establishes a framework based on fruitful cooperation, trust and respect so that the forfeited funds can be repatriated to benefit the people of Nigeria, from whom they had been taken," Mr Temple added.