Local governments in Nigeria face a fresh challenge in their push for financial autonomy as the Central Bank of Nigeria (CBN) now requires them to submit a two-year account audit before receiving direct allocations from the federation account.
The plan for direct revenue remittance, initially scheduled to begin in January, was postponed after many of the 774 local councils failed to provide the necessary account details. Consequently, their N361.754 billion share from the total N1.424 trillion distributable revenue was sent through the state governments instead.
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CBN begins account opening for LGAs
The CBN has commenced the process of opening accounts for local governments to facilitate direct payments, following the Supreme Court ruling in July 2024 that secured their financial autonomy. However, the bank insists that account openings will not proceed without a clear understanding of each local government’s financial position.
A source at the CBN stated that many LGAs have not operated independently and lack proper financial records. Without an audit, the bank will not process new accounts or disburse funds directly.
Deadline approaching for February FAAC meeting
With the next Federation Account Allocation Committee (FAAC) meeting scheduled in a few weeks, concerns are growing over the ability of local governments to submit their audit reports in time. Failure to comply may result in continued routing of funds through state governments, undermining the autonomy ruling.
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Inter-ministerial committee working on implementation framework
An Inter-Ministerial Committee, led by George Akume, the Secretary to the Government of the Federation (SGF), is developing a framework to enforce the Supreme Court’s decision on local government autonomy. A committee member disclosed that a template is being designed to allow the Accountant General of the Federation (AGF) to allocate funds directly for essential services like primary education and healthcare, ensuring the funds reach relevant agencies without interference.
