Local governments across Nigeria are encountering a new challenge in their quest to receive monthly allocations directly from the Federation Account, as the Central Bank of Nigeria (CBN) has mandated a comprehensive two-year financial audit as a prerequisite for direct disbursement.
Originally, the direct remittance of allocations to the 774 local governments was scheduled to commence last month. However, the process was delayed after many councils failed to provide the necessary financial details required for the payments. As a result, their share of ₦361.754 billion from the ₦1.424 trillion distributable revenue for the month was redirected through state governments.
The CBN has begun the process of opening accounts for local governments, enabling them to receive allocations directly under the financial autonomy granted to them by a recent Supreme Court ruling. However, there are growing concerns that many councils may struggle to meet the CBN’s audit requirement before the next Federation Account Allocation Committee (FAAC) meeting in February.
A CBN official, speaking anonymously, emphasized the necessity of the audit, stating:
“We cannot open fresh accounts for the LGAs without a clear understanding of their financial status, especially since many of them have not operated as independent entities.”
Meanwhile, an Inter-Ministerial Committee, led by the Secretary to the Government of the Federation (SGF), is finalizing a framework for enforcing the Supreme Court’s ruling on local government autonomy. A committee member disclosed that a template is being developed to authorize the Accountant General of the Federation (AGF) to deduct funds allocated for key sectors—such as primary education and healthcare—directly from local government FAAC allocations and transfer them to the relevant agencies.
With the next round of allocations due in a few weeks, the ability of local governments to meet the CBN’s financial reporting requirements remains uncertain.
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