Local governments across Nigeria are encountering a new challenge in their bid to receive monthly allocations directly from the Federation Accounts. The Central Bank of Nigeria (CBN) now requires each of the 774 local government areas (LGAs) to submit a two-year audit of their finances before they can access direct remittances.
The direct payment system, which was expected to begin last month, was postponed because many local councils failed to provide the necessary financial records. As a result, their share of ₦361.754 billion from the total distributable revenue of ₦1.424 trillion was routed through state governments instead.
Sources within the CBN noted that the bank has begun the process of opening accounts for the LGAs. These accounts will allow them to receive funds directly from Abuja, following the Supreme Court’s ruling on local government financial autonomy.
However, concerns remain about whether the councils will meet the audit requirement before the February meeting of the Federation Account Allocation Committee (FAAC), where allocations for the next round of payments will be determined.
A source at the CBN explained the bank’s position, saying, “We cannot just open fresh accounts for the LGAs when many of them have not operated as an independent government entity.” The official further noted that the audit report is necessary to ensure financial accountability and transparency.
Meanwhile, an Inter-Ministerial Committee, led by the Secretary to the Government of the Federation (SGF), is working on a framework to enforce the Supreme Court’s judgment on local government autonomy.
A member of the committee revealed that a template is being designed to authorize the Accountant General of the Federation (AGF) to directly allocate funds meant for essential services—such as primary education and healthcare—before disbursing the remaining funds to the LGAs.
