Emmanuel Ochayi
Local government areas (LGAs) across Nigeria have encountered a major hurdle in receiving their monthly allocations directly from the federation accounts. Despite gaining financial autonomy through a Supreme Court ruling in July 2024, many LGAs failed to meet the Central Bank of Nigeria’s (CBN) requirements, delaying the process.
The CBN mandated that each of the 774 local councils submit a two-year financial audit before their accounts could be opened for direct fund transfers. As a result, their N361.754 billion share from the total N1.424 trillion for January 2025 was routed through state governments instead of being directly allocated.
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A source at the CBN confirmed that the bank would not proceed with account openings unless the local governments provided their financial records.
“We cannot just open fresh accounts for the LGAs when many of them have not operated as an independent government entity,” the source said.
According to the source, the move aims to ensure financial accountability and prevent mismanagement of funds at the local level.
Government Taskforce Works on Enforcement Framework
To address the delay, an Inter-Ministerial Committee led by the Secretary to the Government of the Federation (SGF), George Akume, is working on a framework to enforce the Supreme Court’s ruling on local government autonomy.
A committee member disclosed that a new template is being developed to empower the Accountant General of the Federation (AGF) to allocate funds directly for essential services, such as primary education and healthcare, and transfer them to the relevant agencies.
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“The government is committed to ensuring full autonomy for the LGAs, but there must be accountability. We are working on a structure that will ensure funds are used for their intended purposes,” the committee member explained.
Uncertainty Over February Allocations
With the next allocation due in a few weeks, concerns are growing over whether local councils will be able to submit the required financial audits before the February Federation Account Allocation Committee (FAAC) meeting.
A senior official at the Ministry of Finance noted that failure to meet the CBN’s conditions could mean continued delays in direct allocations.
“The CBN has made it clear that local governments must comply with financial transparency requirements. If they fail to submit their audits, their allocations may still go through the states,” the official said.
CBN Begins Account Opening Process
Despite the challenges, the CBN has initiated the process of opening accounts for local governments. This step aligns with the financial autonomy granted by the Supreme Court. However, the process remains incomplete due to the missing financial audits.
A CBN representative emphasised that the goal is to ensure financial discipline.
“We are not against local government autonomy. What we want is a system where public funds are properly accounted for,” the representative stated.
State Governments Still Controlling LGA Funds
With the January allocation still passing through state governments, some analysts argue that local governments remain financially dependent despite the autonomy ruling.
A policy analyst, Dr. Emmanuel Ogundele, criticized the delay, saying, “The whole idea of local government autonomy is to remove the financial grip of state governors. If funds are still going through the states, then the autonomy is not yet fully in place.”
According to Ogundele, the financial autonomy of LGAs will only be effective when they have direct access to their funds without interference.
What Happens Next?
As the February FAAC meeting approaches, pressure is mounting on local councils to submit their financial audits and complete the account opening process.
The Federal Government and the CBN have maintained that autonomy will be implemented, but local governments must first meet financial accountability requirements.
For now, the fate of direct revenue allocation for LGAs remains uncertain, with financial audits being the key to unlocking their long-awaited autonomy.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
