Local governments across Nigeria are encountering new obstacles in their pursuit of financial autonomy, as the Central Bank of Nigeria (CBN) now requires each of the 774 councils to submit a comprehensive two-year audit of their finances before they can receive their monthly allocations directly from the Federation Accounts.
Initially, direct revenue disbursement was scheduled to commence last month. However, due to the failure of many local governments to provide the necessary financial details, the process was deferred, forcing their share of N361.754 billion from the N1.424 trillion distributable revenue to be routed through the states.
The CBN is currently in the process of opening accounts for local governments to enable them to receive their allocations directly from Abuja. However, concerns have emerged regarding the councils’ ability to meet the audit requirement before the next Federation Account Allocation Committee (FAAC) meeting in February.
Sources within the CBN stress that the bank cannot proceed with opening accounts without a clear financial status report from each local government. “We cannot just open fresh accounts for the LGAs when many of them have not operated as an independent government entity,” a CBN official stated.
To enforce the Supreme Court’s ruling on local government autonomy, an Inter-Ministerial Committee led by the Secretary to the Government of the Federation (SGF) is developing a framework to ensure compliance. As part of this process, a new template is being designed to empower the Accountant General of the Federation (AGF) to deduct funds designated for primary education, healthcare, and other essential services directly from local government FAAC allocations and transfer them to relevant agencies.
With the next FAAC disbursement due in a few weeks, the delay in fulfilling audit requirements raises concerns about whether local governments will be able to access their funds independently in time.
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