The Central Bank of Nigeria (CBN) is now requiring local governments nationwide to provide two years of audited financial statements in order to receive their monthly allocations directly from the Federation Accounts.
Each of the 774 local governments must submit a comprehensive audit to the CBN as a condition for direct access to their funds. This process was initially set to begin last month but was postponed when many councils failed to deliver the required documentation. Consequently, their share of N361.754 billion from the total distributable revenue of N1.424 trillion was instead processed through the state governments.
The CBN is currently working on establishing accounts for these local governments to facilitate direct allocations from Abuja, which is part of the financial independence being pursued through a Supreme Court ruling by the federal government.
As the next allocation period approaches in a few weeks, there are concerns regarding the ability of local governments to complete the necessary two-year audits before the February Federation Account Allocation Committee (FAAC) meeting in Abuja. Sources within the CBN indicated that it cannot establish these accounts without a clear understanding of each local government’s financial health.
“We cannot simply create new accounts for local governments when many have not functioned as independent entities,” one source emphasized, highlighting the importance of the audit.
An Inter-Ministerial Committee, led by the Secretary to the Government of the Federation, is working on a framework to ensure compliance with the Supreme Court decision on local government autonomy. A committee member disclosed that a template is being created to allow the Accountant General of the Federation to directly deduct funds earmarked for essential services like primary education and healthcare from FAAC allocations and allocate them to the appropriate agencies.
