CBN Demands Two-Year Audited Accounts for Local Governments' Direct Allocation

Central Bank of Nigeria

Local governments across Nigeria are facing fresh challenges in their bid to receive direct allocations from the Federation Account, as the Central Bank of Nigeria (CBN) has mandated the submission of two years of audited financial reports before their accounts can be opened.

The direct remittance, initially scheduled to commence last month, was postponed after many of the 774 local government councils failed to provide the required financial details. As a result, their share of ₦361.754 billion from the ₦1.424 trillion distributable revenue was redirected through the state governments.

A source at the CBN confirmed that the delay was necessary to ensure financial transparency. “We cannot just open fresh accounts for the LGAs when many of them have not operated as independent government entities,” the official said.

With the next Federation Account Allocation Committee (FAAC) meeting scheduled for February, concerns have been raised over whether the local governments can meet the CBN’s deadline.

Meanwhile, an Inter-Ministerial Committee, led by the Secretary to the Government of the Federation (SGF), is working on enforcing the Supreme Court judgment on local government autonomy. A new framework is being developed to allow the Accountant General of the Federation (AGF) to deduct funds for essential services such as primary education and healthcare directly from local government allocations and transfer them to the relevant agencies.

The move is expected to enhance financial accountability and reduce state government interference in local government funds. However, with the CBN’s new requirements, compliance remains a major hurdle for many councils across the country.