Fresh Hurdle for Local Governments as CBN Imposes New Audit Requirement on Federal Allocation
Fresh Hurdle for Local Governments as CBN Imposes New Audit Requirement on Federal Allocation
Local governments across Nigeria are facing a new challenge in accessing their monthly allocations directly from the Federation Account, as the Central Bank of Nigeria (CBN) now mandates a two-year financial audit before processing direct payments.
Initially, the direct disbursement of funds was set to begin last month. However, due to the failure of many local governments to submit the required financial records, their share of N361.754 billion from the N1.424 trillion distributable revenue was routed through state governments instead.
To facilitate the Supreme Court’s ruling in favor of local government financial autonomy, the CBN has started opening accounts for local councils. However, concerns persist over whether councils can meet the audit requirement before the February meeting of the Federation Account Allocation Committee (FAAC), where new disbursements will be finalized.
A CBN source highlighted the necessity of the audit process, stating, “We cannot just open fresh accounts for the LGAs when many of them have not operated as an independent government entity.”
Meanwhile, an Inter-Ministerial Committee, led by the Secretary to the Government of the Federation (SGF), is working on a framework to implement the Supreme Court’s decision. A committee member revealed that a template is being developed to enable the Accountant General of the Federation (AGF) to directly deduct and transfer funds meant for key services—such as primary education and healthcare—to the relevant agencies.
With the next round of allocations approaching, local governments must act swiftly to meet the new requirements or risk further delays in accessing their funds.
