The Central Bank of Nigeria (CBN) has reportedly extended the deadline for the commencement of direct remittances of Federation Account proceeds to the country’s 774 local government areas (LGAs) until February.
This follows an earlier directive by the Federal Government that local councils should gain financial autonomy from January 2025.
However, the CBN was unable to process the payments, delaying the implementation of the policy.
According to sources, the apex bank had instructed all LGAs to conduct a comprehensive audit of their finances as a prerequisite for receiving direct allocations. However, many councils failed to meet the January deadline for this requirement.
Additionally, some local governments were yet to open accounts with the CBN, another key condition for the direct transfer of funds. As a result, LGAs did not receive their January allocations, even though the Federal Government and the 36 states had already been paid.
The Federal Government’s push for direct remittances to LGAs follows a Supreme Court ruling on July 11, 2024. The court declared it illegal for state governments to control local government funds, affirming that LGAs are an independent tier of government under the 1999 Constitution.
Furthermore, the judgment stipulated that only LGAs with democratically elected officials could receive allocations from the Federation Account. The ruling aimed to end years of alleged financial mismanagement, where state governors were accused of diverting funds meant for local governments.
Governors Resist “Hasty” Implementation
Despite the legal backing for financial autonomy, state governors have expressed concerns over what they perceive as the rushed implementation of the policy.
During a meeting with President Bola Tinubu on December 26, 2024, members of the Nigerian Governors Forum (NGF) argued that states and LGAs have ongoing joint projects, including road construction, agricultural initiatives, and security programmes.
President Tinubu, however, defended the decision, stating that it was made in good faith to strengthen local governance and improve service delivery at the grassroots level.
Unresolved Questions on Implementation
The CBN has yet to provide a clear explanation for the delay. When contacted, the bank’s Director of Communications, Hajiya Hakama Sidi Ali, promised to provide details but had not done so by press time.
With February now set as the new target, local councils across Nigeria remain in limbo, awaiting the long-promised financial autonomy that could reshape governance at the grassroots level.