Direct allocations to local governments stalled over lack of bank accounts

Plans to directly allocate revenue to Nigeria’s 774 local governments from the federation account have been delayed due to administrative shortcomings.

The local governments are entitled to a share of N361.754 billion from the N1.424 trillion allocated to the three tiers of government this month. However, the federal government’s plan to commence direct payment into local government accounts has been hindered by the councils’ failure to provide the required bank account details.

At the recently concluded January 2025 Federation Account Allocation Committee (FAAC) meeting in Abuja, it was revealed that many local governments had not opened the necessary accounts with the Central Bank of Nigeria (CBN), while those that did failed to submit their details for crediting as per The Nation.

“The structures are yet to be erected,” a source familiar with the matter disclosed. “Those that opened accounts with the CBN did not submit their details to FAAC, resulting in the delay. If this information is not ready, they will not be paid. But if they produce it, they will be paid.”

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Political interference and delays in local government elections in some states were also cited as contributing factors.

“The LGAs may have been handicapped by the maneuvering of state governments and the ongoing elections to elect local government officials recognised by law to spend the money,” the source explained.

FAAC officials expressed hope that the local governments would address these administrative issues by the end of January to allow them to receive their allocations.

The planned direct payments follow a July 2024 Supreme Court ruling granting local governments financial autonomy. The Federal Government subsequently instructed all councils to open CBN accounts to facilitate monthly disbursements from the federation account.