Local Governments Face New Bank Account Challenge: Implications and Solutions

Local governments nationwide are encountering a new obstacle in their attempt to obtain their monthly allotments straight from the Federation Accounts as Apex Bank requires two years' worth of audited LG accounts.

It was revealed yesterday that in order for the 774 local governments to directly return their allocations, they must first provide the Central Bank of Nigeria (CBN) with a thorough audit of their finances for a period of two years.

Originally set to start last month, the direct revenue disbursement had to be postponed at the last minute due to numerous municipalities' failure to provide the information needed to enable the direct payments.

Through the states, they were then given their portion of N361.754 billion from the N1.424 trillion in distributable revenue for the month.

In accordance with the financial autonomy that the federal government requested from the Supreme Court, the apex bank is currently in the process of creating accounts for the LGs so that they can receive their allocations directly from Abuja.

There were concerns yesterday regarding the LGs' capacity to deliver the two-year audit reports that the CBN requested prior to the February meeting of the Federation Account Allocation Committee (FAAC) in Abuja, where the allocations are made, even though the next allocation is due in a few weeks.

The Nation was informed by CBN sources that the bank was unable to open accounts for the LGAs until it had a complete picture of their present financial situation.

According to one of the insiders, "we cannot just open fresh accounts for the LGAs when many of them have not operated as an independent government entity."

The audit report was significant, according to the official.

The Secretary to the Government of the Federation (SGF) is leading an Inter-Ministerial Committee that is creating a framework to implement the Supreme Court's ruling on local government autonomy.

According to a Committee member, a template is being created that would allow the AGF to take money from the FAAC allotments allocated to LGAs for certain purposes, such as primary education, healthcare, and other constitutional duties, and then send it to the appropriate organizations.