The Federal Government and state authorities are gearing up to implement direct revenue allocation to Nigeria’s 774 local governments, marking a significant milestone in the country’s push for financial autonomy at the grassroots level. The initiative, which takes effect this month, is the result of a Supreme Court judgment upholding local government financial independence.
A dedicated unit has been established within the Office of the Accountant-General of the Federation (OAGF) to manage and ensure the smooth disbursement of funds directly to local governments. According to sources at the OAGF, operational details for the direct allocation system will be a key topic at the first Federation Account Allocation Committee (FAAC) meeting for 2025, scheduled for Wednesday.
The new system, expected to begin full operation this month, is designed to eliminate the involvement of state governors in managing local government funds. It is part of efforts to ensure local governments can fully function autonomously, with funding directly from the Federation Account.
Sources revealed that most states are ready for the implementation, having met the federal requirement for local governments to be managed by democratically elected officials. The Federal Government’s intervention to ensure the swift implementation of the policy is expected to eliminate challenges related to governance at the local level.
Delta and Adamawa states, among others, have long supported the autonomy of local governments. In Delta, local councils have enjoyed control over their allocations for years, with additional financial support from the state government. Similarly, Adamawa’s local governments have operated with significant autonomy prior to the federal push.
In states like Plateau and Ogun, local governments have always had a free hand in managing their finances, with no interference from state governments. In some states, such as Abia, governors have already taken steps to establish financial systems like the Treasury Single Account (TSA) for their local councils.
The move follows a landmark Supreme Court decision in July 2024 that declared it unconstitutional for governors to withhold local government funds allocated from the Federation Account. The court ruled that local governments should receive their allocations directly from the Accountant-General’s office, a decision aimed at bolstering grassroots development.
This reform is a response to concerns raised by local governments over the withholding of funds by state governors, which has hindered their ability to execute projects and serve their communities. The federal government’s commitment to ensuring full implementation of this decision is expected to enhance the effectiveness of local governments and strengthen democratic governance at the grassroots level.
Governors have expressed concerns about the abrupt transition to financial autonomy, suggesting a gradual rollout, but the Federal Government has warned that states failing to comply will face penalties, including the denial of revenue allocation.
As Nigeria prepares for the full implementation of direct revenue allocation to local governments, it is expected that the policy will bring positive change to the country’s governance structure, ensuring greater accountability and efficiency in local administration.
