FAAC Disburses LG Funds to States, Explains Delay in Direct Transfers to Councils

The Federation Account Allocation Committee (FAAC) has disbursed local government funds to states, citing procedural challenges as the reason for delaying direct transfers to councils.

The Federation Account Allocation Committee (FAAC) has chosen not to directly distribute the statutory monthly allocations to the nation’s 774 local governments this month because they did not submit their required account details on time.

Instead, a source revealed that the councils’ January allocations will be distributed through the state governments.

Nonetheless, key agencies such as the Universal Basic Education Commission (UBEC) and Primary Health Centres (PHC) will obtain direct funding from the Federation Account.

In January, the FAAC has distributed a total of N860.252 billion to state governments, with N498.498 billion allocated for the states and N361.754 billion designated for local governments.

An unnamed FAAC official stated that the delay in distributing funds to local governments was caused by their inability to complete the necessary administrative procedures for transferring funds.

“The January funds were not directly allocated to the local governments; instead, they went into their respective state accounts. Once the relevant documents are submitted by these councils, they will receive their February allocations directly. Since the details for January weren’t provided on time, those funds have already been deposited into state accounts. If these councils can act quickly and finalize any outstanding requirements promptly, they’ll start receiving direct funding from next month onwards. This move will mark the beginning of greater autonomy for them in line with Bola Tinubu’s administration goals,” explained the official.

An additional FAAC representative mentioned that the Office of the Accountant-General of the Federation (OAGF), along with other stakeholders, is actively addressing delays in implementing the Supreme Court’s decision. “I understand that creating accounts has slowed down progress somewhat, but rest assured, the Federal Government is committed to ensuring local government autonomy becomes a reality. I can assure you things are progressing well,” said the official.

To address worries about governors possibly mismanaging local government funds, an Inter-Ministerial Committee headed by the Secretary to the Government of the Federation, Senator George Akume, is developing a framework to enforce a Supreme Court decision. An official stated that this plan will empower the Accountant-General of the Federation (AGF) to directly deduct and allocate funds intended for primary education, healthcare, and other local government responsibilities from FAAC allocations straight to relevant agencies.

The official explained that Local Government Areas (LGAs) have obligations such as providing counterpart funding for Universal Basic Education Commission (UBEC) primary schools, supporting health initiatives, and fulfilling other responsibilities requiring specific contributions. Ultimately, some of these funds will likely be deducted at the source and transferred to the relevant agencies.

The OAGF has been collaborating with state governments to assist local governments in creating a template that promotes transparency and accountability in fund utilization. Nevertheless, the progress of the committee led by Akume has faced setbacks due to ongoing budget defense activities and other essential government issues.

Despite this, the technical members of the committee continue to meet in order to finalize the template.

In May, Lateef Fagbemi (SAN), who serves as the Attorney-General of the Federation and Minister of Justice, filed a lawsuit with the Supreme Court aiming to achieve complete autonomy for local governments. He requested that the court intervene to stop governors from illegally disbanding democratically elected council officials and advocated for direct transferal of funds from the Federation Account directly to local government bodies.

Despite opposition from numerous governors, the Supreme Court issued a ruling on July 11, 2024, granting financial autonomy to local councils and establishing an important precedent for governance at the local level. This decision seeks to limit governors’ excessive control over funds allocated to local governments and enhance transparency in financial distributions.

To enforce the ruling, the Federal Government directed all local governments to establish dedicated accounts with the Central Bank of Nigeria (CBN) for receiving their monthly allocations directly, thereby bypassing state governments.

Addressing concerns about the delays in account setup, Bello Lawal Yandaki, national president of the Association of Local Governments of Nigeria (ALGON), reassured stakeholders last week that these setbacks resulted from procedural matters.

He mentioned, “The CBN is currently awaiting instructions from the Federal Government to open local government accounts for each state. This can be accomplished within 24 to 48 hours per account.” Yandaki further stated that once these accounts are active and all necessary information is provided, the disbursement process would begin immediately without any additional delays.