A new data analysis by Dataphyte has revealed that despite the landmark Supreme Court ruling granting financial autonomy to Nigeria’s 774 local governments, a staggering N4.478 trillion in disbursed funds remains largely underutilized due to administrative bottlenecks and structural resistance.
The analysis, covering the period from July 2024 to June 2025, shows that while cumulative FAAC allocations to local government areas (LGAs) have surged, the intended impact on grassroots development—including healthcare, basic education, and infrastructure—remains largely unrealized.
The Financial Surge Since the implementation of financial autonomy, allocations to local councils have reached historic highs, driven by increased Value Added Tax (VAT) collections and exchange rate gains.
Comparative Growth: Total disbursements rose from N2.26 trillion (2022–2023) and N3.09 trillion (2023–2024) to the current N4.48 trillion (2024–2025).
Top Recipients: Lagos State LGAs dominated the allocation charts, with Alimosho (N29.3bn), Ajeromi/Ifelodun (N23.4bn), and Kosofe (N23.2bn) receiving the highest shares.
Lowest Recipients: Councils such as Ifedayo (Osun) and Bakassi (Cross River) recorded the lowest receipts, ranging between N3.48bn and N3.67bn.
Administrative Bottlenecks and “Invisible Barriers” One year after the Supreme Court barred state governors from controlling local funds, Dataphyte’s investigation highlights critical implementation failures:
Banking Gridlock: The Central Bank of Nigeria (CBN) and the Accountant-General of the Federation have faced difficulties in transitioning to direct payments. While most states have held elections, only Delta State has reportedly provided the full bank account details required for direct fund transmission for all its councils.
Audit Demands: The Association of Local Governments of Nigeria (ALGON) has raised concerns over new CBN requirements for two years of audited financial statements before accounts can be fully activated—a condition not explicitly stated in the Supreme Court judgment.
Electoral Delays: While 35 states have concluded local polls, political and legal disputes (most notably in Rivers State) have delayed the emergence of democratically elected councils in some regions, providing a pretext for continued state interference.
The Cost of Inaction Vahyala Kwaga, Group Head of Research at Dataphyte, warned that these delays have a direct, negative impact on the living standards of Nigerians. “The centralization of control from the state level does not reflect the realities of the LGAs. The non-release of proper funding limits service delivery and stifles administrative growth at the level where it is needed most,” Kwaga noted.
As trillions of naira sit in transition or remain subject to state-level management, calls are intensifying for the Federal Government and the CBN to streamline the account-opening process and ensure that local councils can finally exercise their constitutional right to financial independence.
