Nigeria's 774 Local Governments Remain Underdeveloped Despite N5.5 Trillion FAAC Allocation in 2025
Investigations reveal widespread underdevelopment across Nigeria's local government areas despite receiving N5.5 trillion in federal allocations during 2025, exposing systemic governance failures and continued state-level interference in third-tier administration.
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Nigeria's 774 local government areas (LGAs) remain critically underdeveloped despite receiving N5.5 trillion in Federation Account Allocation Committee (FAAC) disbursements throughout 2025, according to investigations by This Day newspaper. The findings underscore persistent governance challenges at the country's third tier of government and raise questions about fund utilization, accountability mechanisms, and the constitutional autonomy of local administrations.
The N5.5 trillion allocation represents approximately 20.5% of total FAAC distributions for 2025, based on historical allocation patterns. However, field investigations across multiple states reveal minimal infrastructure development, deteriorating primary healthcare facilities, and inadequate basic education services at the grassroots level. This disconnect between resource availability and developmental outcomes points to systemic failures in fiscal management and governance structures.
State-Level Control Undermines Local Autonomy
According to This Day's investigation, state governors continue to exert control over local government finances, effectively "choking" the third tier of government despite constitutional provisions guaranteeing LGA autonomy. This practice, commonly referred to as the joint account system, allows state governments to intercept and manage local government funds through State-Local Government Joint Accounts, creating opportunities for diversion and misappropriation.
The Supreme Court's July 2024 landmark judgment affirming direct federal allocation to local governments has yet to translate into meaningful autonomy. Legal experts note that implementation remains inconsistent across states, with governors maintaining de facto control through various administrative mechanisms including the appointment of caretaker committees rather than elected local government chairmen.
Financial data from the Federation Account Allocation Committee shows monthly allocations to local governments averaged N458 billion throughout 2025, representing increases of 12-15% year-on-year due to improved oil revenue performance and naira devaluation effects on dollar-denominated receipts. Despite these enhanced allocations, infrastructure deficits persist across rural and semi-urban areas, with many LGAs unable to execute basic capital projects or maintain existing facilities.
Accountability Deficit and Weak Oversight
The absence of robust accountability frameworks at the local government level compounds the governance crisis. Most LGAs lack functional audit committees, transparent procurement processes, or citizen engagement mechanisms. The Office of the Auditor-General for Local Governments, where it exists, operates with limited capacity and faces political interference that undermines its effectiveness.
Civil society organizations have documented widespread irregularities including inflated contracts, ghost workers on local government payrolls, and non-execution of budgeted projects. The situation is exacerbated by low civic awareness and limited media coverage of local government affairs, creating an environment where mismanagement occurs with minimal public scrutiny or consequences.
Revenue generation capacity at the local level remains severely constrained, with most LGAs dependent on FAAC allocations for 85-95% of their total revenue. Internally Generated Revenue (IGR) collection is hampered by weak tax administration, limited economic activity in rural areas, and overlapping tax jurisdictions with state governments. This dependence on federal transfers without corresponding accountability mechanisms creates moral hazard and reduces incentives for prudent fiscal management.
Economic and Social Implications
The underdevelopment of local government areas carries significant economic costs for Africa's largest economy. Poor rural infrastructure constrains agricultural productivity, limits market access for smallholder farmers, and perpetuates poverty cycles in communities that house approximately 60% of Nigeria's estimated 220 million population. The World Bank estimates that inadequate local governance costs Nigeria 2-3 percentage points of potential GDP growth annually.
Primary healthcare delivery, constitutionally assigned to local governments, remains critically deficient. Maternal mortality rates in rural areas exceed 1,000 per 100,000 live births in several states, more than double the national average, according to health sector data. Similarly, basic education outcomes lag significantly, with many LGA-managed primary schools lacking qualified teachers, instructional materials, and functional infrastructure.
The persistent governance failures at the local level threaten Nigeria's decentralization agenda and broader development objectives. International development partners, including the United Nations Development Programme and the UK's Foreign, Commonwealth and Development Office, have identified local government reform as critical to achieving Sustainable Development Goals in Nigeria, particularly those related to poverty reduction, health, education, and infrastructure.
Pressure is mounting for comprehensive local government reform, including full implementation of financial autonomy, mandatory elections rather than appointed caretaker committees, strengthened audit mechanisms, and citizen participation in budget processes. However, political resistance from state governors, who benefit from the current system, remains a significant obstacle to meaningful change. The 2026 fiscal year will test whether federal authorities can enforce constitutional provisions and ensure that the N5.8-6.0 trillion projected for local government allocation translates into tangible grassroots development.