IMPLICATIONS OF DIRECT ALLOCATION FROM THE FEDERATION ACCOUNT COMMITTEE (FAAC) TO LOCAL GOVERNMENTS IN NIGERIA: CHALLENGES, OPPORTUNITIES, AND POLICY RECOMMENDATIONS

The study examined the implications of direct allocation from the Federal Account Allocation Committee (FAAC) to local governments in Nigeria, with specific reference to Akoko South West Local Government Area of Ondo State. Over the years, local governments have experienced financial dependence on state governments, leading to delays, mismanagement, and weakened autonomy. The introduction of direct FAAC allocations was designed to address these issues by ensuring prompt access to funds, promoting transparency, and strengthening grassroots governance. However, the system’s effectiveness remains uncertain, as persistent challenges such as corruption, poor accountability, and political interference continue to undermine local governance. This study, therefore, investigated whether direct FAAC allocations have truly enhanced financial autonomy, governance effectiveness, and service delivery at the local level. A descriptive survey research design was adopted for the study. Both purposive and simple random sampling techniques were employed to select the sample population. A total of 200 respondents were drawn from five selected communities within Akoko South West Local Government Area, with 40 respondents from each community. The major instrument for data collection was a structured questionnaire titled Federal Account Allocation Committee Questionnaire (FAACQ), validated by experts and analyzed using descriptive statistics to answer four research questions related to financial autonomy, governance efficiency, accountability, and policy implementation. The findings revealed that direct FAAC allocations significantly improved financial autonomy and administrative efficiency of local governments, with 96% of respondents agreeing or strongly agreeing to this assertion (grand mean = 3.52). Similarly, 94% affirmed that direct funding enhances service delivery, while 98%acknowledged that the system presents both opportunities and challenges concerning transparency and accountability. Although the reform promotes autonomy and responsiveness, issues such as weak oversight, limited capacity, and political interference remain major obstacles. The study concluded that direct FAAC allocations play a transformative role in enhancing fiscal decentralization and grassroots development. However, to maximize its benefits, local governments must institutionalize transparency, strengthen oversight mechanisms, build financial management capacity, and adopt digital systems for accountability. The study recommends that fiscal autonomy be legislatively protected and supported by strong governance frameworks to ensure sustainable local development.