State governors have intensified efforts to halt the planned disbursement of federal allocations directly to local government councils, a move aimed at delaying the enforcement of the Supreme Court’s ruling on local government autonomy.
The renewed push was made during a meeting with President Bola Tinubu at the State House, Abuja, on Tuesday, where governors opposed the payment of LG allocations through the Central Bank of Nigeria (CBN). The governors cited unresolved multi-billion dollar debts allegedly incurred by the councils.
Presidency officials disclosed that the governors leveraged the opportunity of an Iftar dinner to negotiate with the President over the direct allocation matter, which has been subject to delays.
According to sources, the Federal Government is pushing for local governments to open accounts with the CBN to facilitate direct payments. However, governors argue that routing the funds through the CBN would effectively leave control in the hands of the Federal Government. Instead, they prefer the allocations be sent to commercial bank accounts.
The governors argue that having the CBN handle the accounts would require approval from the Accountant-General, thereby keeping the funds under federal control. Discussions at the meeting were described as positive, but a resolution has yet to be reached.
Background of the Legal Battle
On July 11, 2024, the Supreme Court issued a landmark judgment affirming the fiscal autonomy of local governments across the nation. It ruled that federal allocations to LGAs must be paid directly into their respective accounts, bypassing state governments.
The court declared it unconstitutional for state governments to receive and disburse LGA funds, ordering an immediate end to the indirect payment system. It further stipulated that only democratically elected LGA leaderships are eligible to receive federal allocations.
The judgment sought to end the common practice of state governors appointing caretaker committees or administrators to manage LGAs, which the court ruled as unconstitutional.
Implementation Challenges
The Central Bank of Nigeria has demanded that all LGAs submit a two-year account audit before funds can be disbursed. The CBN has also begun opening accounts for local governments to facilitate direct payments. However, the National Union of Local Government Employees has cautioned the CBN against yielding to pressure from governors to obstruct financial autonomy.
Meanwhile, the Association of Local Governments of Nigeria (ALGON) claimed it had not received formal communication from the apex bank regarding the account openings.
The former Accountant-General of the Federation, Oluwatoyin Madein, and the Attorney-General and Minister of Justice, Lateef Fagbemi, SAN, have reportedly been working on implementing the Supreme Court judgment but face challenges identifying LGAs with democratically elected officials.
Governors Cite Debt Concerns
Reports suggest that the Nigerian Governors Forum (NGF) is pushing for a delay in implementing direct allocations due to the multi-billion dollar debts allegedly incurred by governors in the name of the LGAs.
ALGON’s Secretary-General, Mohammed Abubakar, expressed concerns that the CBN might be under pressure from governors to divert local government funds to settle these debts. He warned that implementing the Supreme Court judgment without proper stakeholder engagement could worsen the situation for local governments.
Abubakar noted that local governments could be at risk of losing their funds to creditors with court judgments and garnishee orders against the CBN. Additionally, he raised concerns about the CBN’s engagement with multiple consultants, which could obstruct local governments’ access to their funds.
“Without proper coordination, the local governments may end up losing money as the debts involved are in billions of dollars,” Abubakar warned.
Presidential Position
President Tinubu has emphasized collaboration between the Federal Government and state governors to ensure effective grassroots development. During a meeting with Vice President Kashim Shettima and members of the Nigeria Governors Forum on January 1, 2025, Tinubu clarified that his administration is not in conflict with the governors over local government autonomy.
He urged the governors to work together to achieve development at the grassroots level, stating, “You control your local governments. Let’s do it together and ensure Nigeria is better off for it.”
