State governors have ramped up efforts to block the direct disbursement of federal allocations to local government areas (LGAs), reigniting a debate over the implementation of the Supreme Court’s ruling on LGA autonomy.
During a meeting with President Bola Tinubu at the State House in Abuja last Tuesday, several governors expressed opposition to the proposal to channel LGA funds through the Central Bank of Nigeria (CBN). They cited concerns over debts allegedly owed by the councils, which they claim must be addressed before any new allocations are made.
The governors used the occasion of the Iftar dinner to press the President for a delay in the direct allocation plan and to discuss alternatives. Sources familiar with the meeting told Journalists that the governors were lobbying for the funds to be paid into commercial bank accounts instead of going through the CBN. They argued that if the funds were routed through the CBN, it would still be effectively under federal control, a situation they want to avoid.
One insider explained the situation: “The governors argued that if the allocation goes through the CBN, it would require approval from the Accountant-General, meaning the federal government would still have oversight. They want it to go through commercial banks to ensure more local control.” The outcome of the meeting remained unclear, though it was described as productive, with further negotiations expected.
The federal allocation to LGAs has long been a contentious issue, especially given the power struggle between state and local governments. In a landmark decision on July 11, 2024, the Supreme Court ruled in favor of fiscal autonomy for LGAs, mandating that federal funds be paid directly into the accounts of local governments, bypassing state governments entirely. This decision was seen as a major victory for local government autonomy, ensuring that state governments could no longer control the funds or appoint non-elected officials to run LGAs.
The ruling also stipulated that only democratically elected leaders could access these funds, thus eliminating the practice of state governors appointing caretaker committees. The court’s decision was a significant step toward ensuring financial accountability at the local level, but its implementation has faced numerous hurdles.
As part of the implementation, the CBN has been tasked with opening accounts for all 774 LGAs, and local government chairmen are required to submit audited accounts for a two-year period before funds are released. In February, the CBN began profiling local government chairmen and their signatories as part of the process.
However, the National Union of Local Government Employees (NULGE) and the Association of Local Governments of Nigeria (ALGON) have raised concerns about delays and complications in the process. ALGON Secretary-General Mohammed Abubakar warned that governors were pressuring the CBN to delay the process to address outstanding debts owed by the LGAs. Abubakar also expressed concerns about the possibility of the CBN using the funds to settle these debts, thereby undermining the financial autonomy that the Supreme Court ruling intended to establish.
Abubakar emphasized that any hasty implementation of the ruling could lead to mismanagement of LGA funds and urged for more stakeholder engagement before moving forward. He pointed out that local government chairmen had not been provided with adequate guidelines or information on how to engage with the CBN, and the process remained opaque.
As part of the broader efforts to ensure a smooth implementation of the ruling, Abubakar called for more consultation with relevant stakeholders, including ALGON, NULGE, and other experts in local government administration. He warned that without proper guidance and collaboration, the autonomy process could be disrupted, ultimately hurting the very councils it was intended to benefit.
The delay in the disbursement of LGA allocations has raised concerns about how local governments will function without access to these essential funds. Governors have been criticized for obstructing the autonomy process, but they argue that the debts and liabilities owed by many councils must be resolved before any new disbursements can occur. While the federal government and the CBN are working to resolve these issues, the delay in implementation continues to stir tensions between the state and federal authorities.
