Nearly a year after the Supreme Court delivered a landmark judgment granting financial autonomy to Nigeria’s 774 local government areas, implementation of the decision remains stalled, sparking frustration and uncertainty across the country.
The judgment, delivered on July 11, 2024, affirmed that local governments are constitutionally recognized as the third tier of government and ordered that allocations from the Federation Account be paid directly to them. The apex court declared the common practice by state governments of withholding or diverting local government funds unconstitutional.
Attorney General of the Federation (AGF) and Minister of Justice, Prince Lateef Fagbemi (SAN), had warned of serious consequences for any state that defied the court’s ruling. He emphasized that enforcement of the ruling fell under the purview of the Office of the Accountant General of the Federation.
However, it remains unclear whether the AGF has formally directed the Accountant General to commence direct disbursement of funds, raising concerns over the Federal Government’s commitment to upholding the court’s verdict.
Responding to inquiries, Kamarudeen Ogundele, media aide to the AGF, remarked that the issue had been “overflogged” and directed questions to other institutions, including the Nigerian Union of Local Government Employees (NULGE) and the Ministry of Finance. He also noted that the Secretary to the Government of the Federation (SGF) chairs the judgment implementation committee.
One major setback to implementation was the introduction of a new condition by the Central Bank of Nigeria (CBN), requiring all 774 local governments to provide at least two years of audited financial reports before opening accounts for direct remittance of their allocations. Local government officials have decried the condition as a bureaucratic bottleneck and a veiled tactic to delay financial autonomy.
This came after an initial three-month moratorium granted by the Federal Government to state governors in August 2024, following concerns over salary payments, administrative readiness, and the conduct of local elections.
The Association of Local Governments of Nigeria (ALGON) has also expressed frustration, blaming the AGF’s directive to the CBN to open uniform accounts for the delay. According to ALGON’s Secretary General, Muhammed Abubakar, the uniform account requirement undermines the spirit of the Supreme Court’s ruling.
To contest the delays and what it termed non-compliance by state governments, ALGON filed a suit at the Federal High Court in Abuja. The suit, marked FHC/ABJ/CS/353/2025 and set for hearing on May 29, names the AGF, the Federal Government, the Minister of Finance, the CBN, state commissioners of finance, and several other entities as defendants.
ALGON is seeking, among other reliefs, recognition of local governments as stakeholders in the Federation Account Allocation Committee (FAAC) meetings and a declaration that funds should not be disbursed through any intermediary, including commercial banks, without the association’s authorization.
ALGON alleged that several commercial banks and state officials continue to act as intermediaries for local government funds in defiance of the Supreme Court’s ruling. In response, the CBN filed a preliminary objection, arguing that ALGON lacks the legal standing to initiate the suit as it was not a party to the original Supreme Court case.
FAAC, in its defense, also maintained that ALGON has no statutory representation in the committee, referencing the 1982 Allocation of Revenue (Federation Account, etc.) Act. State commissioners of finance echoed this position.
ALGON, however, countered with documentation of its legal incorporation since May 10, 2002, asserting its mandate to advocate for the autonomy and interests of local governments nationwide.
Amid these legal and administrative roadblocks, reports have emerged of some state governors allegedly pressuring local government chairmen not to open accounts with the CBN, which would make them eligible for direct allocation. The governors are believed to oppose the ruling, which threatens their longstanding control over local government finances.
It will be recalled that the AGF had initially filed the case at the Supreme Court on behalf of the Federal Government and the 774 local councils. The court upheld the suit, stating unequivocally that local government funds must be disbursed directly and that the appointment of caretaker committees in place of democratically elected local councils is unconstitutional.
The judgment, delivered by a seven-member panel led by Justice Emmanuel Agim, described such practices by state governments as a “dangerous trend” and emphasized that local governments must be governed by elected officials, not appointed caretakers.
Following the judgment, the Federal Government set up an Inter-Ministerial Committee headed by SGF Senator George Akume to ensure compliance. Members of the committee included the Ministers of Finance, Justice, Budget and Economic Planning, the CBN Governor, the Accountant-General, and representatives of governors and local governments.
Despite months of deliberations and a follow-up report submitted by a review panel, the court’s order for “immediate compliance” has yet to be honored.
As the May 29 court hearing approaches, stakeholders await a decisive move that could finally activate the long-anticipated financial autonomy for Nigeria’s third tier of government.
