CBN Dragged To Court Over Transparency Issues In LG Fund Disbursements

CBN has been dragged to court over transparency issues in LG Fund Disbursements.

NaijaOnPoint Nigeria reports that the Socio-Economic Rights and Accountability Project (SERAP) has initiated legal action against the Central Bank of Nigeria (CBN) over its alleged refusal to provide transparency on the disbursement of federal allocations directly to Nigeria’s 774 Local Government Areas (LGAs), including those in Rivers State.

The lawsuit, filed at the Federal High Court in Lagos and registered as case number FHC/L/MSC/521/2025, seeks to compel the CBN to publicly disclose details of all direct payments made to each local government following a landmark Supreme Court ruling in 2024.

SERAP Demands Full Disclosure on Local Government Allocations

SERAP’s legal challenge stems from a July 2024 Supreme Court judgment mandating that funds from the Federation Account be directly allocated to democratically elected local councils. The court also ruled that state governors have no legal authority to intercept or manage these funds.

Represented by attorneys Kolawole Oluwadare and Oluwakemi Oni, SERAP argues that the CBN’s failure to disclose payment information undermines transparency, accountability, and constitutional governance. The organization insists that citizens have the right to access financial data concerning public funds.

“The Central Bank must act in line with the public interest by disclosing details of direct allocations to each of Nigeria’s 774 local governments,” the suit reads. “This is essential to monitor compliance with the Supreme Court ruling and ensure proper use of public resources.”

Governors Accused of Blocking Local Government Funding

SERAP accuses state governors of defying the Supreme Court’s directive by continuing to withhold or misappropriate local government allocations. The group warns that such actions erode the rule of law and threaten democratic governance.

“Governors who continue to control or divert local government funds are in contempt of the Supreme Court and endanger the constitutional balance of power,” SERAP said in its filing.

The organization maintains that the CBN is constitutionally obligated to uphold the autonomy of each tier of government by ensuring that funds are disbursed in accordance with the law.

Ensuring Compliance Ahead of 2027 Elections

As the 2027 general elections approach, SERAP is urging the judiciary to act swiftly to prevent any future manipulation of local government finances by state authorities.

“The persistent refusal of states to relinquish control over local government funds undermines democracy and disadvantages millions of Nigerians, particularly the poor,” the organization said.

SERAP warns that continued mismanagement or diversion of these funds could worsen poverty levels and weaken local governance structures.

Background: Supreme Court Ruling on Federation Account Disbursement

In 2024, the Federal Government, through the Attorney General of the Federation, filed a suit against all 36 state governors over the alleged hijacking of local government funds. The government called on the Supreme Court to rule that allocations from the Federation Account be paid directly to local governments—bypassing state governments entirely.

Following the ruling, the Supreme Court directed all LGAs across the country to open dedicated accounts with the Central Bank of Nigeria to receive funds directly.

SERAP’s Legal Position

SERAP insists that the CBN holds both constitutional and statutory responsibilities to ensure lawful governance by protecting the financial autonomy of local governments.

“The CBN has a legal duty to safeguard federal allocations and prevent any level of government from becoming dysfunctional or obsolete,” SERAP stated.

Through this lawsuit, SERAP aims to enforce judicial integrity, strengthen financial transparency, and protect local governance from executive overreach.