State governors have intensified efforts to delay the disbursement of federal allocations directly to local government councils, challenging the implementation of the Supreme Court’s ruling on local government autonomy.
During a recent meeting with President Bola Tinubu at the State House, Abuja, some governors objected to channeling local government allocations through the Central Bank of Nigeria (CBN), citing outstanding multi-billion dollar debts allegedly incurred by the councils.
Presidency officials disclosed that the governors used the Iftar dinner as an opportunity to lobby the President and negotiate favorable terms regarding direct allocations to local governments.
“When the governors came on Monday for Iftar, they sought to meet the President, which they did on Tuesday afternoon. Some of the governors were with him for a long time and only left around past six that evening,” an insider revealed to The PUNCH.
According to another official, who spoke anonymously, the Federal Government insists that all local government funds should be paid directly into CBN accounts, but governors are resisting this move.
“The Federal Government wants the allocations paid to the CBN, and all local governments should open accounts with the apex bank. But the governors said no. They argue that if the money goes to the CBN, it would still be under federal control,” the source stated.
Instead, the governors are advocating for the funds to be deposited in commercial bank accounts, reportedly to ensure state-level oversight.
“One of the governors argued that if the CBN handles local government accounts, approval would be required from the Accountant-General, meaning the funds remain under federal oversight. The governors want the money in commercial banks, but the Federal Government is rejecting that option,” the source added.
Legal and Political Struggles Over Local Government Autonomy
The direct allocation of funds to local governments has been a longstanding issue, rooted in the power struggle between state and local governments.
On July 11, 2024, the Supreme Court delivered a landmark judgment affirming the financial autonomy of local governments. It ruled that federal allocations must be sent directly to local government accounts, bypassing state governors.
The ruling also mandated that only democratically elected local government administrations would be eligible to receive these funds. This provision aimed to end the widespread practice of state governors appointing caretaker committees to oversee local government administration.
Following the judgment, the CBN instructed all 774 local governments to submit two years’ worth of audited financial statements before funds could be disbursed. The apex bank also began opening accounts for local governments to enable direct transfers.
In February, the CBN announced it had started profiling local government chairmen and financial signatories as part of the financial autonomy process.
However, reports indicate that some governors have pressured the CBN to delay account openings for local governments, with claims of non-compliance with auditing requirements.
Governors Cite Local Government Debt as a Roadblock
The National Union of Local Government Employees (NULGE) has accused some state governors of working behind the scenes to block the Supreme Court’s decision.
Additionally, the Association of Local Governments of Nigeria (ALGON) has raised concerns that governors are using local government debts as a justification to postpone the implementation of financial autonomy.
ALGON’s Secretary-General, Mohammed Abubakar, disclosed that the multi-billion dollar liabilities allegedly incurred on behalf of local governments have become a key issue in discussions between governors and federal officials.
“The Federal Government also has its challenges. When I engaged the FG team, they said the governors were coming up with different excuses, claiming liabilities incurred in the name of local governments. These must be properly itemized and balanced,” Abubakar stated in a chat with The PUNCH.
He warned that governors might use these debts as a means to divert local government funds, particularly if the Supreme Court ruling is enforced without proper safeguards.
“If not handled carefully, local government funds might end up in the hands of people claiming to be settling debts, and many local government administrations don’t even know how these debts were incurred,” he warned.
Abubakar also revealed that the CBN is currently facing multiple lawsuits from consultants claiming to have worked for local governments.
“Many so-called consultants have obtained judgments and garnishee orders against the CBN, seeking payment for past contracts with local governments. If direct allocation is implemented, these funds could be at risk,” he cautioned.
He urged local government chairmen to work diplomatically with state governors to avoid friction over financial autonomy.
“ALGON represents the 774 LGAs, but local government chairmen must also engage their governors and assure them that autonomy won’t harm their relationship or state-level operations,” Abubakar advised.
Call for Clear Implementation Guidelines
Abubakar criticized the lack of transparency in the Federal Government’s approach to implementing financial autonomy, stating that local government chairmen have not received clear guidelines on how to engage with the CBN.
“There’s no clarity on how LG chairmen should approach the CBN. What department is handling this? Everything should be made public,” he stated.
He urged the Attorney-General of the Federation (AGF) to play a more active role in coordinating the implementation process and engaging stakeholders.
“The AGF’s office should facilitate more consultations with ALGON, NULGE, and key local government stakeholders. Without this, autonomy implementation could become chaotic,” he added.
He also called for the Secretary to the Government of the Federation (SGF), George Akume, and other top officials to hold stakeholder meetings to discuss the best path forward.
“If stakeholders are fully involved, financial autonomy for local governments can take off smoothly,” Abubakar concluded.