August 13, 2024
by Adedoja Adesoji
The Federal Government and State Governors may have reached a three-month agreement on implementing Local Government autonomy as reported by Punch newspaper.
According to Punch, the pause is due to concerns about its effects on salary payments and operational viability.
As a result, Local Governments may have to wait until October for the law to take effect and for direct payments into their accounts to commence.
On July 11, 2024, the Supreme Court made a landmark ruling affirming the financial autonomy of the 774 Local Governments in Nigeria, determining that governors no longer have control over funds designated for these councils.
The court also instructed the Accountant-General of the Federation to directly transfer LG allocations to their accounts, declaring the failure to remit funds by the 36 states as unconstitutional.
Under former President Muhammadu Buhari, a regulation from the Nigerian Financial Intelligence Unit, effective June 1, 2019, prohibited transactions from State and Local Governments Joint Accounts. Funds were to be directly deposited into local governments’ accounts, and cash withdrawals were limited to N500,000 per day, with penalties for non-compliance. The Nigerian Governors’ Forum opposed this regulation, leading to its eventual repeal.
This status quo persisted until May 2024 when the Attorney-General of the Federation, Lateef Fagbemi (SAN), filed a suit, SC/CV/343/2024, to reinforce local government autonomy as guaranteed by the constitution. The suit aimed to prevent governors from dissolving democratically elected local councils and creating caretaker committees, actions that breach constitutional provisions. The AGF contended that the constitution mandates a democratically elected local government system and excludes alternative governance structures.
The suit also sought to have Federation Account funds directly allocated to local governments, bypassing the disputed joint accounts managed by state governors. The Federal Government requested an injunction to prevent governors and their agents from receiving or spending LG funds in the absence of a democratically elected local government system, arguing that the governors’ failure to establish such a system undermines the 1999 Constitution. The Supreme Court heard the case on June 13, with state governments opposing the suit.
The Supreme Court’s ruling on July 11, 2024, confirmed the financial autonomy of Nigeria’s 774 local governments. The unanimous judgment by the seven-member panel upheld the federal government’s suit to enhance local governments’ independence.
Emmanuel Agim, a panel member, delivered the lead judgment, stating that local governments should receive their allocations directly from the Accountant-General of the Federation. He ruled that it is both illegal and unconstitutional for governors to withhold funds intended for local government areas.
Many Nigerians, including LG chairmen, praised the Supreme Court’s ruling as a positive move towards restructuring the country.
Despite some governors’ concerns, the Nigeria Governors’ Forum, through its chairman, Kwara State Governor AbdulRahman AbdulRazaq, welcomed the judgment as a relief from the financial burden on state governments.
AbdulRazaq told journalists after a meeting with President Bola Tinubu on July 12, “The governors are pleased with the decentralization of power regarding local government autonomy. The public is unaware of the extent to which states subsidize local governments.”
Over a month after the ruling, the Supreme Court’s order has yet to be implemented.
In July 2024, the Federation Allocation Account Committee disbursed a total of N1.354 trillion, with Local Governments receiving N337.019 billion.
During the July FAAC meeting, chaired by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, the allocations were divided as follows: the Federal Government received N459.776 billion, states got N461.979 billion, Local Governments received N337.019 billion, and oil-producing states received N95.598 billion as derivation (13 percent of mineral revenue).
Despite this, the Association of Local Governments of Nigeria (ALGON) has yet to see the direct payment of funds into LG accounts.
ALGON has accused state finance commissioners of conspiring with governors to obstruct the direct payments from the federation account to the LG accounts.
In a letter to the Chairman of the Forum of State Commissioners of Finance in Nigeria, dated July 30, 2024, and signed by its counsel, Mike Ozekhome (SAN), ALGON threatened to initiate contempt proceedings against the commissioners if they did not comply with the Supreme Court’s order.
Ozekhome indicated that ALGON’s enthusiasm over the Supreme Court decision had been undermined by the finance commissioners’ committee.
While another ALGON faction led by Aminu Maifata denied issuing a legal threat, Ozekhome maintained that he had been informed by ALGON’s Board of Trustees.
On July 25 the Federal Government had not yet begun direct payments to the 774 Local Governments.
Edun attributed the delay to procedural issues related to the Supreme Court’s ruling, which had not been fully communicated for proper implementation.
He mentioned that the process was still in its initial stages and that further steps would follow once the full details were received.
The minister noted that the Federal Government had not commenced direct payments due to “practical impediments” and revealed that a committee was established to assess the feasibility of the judgment.
These “practical impediments” were hindering the implementation of the Supreme Court ruling on LG autonomy, with concerns over its effect on salary payments and operational viability.
Oyo State Governor Seyi Makinde, who expressed concerns about the judgment, suggested seeking homegrown solutions to prevent negative impacts on the public.
“The law is the law, and while legal conflicts should be resolved in court, we must also seek local solutions to ensure transparency and prevent public suffering,” Makinde was quoted as saying.
Additionally, The PUNCH reported that ALGON’s National President, Aminu Mu’azu-Maifata, called for an increase in the monthly allocations to the 774 LGAs to support the new minimum wage.
At a recent press briefing in Lafia, Nasarawa State, Mu’azu-Maifata said, “Once the National Assembly enacts the new minimum wage law, every council chairman must comply. We are exploring ways to secure and harmonize resources to avoid defaults.”
Sources close to the NGF and the Federal Government told The PUNCH that both were seeking a political solution to address the Supreme Court ruling’s consequences.
“The initial step is a three-month moratorium, during which LG allocations will continue to be paid into joint accounts with the states while a permanent solution is developed to fulfill the Supreme Court’s objectives,” one source said.
The source added that governors welcomed the judgment as it would relieve them of the burden of augmenting LG allocations to pay local government staff and essential workers but were concerned about a return to the 1990s era of unpaid salaries.
The source also highlighted that only a few LGAs in Lagos, Rivers, Kano, and the Federal Capital Territory could manage expenses solely from FAAC allocations and internal revenue.
“The financial autonomy mandated by the Supreme Court is not as straightforward as it seems. Most LGAs rely on state funds to cover salaries, as primary school teachers and health workers are paid from joint accounts with the state,” the source noted.
Ozekhome told The PUNCH that he was unaware of any agreement regarding the delay in implementing LG autonomy and had not received information on the July allocation being sent to state finance commissioners.
He warned that any deviation from the Supreme Court’s ruling could have serious legal consequences and stated that no ultimatum had been issued for contempt proceedings against finance commissioners.
Attempts to reach the Attorney-General of the Federation, Lateef Fagbemi (SAN), and the Ministry of Finance for comments were unsuccessful as of the time of this report.
LGs Confirmation
Mrs. Anestina Iweh, Chairperson of the National Union of Local Government Employees in Akwa Ibom State, confirmed on Monday that the July allocations for the 774 LGAs were sent to state finance commissioners.
Iweh explained that the Federal Government did not yet have the account details of the 774 LGAs and had not updated these details for direct payments.
“The Federal Government lacks the account details of the 774 LGAs and has not undertaken any procedure to update them. We cannot let workers go without salaries, so funds must be allocated for this purpose,” Iweh said.
On the other hand, Dr. Wali Ahmed, Chairman of Kwami Local Government Area in Gombe State, defended the disbursement of the July allocation to commissioners, citing a 90-day window for implementing the judgment.
Ahmed confirmed that councils were instructed to update their account details with the Treasury Single Account.
In Plateau State, an anonymous LG official confirmed that the Federal Government had provided a three-month period before fully implementing the judgment.
“We have been informed that the Federal Government granted a 90-day period for implementation. As the period has not yet expired, there is no need for concern,” the source said.
The official added that in Plateau, LGs continue to receive their allocations without interference from the state government.
In Katsina State, all LG executive council members reportedly traveled to Abuja to follow up on LG autonomy issues.
Another Katsina LG chairman, who requested anonymity, confirmed that they were in Abuja to advocate for respect for the Supreme Court judgment and address issues related to allocations and tenure mandates.
Attempts to contact ALGON chairman Bello Kaita were unsuccessful.
Court Ruling Belated
In a different development, Adamawa State Finance Commissioner Mrs. Augustina Wandamihya criticized the Supreme Court ruling as “belated,” stating that local government autonomy had already been implemented in the state.
Wandamihya informed The PUNCH that Governor Ahmadu Fintiri had granted autonomy to the 21 local governments during his first term, allowing them to receive their Federal Government allocations directly.
