FG, State Settle on Temporary Framework for Local Govt Allocations

The Federal Government and state governors have reached a temporary agreement to delay the implementation of local government autonomy for three months, over concerns related to salary payments and the operational viability of the councils, The PUNCH reported on Monday.

This development means that the direct payment of allocations to the 774 local governments across Nigeria may not begin until October 2024. This delay follows a landmark Supreme Court ruling on July 11, 2024, which affirmed the financial autonomy of local governments and prohibited governors from controlling funds meant for these councils.

The Supreme Court directed the Accountant-General of the Federation to pay local government allocations directly into their accounts, declaring the practice of state governments withholding these funds as unconstitutional.

The issue of local government autonomy has been contentious. Under former President Muhammadu Buhari, the Nigerian Financial Intelligence Unit (NFIU) issued a regulation in June 2019 that banned transactions on State and Local Governments Joint Accounts, directing that funds be sent directly to local government accounts. It also limited cash withdrawals from these accounts to N500,000 per day. However, this regulation faced strong opposition from state governors, leading to its eventual suspension.

The status quo remained until May 2024, when the Attorney-General of the Federation, Lateef Fagbemi (SAN), filed a suit at the Supreme Court to reinforce local government autonomy, as guaranteed by the constitution. The suit challenged the practice of state governors dissolving democratically elected local government councils and appointing caretaker committees, which the federal government argued violated constitutional provisions.

The federal government also sought an injunction to prevent state governors from accessing or spending local government funds without a democratically elected local government system in place, arguing that the absence of such a system subverts the 1999 Constitution. The Supreme Court, after hearing the case in June 2024, delivered a unanimous judgment in favor of the federal government, affirming the financial independence of local governments.

This ruling has been widely praised by Nigerians, including local government chairmen, who see it as a positive step towards restructuring the country. While some governors expressed concerns, the Nigeria Governors’ Forum, represented by its chairman and Kwara State Governor AbdulRahman AbdulRazaq, acknowledged the ruling as a relief. Speaking to journalists after a meeting with President Bola Tinubu on July 12, AbdulRazaq stated, “The governors are happy with the devolution of power regarding local government autonomy. The public really doesn’t know how much states spend on bailing out local governments.”