The Federal Government of Nigeria and state governors have reached an agreement to delay the implementation of financial autonomy for Local Governments (LGs) by three months. This decision, aimed at addressing concerns about salary payments and operational challenges, means that the direct transfer of funds to LG accounts will not commence until October 2024.
The agreement follows a significant Supreme Court ruling on July 11, 2024, which upheld the financial independence of Nigeria’s 774 Local Governments. The court ruled that state governors could no longer control funds meant for these councils, and directed that allocations be paid directly into the LG accounts by the Accountant-General of the Federation. The judgment was widely praised as a positive step towards restructuring governance in Nigeria.
The Supreme Court’s decision was the culmination of legal efforts initiated by the Attorney-General of the Federation, Lateef Fagbemi (SAN), who filed a suit in May 2024 to reinforce the autonomy of Local Governments as enshrined in the constitution. The suit also sought to prevent state governors from dissolving democratically elected local government councils and replacing them with caretaker committees, a practice deemed unconstitutional.
Under the administration of former President Muhammadu Buhari, the Nigerian Financial Intelligence Unit (NFIU) had already introduced a regulation in June 2019 that prohibited transactions on State and Local Governments Joint Accounts, directing funds directly to the LGs. This regulation also limited cash withdrawals from LG accounts to N500,000 per day, with penalties for non-compliance. However, the regulation faced opposition from state governors, leading to its eventual suspension.
Despite the Supreme Court’s ruling, state governors have expressed concerns about the practical implications of immediate LG autonomy. Following the court’s decision, the Nigeria Governors’ Forum, led by Kwara State Governor AbdulRahman AbdulRazaq, voiced relief that the judgment would ease the financial strain on state governments, which often had to bail out Local Governments.
Governor AbdulRazaq, speaking after a meeting with President Bola Tinubu on July 12, emphasized that the judgment was a welcome development for the governors, who had long shouldered the financial burden of supporting Local Governments. However, the delay in implementing the autonomy reflects ongoing negotiations and the need for a gradual transition to ensure that Local Governments can operate effectively under the new arrangement.
As the October deadline approaches, stakeholders will be watching closely to see how the Federal Government and state governors navigate the complexities of enforcing Local Government autonomy across the country.
