State governors have ramped up efforts to prevent the direct disbursement of federal allocations to local governments, citing financial concerns and existing liabilities. Their opposition comes despite a Supreme Court ruling that granted financial autonomy to local government councils.
Last Tuesday, some governors met with President Bola Tinubu at the State House in Abuja, reportedly urging him to reconsider the planned direct payment of funds to local government accounts via the Central Bank of Nigeria (CBN). Sources familiar with the discussions noted that the governors argued that such a system would still place financial control in the hands of the federal government, an outcome they oppose.
A presidency official, who spoke anonymously, disclosed that the governors used an Iftar dinner gathering as an opportunity to lobby the president on the matter. “When the governors came on Monday for Iftar, they sought to meet the President, which they did on Tuesday afternoon. Some of the governors came to meet the President. They were there with him for long. They left around past six that evening,” the source stated.
Another insider explained that the governors are pushing for the funds to be sent to commercial banks instead of the CBN. They reportedly believe that placing the funds under the CBN’s control would still require oversight from the Accountant-General, making it an extension of federal government authority. “They finally met the President on Tuesday to try to find a solution. They are jostling for a favorable outcome,” the source added.
The Supreme Court’s ruling on July 11, 2024, mandated that local government allocations be paid directly to their accounts, bypassing state governments. The judgment was aimed at curbing the long-standing practice of governors controlling local government funds. The court also ruled that only democratically elected local government officials should receive these funds, thereby ending the practice of appointing caretaker committees.
Despite the ruling, the implementation has faced delays. The CBN previously instructed all local governments to submit a two-year account audit before receiving funds. It also announced in February that it had begun profiling local government chairmen and signatories to ensure financial transparency.
However, there have been reports that some state governors are pressuring the CBN to stall the process. The National Union of Local Government Employees (NULGE) has warned against any attempts to block financial autonomy, urging the CBN not to aid the governors in obstructing the directive. Meanwhile, the Association of Local Governments of Nigeria (ALGON) stated that it has not received any official communication from the apex bank regarding account openings.
Further complicating matters, the former Accountant-General of the Federation, Oluwatoyin Madein, and Attorney-General Lateef Fagbemi have reportedly been working on a framework for implementing the Supreme Court ruling. However, they are facing difficulties identifying local governments with democratically elected leadership, as many councils are still led by caretaker administrators.
In response to concerns over financial mismanagement, ALGON’s Secretary-General, Mohammed Abubakar, noted that the governors were raising issues about outstanding debts supposedly incurred by local governments. He warned that without proper oversight, there is a risk of local government funds being diverted to settle debts that the councils may not have been aware of.
“The Federal Government is also having its bottlenecks. The last time I engaged the FG team, it said the governors were also coming up with different excuses that they have some liabilities incurred in the name of local government. So all these things need to be properly itemized and there is a need to find a way to balance each other,” Abubakar said.
He further cautioned that if the implementation is handled carelessly, local government funds could be mismanaged, either through court judgments favoring creditors or via consultants claiming financial settlements. “There is this fear from our end that the CBN is in court with many so-called consultants, who have been working for local governments through ALGON,” he noted.
