State governors across Nigeria have launched a fresh campaign against the planned disbursement of federal allocations directly to local government councils. The move, which is aimed at delaying the implementation of a landmark Supreme Court ruling on local government autonomy, has sparked fresh negotiations between state leaders and the federal government.
During a meeting with President Bola Tinubu at the State House in Abuja last Tuesday, a group of governors raised concerns about the payment of Local Government Area (LGA) allocations through the Central Bank of Nigeria (CBN). They argued that such a move would not address the alleged multi-billion dollar debts incurred by the councils and would further limit the states’ control over their finances.
Presidency officials confirmed that the governors used the occasion of the Iftar dinner to lobby the President, renewing their push to have the disbursements made directly to the councils via commercial bank accounts, rather than through the CBN. The meeting, which took place after the Iftar event, lasted several hours, with governors engaging with the President in search of a solution to the matter.
According to an insider who was privy to the discussions, the governors expressed their concerns about the control the federal government would still maintain if the local government funds were routed through the CBN. They argued that the CBN, being an arm of the federal government, would still exercise influence over the allocation process, undermining the autonomy granted to local governments by the Supreme Court ruling.
Speaking on condition of anonymity, the official explained that the governors made their case to the President: “The Federal Government wants the allocations paid to the CBN, and all local government areas should open an account with the CBN. But the governors said no. They don’t want it that way. They said if the money goes to the CBN, it is as good as the Federal Government still controlling the whole thing.”
The controversy centers on the disbursement of federal allocations to local governments. For years, state governments have controlled the flow of funds to the local governments, often using the money for various purposes. In response to growing concerns over this practice, the Supreme Court ruled on July 11, 2024, that local governments should have fiscal autonomy. The court ordered that federal allocations to local governments must be paid directly into their respective accounts, bypassing the state governments entirely.
This ruling was a significant victory for the local governments, as it affirmed their right to control their financial resources. However, the decision has met with resistance from many state governors, who see it as a threat to their power and control over finances within their states. The governors’ opposition to the Supreme Court’s verdict is rooted in concerns over the economic implications of the ruling and the potential loss of authority over local government funds.
A source who was part of the discussions with President Tinubu revealed that the governors raised specific concerns regarding the role of the CBN in handling local government allocations. One of the governors reportedly argued that the involvement of the CBN would require approval from the Accountant-General, meaning the funds would still be under federal control, even though they are intended for local governments.
In response to the governors’ objections, the federal government has maintained that the CBN is simply the most secure and efficient channel for handling the disbursement of funds. However, the governors are adamant that using commercial banks for these transactions would ensure more independence for the local governments, reducing the federal government’s influence over local affairs.
The meeting between the governors and President Tinubu was described as “positive,” according to one official who attended the discussions. However, the official was unclear on the exact outcome of the talks. “They said the meeting was positive. But I don’t know what they agreed upon. It appears they are working with some officials to find a way out,” the official said.
Despite the optimistic tone, the key issue remains the withholding of local government allocations. Sources close to the matter indicated that the funds have not been disbursed yet, as the federal government and state governors continue to negotiate a solution. The delay in payments has led to frustration among local government councils, who are waiting for the funds to meet various obligations, including salaries and development projects.
The issue of local government funding has long been a contentious subject in Nigeria, with state governors and local governments often at odds over control of resources. Historically, state governments have exercised significant power over local government finances, using the funds for a range of purposes. The Supreme Court ruling, which seeks to give local governments greater financial independence, is seen as a game-changer in Nigeria’s governance structure.
The case for local government autonomy was brought to the forefront by the Federal Government, which filed a suit to enforce the fiscal autonomy of local governments as enshrined in the 1999 Constitution (as amended). The Supreme Court’s ruling in favor of local government autonomy was hailed as a major step towards strengthening Nigeria’s democracy, ensuring that local governments have the freedom to manage their own financial resources.
However, the ruling has encountered resistance from many governors, who argue that it could lead to a loss of control over local governments and their finances. They also point to the issue of outstanding debts incurred by local governments, which they believe must be addressed before any changes to the allocation system are made.
Despite these challenges, the federal government remains committed to implementing the Supreme Court’s ruling. The Attorney General of the Federation has expressed confidence that the matter will be resolved in a manner that respects the autonomy of local governments while addressing the concerns raised by the governors.
As negotiations continue, all eyes will be on the outcome of the discussions between the federal government and the governors. The next steps in this high-stakes political battle will likely determine how local government autonomy is implemented and whether the financial independence of local governments will finally be realized in Nigeria.
For now, the fate of local government allocations remains uncertain, with the ongoing debate between state governors and the federal government continuing to shape the future of local governance in Nigeria.
