Nigerian Federal Government and State Governors Delay Local Government Financial Autonomy Implementation Until October

The Federal Government and state governors have agreed to delay the implementation of financial autonomy for Local Government Areas (LGAs) in Nigeria until October. This decision follows concerns about the potential impact on salary payments and the overall functioning of the councils.

Despite the Supreme Court’s ruling to grant financial autonomy to LGAs, the Local Governments are yet to receive their funds directly, a situation causing growing frustration.

As of July 2024, Local Governments had not been paid their allocated funds directly. At a meeting of the Federation Allocation Account Committee (FAAC), N337.019 billion was due to the LGAs but was not paid into their accounts as directed by the court. Instead, the funds were channeled through joint state accounts, prompting backlash from the Association of Local Governments of Nigeria (ALGON).

ALGON’s Frustration and Legal Threat

ALGON expressed its frustration over the delay, accusing state finance commissioners of colluding with governors to block the direct payment of funds to Local Governments. The association has threatened legal action against these commissioners if they continue to flout the Supreme Court’s order.

The body emphasized the urgency of enforcing financial autonomy, warning that further delays would disrupt local governance and public services.

On July 25, 2024, the Federal Government acknowledged the situation, with the Minister of Finance, Wale Edun, confirming that the direct payment of funds to Local Governments had not yet begun. Edun explained that several “practical impediments” were hindering the implementation of the court’s order. A committee had been set up to study the ruling and determine the best way forward.

Governor’s Concerns and State-Level Resistance

Many state governors have voiced concerns over the implications of the Supreme Court’s ruling. Oyo State Governor, Seyi Makinde, stressed the need for a “homegrown solution” to address the challenges posed by the court’s decision.

“The law is the law and when there is a conflict, yes, we should go to the court. But it behoves us to look for our own homegrown solutions that can ensure that we have transparency and that our people do not suffer,” he said.

Sources within the Nigeria Governors’ Forum (NGF) and the Federal Government, who spoke to The Punch, suggest that both parties are seeking a “political solution” to ease the tensions surrounding the Supreme Court’s judgment. A temporary three-month moratorium has been placed on the judgment, allowing LGA allocations to continue flowing through state-controlled joint accounts while a permanent solution is devised.

Governors’ Financial Burdens and Concerns Over Salary Payments

The financial autonomy ruling has sparked mixed reactions among state governors. Some see it as a relief, as it reduces their burden of augmenting LGA allocations to cover salaries for local government staff, primary school teachers, and health workers. However, there is growing concern that direct payment to LGAs could revive the challenges of the 1990s when teachers and other LGA workers were owed salaries for extended periods.

“Only a few local governments in Lagos, Rivers, Kano, and the Federal Capital Territory can comfortably cover their expenses using monthly FAAC allocations and internally generated revenue (IGR),” said a source close to the NGF.

For many other states, governors supplement LGA funds with state resources to ensure salaries are paid. There is now concern that with the new financial autonomy, LGAs might struggle to meet these obligations, leading to potential industrial action.

Practical Barriers to Implementation

Mrs. Anestina Iweh, Chairperson of the National Union of Local Government Employees (NULGE) in Akwa Ibom State, confirmed that the July allocation for LGAs was paid into state accounts, further frustrating the push for autonomy. According to Iweh, “The Federal Government does not have the account details of the 774 LGAs. They have not done anything, no procedure, no process, even up till date, to update the account details of the 774 LGAs.”

Without proper administrative updates, the Federal Government cannot fulfill the Supreme Court’s directive to pay funds directly into LGA accounts. Iweh emphasized that LGA workers cannot go without salaries while the government sorts out these procedural issues.

The Supreme Court Ruling and Its Implications

The Supreme Court’s July 2024 ruling marked a significant moment in the long-standing battle for Local Government financial autonomy. It declared that governors could no longer control funds meant for LGAs, directing the Accountant-General of the Federation to pay allocations directly into their accounts. This decision was celebrated as a victory for Local Government reform advocates, who have argued that financial independence is critical for effective governance and development at the grassroots level.

However, the ruling has exposed deeper systemic challenges in Nigeria’s intergovernmental financial arrangements. Many local councils have long been reliant on state governments for additional funding, raising concerns about whether financial autonomy can be implemented without undermining service delivery and salaries.

The struggle for LGA’s financial autonomy dates back several years. In 2019, under former President Muhammadu Buhari, the Nigerian Financial Intelligence Unit (NFIU) introduced regulations aimed at protecting Local Government funds from state government interference. These regulations included a ban on state withdrawals from LGA accounts exceeding certain thresholds. However, the Nigerian Governors’ Forum resisted the policy, and the NFIU’s regulations were eventually weakened.

Despite this setback, the push for autonomy has remained strong, with many arguing that direct control of funds would enhance transparency and efficiency at the local level.