STATE governors have launched a fresh push against the planned disbursement of federal allocation to the local government councils in a renewed bid to delay the implementation of the Supreme Court verdict on LGA autonomy.
Some of the governors, during a meeting with President Bola Tinubu at the State House, Abuja, last Tuesday, kicked against payment of the LG allocation through the Central Bank of Nigeria, citing the need to address the multi-billion dollar debts allegedly incurred by the councils.
Presidency officials said the governors used the opportunity of the Iftar dinner to lobby the President and renew negotiations on direct allocation to the councils, which has suffered delays.
“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,” one insider told this newspaper
Speaking on condition of anonymity because he was not authorised to speak on the matter, another official privy to the details, explained further, “They finally met the President on Tuesday to try to find a solution. They are jostling for a favourable outcome.
“What is happening are two things. 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.”
A source privy to Tinubu’s discussions with the governors revealed that the state executives wanted the disbursements sent to commercial bank accounts instead.
“One of the governors said that with the CBN handling the account, they would need approval from the Accountant-General. That means it is still under FG’s control, and they don’t want it that way. They want it to go to commercial banks. But the FG is saying no,” the source stated.
On the outcome of the meeting, the official revealed, “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. But the main thing is that the local government allocation was being withheld. It has not been paid. And it is because of this.”
Historically, the funding of local governments has long been a contentious issue, primarily due to the power dynamics between the state and local governments.
On July 11, 2024, the Supreme Court delivered a landmark judgment affirming the fiscal autonomy of local governments nationwide.
It ruled that federal allocations to the LGAs must be paid directly to their respective accounts, bypassing state governments.
This followed a suit filed by the Federal Government, which sought to enforce fiscal autonomy for LGAs as enshrined in the 1999 Constitution (as amended).
The Supreme Court emphasised that state governments receiving and disbursing LGA funds was unconstitutional and ordered an immediate end to the indirect payment system.
The judgment also included a provision that only democratically elected LGA leaderships are eligible to receive federal allocation.
The provision was introduced to address the widespread practice of state governors appointing caretaker committees or administrators to manage LGAs.
The court ruled that such appointed officials are unconstitutional and that only leaders elected through a democratic process can legitimately access and manage LGA funds.
Meanwhile, the Central Bank of Nigeria had mandated all LGAs to submit a two-year account audit before funds can be disbursed.
The CBN had also begun opening accounts for local governments to facilitate direct payments.
The apex bank in February announced that it had begun profiling local government chairmen and signatories to the bank accounts of the 774 local government areas as part of the process to implement financial autonomy.
The Director of Legal Services at the CBN, Kofo Salam-Alada, stated that this step was necessary to ensure financial accountability.
However, the National Union of Local Government Employees cautioned the CBN against aiding governors in obstructing financial autonomy, following reports that the bank had refused to open accounts for some councils due to alleged non-compliance with auditing requirements.
On its part, the Association of Local Governments of Nigeria said it had received no formal communication from the apex bank regarding the opening of accounts.
Nonetheless, direct payments to LGAs have faced resistance and logistical challenges nine months later.