The Federal Government and state governors have jointly decided to postpone the enforcement of financial independence for Local Governments until October, citing worries regarding salary disbursements and the general operations of these community bodies.
In July 2024, Local Governments were still not receiving their allocated funds directly, despite the Supreme Court’s directive. During a Federation Allocation Account Committee (FAAC) meeting where funds were distributed to all government tiers, the Local Governments’ portion of N337.019 billion was not transferred into their accounts as mandated.
Responding to this, the Association of Local Governments of Nigeria (ALGON) voiced discontent over the delay, alleging that state finance commissioners were collaborating with governors to obstruct the direct transfer of funds to Local Governments.
The association also threatened legal action against these commissioners if they did not adhere to the Supreme Court’s order.
The direct payment of funds to Local Governments, as mandated by the Supreme Court, has not yet begun, confirmed by the Federal Government on July 25. Minister of Finance Wale Edun cited practical challenges hindering the implementation and mentioned the formation of a committee to address these issues and devise a plan for compliance.
The Federal Government is reportedly facing challenges in enforcing the court ruling because of worries about how it might impact salary payments and the overall functioning of Local Governments.
Governor Seyi Makinde of Oyo State had previously expressed apprehensions about the verdict and called for a locally tailored solution to protect the well-being of the populace.
Governor Makinde stated, “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. This is because when two elephants are fighting, it is the grass that will suffer.”
The Federal Government is currently in a quandary regarding the implementation of the court ruling that grants financial autonomy to Local Government Areas, as reported by sources closely associated with both the Nigeria Governors’ Forum and the Federal Government.
“From what I know from the Nigeria Governors’ Forum, the Federal Government and the states are looking for a political solution to manage the fallout of the Supreme Court judgment.
“The first step is the three-month moratorium on the judgment. For the next three months, the LG allocation will still be paid into the joint account with the respective states, while a permanent solution that will serve the objectives of financial autonomy as envisaged by the Supreme Court judgment is worked out,” one of the sources mentioned.
He further stated, “The governors are happy that the judgment came eventually, as it would relieve them of the burden of having to augment monthly FAAC allocation of the LGs to be able to pay local government staff, primary school teachers, and primary health workers, among others.
“However, they are apprehensive that we may go back to the early 1990 era when primary school teachers and other local government members of staff were owed salaries for an average of 12 to 24 months.”
The source added, “The issue of financial autonomy per the Supreme Court judgment is not as rosy as it looks. Only a few local governments in Lagos, Rivers, Kano, and the Federal Capital Territory can comfortably cover their expenses using only monthly FAAC allocations and their IGR.
“For other states, governors augment their allocation with state funds to be able to pay salaries. That is why the salary of primary school teachers and primary health workers, which are the responsibilities of LGs, is taken as first line charge through the joint account with the state.
“It is clear to both the Federal Government and the governors that there will be a problem with the Supreme Court judgment and the local governments will be rocked by industrial action by workers.”
On Monday, Mrs. Anestina Iweh, the Chairperson of the National Union of Local Government Employees in Akwa Ibom State, verified that the July allocation intended for the 774 Local Government Areas was distributed to the state finance commissioners.
She stated, “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.
“We can’t keep quiet and allow workers to stay without salaries, so money must come for salaries to be paid. If they are ready to act according to the Supreme Court judgement, they will get account details of the 774 LGAs and do the needful.”
On July 11, 2024, the Supreme Court issued a ruling prohibiting governors from managing funds allocated for Local Governments and instructed the Accountant-General of the Federation to transfer allocations directly to their accounts.
Back in 2019, during former President Muhammadu Buhari’s tenure, the Nigerian Financial Intelligence Unit acted to safeguard Local Government funds by implementing a regulation that prohibited state governments from making significant withdrawals from Local Government accounts.
Despite encountering opposition from the Nigerian Governors’ Forum, the policy was eventually softened.
