Our reporter
In a bid to maintain influence over local government finances, Nigerian State governors have launched a fresh effort to delay the direct disbursement of federal allocations to local councils, despite a Supreme Court ruling affirming their financial autonomy.
Sources reveal that several governors met with President Bola Ahmed Tinubu at the State House in Abuja last Tuesday, following an Iftar dinner the previous evening. During the meeting, they voiced their opposition to the Federal Government’s plan to channel local government (LG) funds through the Central Bank of Nigeria (CBN), insisting that allocations should continue to be deposited in commercial banks.
Insiders disclosed that the governors raised concerns over the substantial debts owed by many local councils, arguing that these financial obligations should be settled before direct allocations take effect. “The governors prefer commercial banks because they fear that if the CBN manages the accounts, the Federal Government will retain control through the Accountant-General’s oversight,” a source close to the presidency explained.
The Supreme Court had ruled on 11 July 2024 that federal allocations must be paid directly to local government accounts, bypassing state governments. The ruling also declared that only democratically elected LG leaders are entitled to receive federal funds, rendering caretaker committees appointed by governors unconstitutional.
To implement the court’s decision, the CBN directed all local governments to submit a two-year account audit before receiving disbursements. The apex bank also began profiling local government chairmen and account signatories to facilitate direct payments.
However, the governors are pushing back against the reforms, seeking to retain their role in managing LG funds. One governor reportedly argued that using commercial banks would prevent the Federal Government from exerting undue control over the process.
Meanwhile, the National Union of Local Government Employees (NULGE) has warned the CBN against allegedly assisting governors in blocking financial autonomy. This follows reports that the CBN had refused to open accounts for certain councils due to their failure to meet audit requirements.
The Association of Local Governments of Nigeria (ALGON), on the other hand, expressed frustration, stating that it had not received formal communication from the CBN regarding the status of the new accounts.
Despite the court’s ruling, the implementation of direct payments to LGAs continues to face resistance and logistical hurdles, highlighting the ongoing power struggle between the federal and state governments over local government finances.
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