LG Financial Autonomy: One Year After, Suprene Court Judgment Yet To Be Implemented

 

Almost a year after, the judgment of the Supreme Court granting financial autonomy to the 774 Local Government Areas in the country is yet to be implemented.

The Attorney General of the Federation (AGF) and Minister of Justice, Prince Lateef Fagbemi (SAN) had said that there would be serious consequences for any state government that acted contrary to the judgment.

According to the AGF, the responsibility for implementing the judgment and ensuring direct allocation to local governments falls under the purview of the Office of the Accountant General of the Federation.

It is not clear, however, if the AGF has written to the Office of the Accountant General of the Federation directing the enforcement of the landmark judgment of the apex court.

The media aide to the AGF, Kamarudeen Ogundele, told the Nigerian Tribune that the matter of enforcement of the judgment has been overflogged. 

He said enquiries should be directed to different sources like the Nigerian Union of Local government Employees (NULGE) and the Ministry of Finance, adding that the Secretary to the Government of the Federation (SGF) is the chairman of the judgment implementation committee.

What many saw as a move to delay the implementation of the judgment was the introduction of a new condition by the Central Bank of Nigeria (CBN), requiring all the 774 local governments to provide at least two years of audited financial reports before they could receive their allocations directly.

The apex bank stated that the local governments must meet the requirement before opening accounts for direct remittance of their allocations.

The condition raised concerns among local government officials, who considered it as another bureaucratic hurdle to delay the implementation of financial autonomy.

However, the first attempt to delay the implementation of the judgment was the three-month moratorium granted to governors by the Federal Government in August 2024.

The Federal Government and state governors had agreed to the moratorium over concerns regarding its impact on salary payments, operational viability, and the conduct of local government elections, among other issues.

The Association of Local Government of Nigeria (ALGON), through its secretary general, Muhammed Abubakar, also blamed the non-implementation of the judgment on the AGF’s directive for the CBN to open uniform accounts for all local governments.

Meanwhile, the Federal High Court in Abuja has adjourned the hearing on ALGON’s suit challenging the federal and state governments till May 29.

In the suit marked FHC/ABJ/CS/353/2025, with the Registered Trustees of ALGON was listed as the plaintiff followed the Supreme Court judgment delivered in  2024, which affirmed financial autonomy for all the local governments..

The association is suing the attorney general of the Federation and Minister of Justice, the Federal Republic of Nigeria and 23 others.

Other defendants included the Minister of Finance, the Central Bank of Nigeria (CBN), state commissioners for finance, the Minister of Budget and National Planning, and the Accountant-General of the Federation. Also joined in the suit were the Revenue Mobilisation, Allocation and Fiscal Commission, the Nigerian National Petroleum Company Limited (NNPC), several commercial banks, and an individual named Bello Lawal.

ALGON is seeking, among other reliefs, the inclusion of all 774 local government councils as participants in Federation Account Allocation Committee (FAAC) meetings where national revenue sharing is deliberated.

The Registered Trustees of ALGON have asked the federal high court to declare that, following the July 11, 2024 Supreme Court judgment, the first to eighth defendants cannot disburse funds to the 774 local government councils through the ninth to 23rd defendants without prior approval or authorisation from the plaintiff.

ALGON alleged that the ninth to the 23 defendants, comprising several commercial banks, were positioning themselves as intermediaries or depositories for allocations meant for local governments, contrary to the apex court’s ruling.

In its preliminary objection, the CBN urged the court to dismiss the suit on the grounds of lack of jurisdiction, arguing that ALGON is not a constitutionally or statutorily recognised legal entity and was neither a party nor a beneficiary in the Supreme Court judgment.

The Federation Account Allocation Committee (FAAC), in its submission, contended that ALGON lacked the legal capacity to initiate the suit, thereby stripping the court of jurisdiction.

The state commissioners of finance also opposed ALGON’s claims, citing Section 6(1) of the Allocation of Revenue (Federation Account, etc.) Act, 1982, which defines FAAC’s statutory membership–excluding representatives of local government councils.

In response, ALGON filed a counter-affidavit asserting its legal status, stating that it was duly incorporated on May 10, 2002, with the mandate to promote and defend the autonomy and interests of local governments across Nigeria.

Amid the controversy, some governors allegedly resorted to intimidation and mounting pressure on their local government chairmen not to open the designated accounts to receive direct allocation.

A number of governors are said to be strongly opposed to the opening of CBN accounts, as it would deny them their long-standing access to local government funds.

As a result, they allegedly instructed some council chairmen not to open accounts with the apex bank.

It would be recalled that the AGF filed the suit at the Supreme Court on behalf of the Federal Government and the 774 local governments, praying the court to grant full autonomy and direct funding to local councils from their share of the federation account.

The court looked into the suit and thereafter granted the prayers, ordering that the allocations meant for local governments be paid directly to them and declared the practice of state governments retaining local government funds as unconstitutional.

The judgment, by a seven-man panel of the court, led by Justice Emmanuel Agim, also held that Nigeria has three arms of government—the federal, the state, and local government and that, no state government has the power to appoint a caretaker committee because a local government council is only recognisable with a democratically-elected government.

The court said the use of a caretaker committee amounted to a violation of the 1999 Constitution and further held that the state governments have been perpetuating a dangerous trend through their refusal to allow democratically elected local government councils in their states or through the appointment and removal of caretaker councils.

The apex court consequently ordered an “immediate compliance” with the judgment.

About a month after the judgment, the Federal Government inaugurated an Inter-Ministerial Committee to enforce the verdict, headed by Secretary to the Government of the Federation (SGF), Senator George Akume,

Members of the committee include the SGF himself as Chairman, with other members as the Minister of Finance and Coordinating Minister of the Economy; Attorney General of the Federation; Minister of Budget and Economic Planning; Accountant General of the Federation; Governor, Central Bank of Nigeria; Permanent Secretary (Federal Ministry of Finance); Chairman, Revenue Mobilisation Allocation & Fiscal Commission (RMAFC); representative of state governors and representative of local governments.

The committee met for months, and its undisclosed report was further handed over to a review panel, which also submitted a report.

It is, however, surprising that months after the apex court’s judgment for immediate implementation, the verdict has not been enforced.