2 weeks Ago By Abdulwahab Isa
Ahead of the commencement of direct funds disbursement to all the local governments in the country with effect from February. ABDULWAHAB ISA, writes that this financial autonomy would engender development. But he makes a case for regular tracking and audit of the allocation All things being equal, if assurances by the officials from the Office of the Accountant General of the Federation (OAGF) are credible, the 774 local government councils in Nigeria will have their monthly FAAC allocation disbursed directly to their vaults in the month of February.
This glad tiding development, if it happens, will unfreeze decades of the state’s fervent grip on local government councils’ finances. Of course, the battle that secured financial autonomy for the local government was a long-fought one. It involved the Supreme Court handing down a final ruling in the matter.
For years, governors, as chief executives of their respective states, leveraged the 1999 constitutional provision that created the State and Local Government Joint Account (SLGJA) to pilfer and plunder local government councils’ FAAC allocation. By the creation of SLGJA, FAAC allocations that were due to local government councils and states are pooled into one account for onward distribution by the states to the local government councils. A novel idea by every standard, state governors over time abused local government councils and state joint accounts.
State governors would allegedly withhold a large portion of the monthly FAAC allocation due to local government councils and release a meager portion that could barely pay for personnel wage bills. The much-anticipated developments expected to happen in the third-tier level of government never happened. Road to LG’s financial autonomy After years of back-and-forth push aimed at securing financial freedom for local government councils, the effort defied an amicable solution worked out by political gladiators.
Governors’ body language and actions do not align with amicable political solutions being sought. In 2022, Houses of Assemblies across Nigeria rejected nine constitutional amendment bills, including the proposed legislation for financial and administrative autonomy for local government councils. It was discerning to all that state assemblies toed their governors’ line, who exert considerable influence over legislative processes at the state level.
The rejected bills were part of the bills that the National Assembly transmitted to them for concurrence. The National Assembly had, in March 2022, voted on 68 bills aimed at further amending the 1999 Constitution. At the end of the exercise, 44 of the bills were approved by both the Senate and the House of Representatives and transmitted to the state assemblies for concurrence.
A simple majority of votes was required in at least two-thirds of state assemblies (24 out of 36) for the amendments to sail through, and the amendments that sailed through would then be sent to the president for assent. The opportunity was bungled. The federal government approached the court of law.
The Attorney General of the Federation, Lateef Fagbemi (SAN), filed a lawsuit on behalf of the Federal Government, seeking to grant full autonomy and direct funding to all 774 local government councils in the country. The AGF, in the suit predicated on 27 grounds, urged the apex court to issue an order prohibiting state governors from unilateral, arbitrary, and unlawful dissolution of democratically elected local government leaders. The Federal Government further contended that Nigeria, as a federation, is a creation of the 1999 Constitution with the President as the head of the federal executive arm of the federation and has sworn to uphold and give effect to the provisions of the Constitution.
The 36 state governments, through their attorneys general, filed a counterclaim, arguing that the Supreme Court lacked the jurisdiction to hear the case. They claimed that the AGF lacked the locus standi to institute the suit for the local governments. In an epoch ruling in 2024, the Supreme Court declared that it was unconstitutional for state governors to hold funds allocated for local government administrations.
The seven-man panel, in the judgment delivered by Justice Emmanuel Agim, declared that the 774 local government councils in the country should manage their funds themselves. The apex court held that the power of the government is portioned into three arms of government: the federal, the state, and the local government. The court further declared that a state government has no power to appoint a caretaker committee, and a local government council is only recognizable with a democratically elected government.
“A democratically elected local government is sacrosanct and non-negotiable,” the court said. The judgment held that the use of a caretaker committee amounts to the state government taking control of the local government and is in violation of the 1999 Constitution. The court ruled that state governments are perpetuating a dangerous trend by refusing to allow democratically elected local government councils to function, instead appointing their loyalists, who can only be removed by them.
The court stated that it is the local government that should receive and manage funds meant for local government. Justice Agim declared, “I hold that the state’s retention of the local government funds is unconstitutional. “Demands of justice require a progressive interpretation of the law.
It is the position of this court that the federation can pay LG allocations to the LGs directly or pay them through the states. “In this case, since paying them through states has not worked, justice of this case demands that LG allocations from the federation account should henceforth be paid directly to the LGs.” The judgment held that the local government council funds must be paid to only democratically elected local government councils, stating that “anything other than this will be taken as a gross misconduct.
” “A declaration that the state government has no power or control to keep the local government council money or funds.”. The Supreme Court’s unequivocal landslide judgment dealt a blow to the state governors’ penchant for pilfering local government councils’ resources from the federation purse.
Some states that hitherto had caretaker committees in the place of elected local government councils’ officials hurriedly fixed a date for conducting local government council elections as a condition for disbursement of FAAC allocation. New beginning The Supreme Court ruling didn’t get immediate compliance. The Secretary to the Government of the Federation (SGF), Senator George Akume, inaugurated an Inter-Ministerial Committee to enforce the Supreme Court judgment delivered.
The members of the committee comprise the Secretary to the Government of the Federation—Chairman; the Minister of Finance & Coordinating Minister of the Economy—Member; the Attorney General of the Federation & Minister of Justice—Member; the Minister of Budget & Economic Planning; the Accountant General of the Federation; the Governor; the Central Bank of Nigeria; the Permanent Secretary (Federal Ministry of Finance); the Chairman of the Revenue Mobilization Allocation & Fiscal Commission; the Representative of State Governors; and the representative of Local Governments. The committee’s primary goal was to ensure that local governments are granted full autonomy, allowing them to function effectively without interference from state governments. Allocation outlook in 2025 The 774 local government councils were billed to receive direct disbursement of their respective FAAC allocation in the month of January 2025, save for delay by council chairmen’s inability to conclude account opening procedures with the Central Bank of Nigeria.
The Federation Account Allocation Committee (FAAC) approved a total of N1.424 trillion being December 2024 revenue for sharing in January 2025. Of the N1.
424 trillion total distributable revenue, the federal government received a total sum of N451.193 billion, and the state governments received a total sum of N498.498 billion.
The Local Government Councils received a total sum of N361.754 billion, and a total sum of N113.477 billion (13% of mineral revenue) was shared with the benefiting states as derivation revenue.
Given the N361.754 billion due to local government councils in January, it is safe to conclude that the local government councils would have collected N4.3 trillion by the end of the year, all things being equal.
The N4.3 trillion, if sunk into local government development, would in no small way birth impressive development across Nigeria’s 774 local governments in the country. It gives an overview of local government councils allocation state governors had cleared through manipulation of SLGJA provision.
Account opening procedures hurdle The stage seemed set for direct disbursement of FAAC allocation to 774 local governments, with effect from January 2025. . Local government councils were required by law to open dedicated accounts with the Central Bank of Nigeria (CBN) for the direct disbursement of allocations to them from the Federation Account.
The National President, Bello Lawal Yandaki, said the opening of the account was critical to the implementation of the Supreme Court ruling on direct allocations to the councils. He said the apex bank was waiting for the federal government’s directive on the opening of the accounts. In addition, the Nigerian Financial Intelligence Unit (NFIU) is also required to monitor the utilization of the funds by the chairmen in conformity with the principles of transparency, accountability, and good governance, a source said.
For effective monitoring of local government funds, the federal government is said to have constituted a team of anti-corruption agents drawn from the Independent Corrupt Practices and other Related Offences Commission (ICPC) and the Economic and Financial Crimes Commission (EFCC) to prosecute council chairmen and other officials who indulge in corrupt practices. Yandaki, at a recent interview with reporters in Katsina, the capital of Katsina State, allayed fears over the delay in the disbursement of funds to the councils. He said there was no cause for alarm and attributed the delay to the failure of councils to submit necessary bank details to the Federation Accounts and Allocations Committee (FAAC) required for facilitating the payments.
He said, “The CBN is presently awaiting directives from the Federal Government to open local government accounts for the respective states, which can be done between 24 and 48 hours for each.’ “I am a member of the subcommittee that was set up to trash out contentious grey areas, and we have already met relevant stakeholders, including labor unions, local government chairmen, NULGE, and so on. “There’s a general agreement that the commencement of direct federal revenue allocations to LGs will be this January.
“Hopefully, we are just rounding off meetings and making submissions to the Federal Government for implementation, and there’s no set timeline, he said. An official of the government was optimistic that local government councils should have their January 2025 FAAC allocation ready in February, paid to their respective accounts with the CBN. According to him, while some local governments had finished with the bank account opening procedures with the CBN, a sizable number had yet to run through with their account opening procedures with the Central Bank.
Speaking in confidence with this medium, because he was not authorized to speak in detail about what transpired, he nevertheless expressed confidence that the next phase of FAAC disbursement (January allocation billed for disbursement next month, February) shall be done directly to the local government account. He said, This batch of disbursement (December shared in January) is gone. I’m sure they’re in the process of account opening, but they couldn’t complete it with the CBN.
All things being equal, they will get direct disbursement via a local government account open with the CBN next month disbursement. In the event that it didn’t happen, it’s their fault, not ours,” he added. The decision to have FAAC allocation disbursement go straight to each local government follows the Supreme Court’s July 11, 2024 landmark judgment that affirmed the financial autonomy of the country’s 774 local government areas.
Benefits and regular audit Nigerians believe that this direct release of funds will engender grassroots development. Comrade Ambali Akeem Olatunji, the President General, Nigeria Union of Local Government Employees (NULGE), is one of such who believe that the benefits are numerous. “It will give a new lease of life to Nigerian communities.
They will be able to ensure transformation of the grassroots and perform their constitutional duties. One, there will be a cleaner environment since they will carry regular refuse evacuation and disposal. They will be able to provide portable water for Nigerian communities, by sinking boreholes.
“Local governments will be alive to their responsibilities and open rural roads, bridging infrastructural gaps at the local government level and the impact of the financial autonomy would be seen within three months. “Also, we need to mobolise and conscientise Nigerians on local government administration so that we can return to the glorious years of the 70s and 80s, when local governments were functional; the era of DFRRI- Directorate of Food Roads and Rural Infrastructure of Ibrahim Babangida era. This will ensure total transformation at the local government level.
” A community leader in Ogun State, Eng. Adegboyega Adeleke also hailed the development, stating that it could translate to massive grassroots infrastructural development around the country. He said “Rural roads would be opened up and agric development will receive massive attention.
Agric extension services of the local government will come to life and the issue of food insecurity will be squarely addressed.” Adeleke, who is the Community Development Chairman in Obafemi-Owode Local Government added: “The councils can now perform their duties unencumbered as contained in the Nigerian Constitution. They can promote skill acquisition at the local level and will ensure our cemeteries and drainages are in good shape.
Rural roads can receive attention to facilitate the transportation of farm produce to the markets and businesses can boom at the local level.” The NULGE president quoted earlier , however, adds a caveat – he wants local government funds to be well-tracked while the procurement policy should be at the local government level in line with global best practices to monitor project wards and implementation. In a recent interview with Sunday Telegraph, he said: “The audit unit in the local government should be upgraded to a full-fledged department, to give power to the head of department to hire independent surveys, raise audit alarms and stem financial recklessness at the local government level.
“The Local Government Service Commission should be enshrined in the Constitution, that will create room for quality assurance, enhanced productivity, retirement and pensions at the local government. So that we will have a unified local government system in place.”.
