The PUNCH discovered on Monday that there may have been an agreement reached between the federal government and state governors to impose a three-month freeze on local government autonomy due to worries about how it would affect operational viability and salary payments. Due to this situation, Local Governments will not be able to execute the statute requiring direct payments into their separate accounts until October.
On July 11, 2024, the Supreme Court issued a historic decision upholding the 774 LGs’ financial independence and declaring that governors could no longer manage monies intended for the councils.
The supreme court ruled that the 36 states’ refusal to submit payments was illegal and ordered the Accountant-General of the Federation to pay LG allocations straight to their accounts.
The Nigerian Financial Intelligence Unit issued a directive under former President Muhammadu Buhari that forbade transactions on State and Local Government Joint Accounts and it went into effect on June 1, 2019.
Money was transferred straight into the local governments’ coffers. Additionally, it imposed fines on banks that disobeyed the daily cap of N500,000 on cash withdrawals from local government accounts.
The Nigerian Governors’ Forum, which represents the country’s governors, protested this rule, and ultimately the NFIU gave in.
The status quo persisted until May 2024, when the Attorney-General of the Federation, Lateef Fagbemi (SAN), filed a lawsuit at the Supreme Court under the case number SC/CV/343/2024 to strengthen the autonomy of the local government areas as guaranteed by the constitution.
The purpose of the lawsuit was to stop state governors from enacting caretaker committees and unilaterally dissolving democratically elected local government councils, which would have violated the constitution.
The AGF contended that the constitution requires a democratically elected local government system and forbids alternative forms of government.
The lawsuit further requested that local governments get monies directly from the Federation Account rather than through the allegedly illegal joint accounts run by state governors.
In addition, the federal government requested an injunction to prevent governors and their representatives from accepting or using local government funding in the absence of a system of locally elected administration.
It argued that the governors intentionally subverted the 1999 Constitution by failing to put in place such a mechanism. On June 13, the Supreme Court heard arguments from the parties involved. The state governments, represented by their various solicitors general, were against the lawsuit.
That served as the backdrop for the ruling on Thursday, July 11, 2024, by the Supreme Court, which upheld the financial independence of Nigeria’s 774 local governments. In a unanimous ruling, the seven-member Supreme Court maintained the federal government’s lawsuit to bolster local governments’ autonomy across the nation.
The court’s main judgement was delivered by panellist Emmanuel Agim, who concluded that the Accountant-General of the Federation should now be the direct source of allocations for local governments nationwide. He said that it is unlawful and unconstitutional for state governors to accept money intended for local government units and then withhold it from them.
Numerous Nigerians, including the LG chairmen, applauded the Supreme Court’s decision, characterising it as a positive move towards the restructuring of the nation. Despite the concerns expressed by a few governors, the Nigeria Governors’ Forum, represented by its chairman and governor of Kwara State, AbdulRahman AbdulRazaq, stated that the ruling relieved state governments of their financial burden.
AbdulRazaq, speaking to journalists after meeting President Bola Tinubu on July 12, a day after the judgment, said, “The governors are happy with the devolution of power regarding local government autonomy. The public really doesn’t know how much states spend on bailing out local governments.”
But it can be noted that the highest court’s direction had not been followed more than a month after the verdict.
LGs received N337.019 billion of the N1.354 trillion in total disbursements made by the Federation Allocation Account Committee as of July 2024.
The Federal Government received N459.776 billion of the total amount shared to the three tiers of government at the July meeting of the FAAC, which was chaired by Wale Edun, Minister of Finance and Coordinating Minister of the Economy.
The states received N461.979 billion, the LGs received N337.019 billion, and the oil-producing states received N95.598 billion as derivation (13 percent of mineral revenue).
Nevertheless, the Association of Local Governments of Nigeria waited in vain for the funds to be deposited into the LG accounts. The state finance commissioners were accused by the ALGON’s Incorporated Trustees of working with the governors to thwart the direct transfer of funds from the federation account to the accounts of the 774 LGs.
ALGON threatened to file a contempt case against the commissioners if they disobeyed the Supreme Court’s ruling in a letter dated July 30, 2024, sent to the Chairman of the Forum of State Commissioners of Finance in Nigeria and signed by its attorney, Mike Ozekhome (SAN).
In the letter, Ozekhome claimed that the finance commissioners committee had dampened his clients’ excitement at the ruling by the highest court. In spite of the fact that Aminu Maifata’s side of ALGON denied posing a legal threat against the commissioners’ committee, Ozekhome maintained that he received a briefing from the ALGON Board of Trustees through a letter signed by Mohammed Abubakar, the board’s secretary-general.
The Federal Government acknowledged that it has not yet started directly paying the 774 Local Government Areas their monthly allotments, according to a PUNCH story published on July 25.
Edun blamed the delay on the Supreme Court’s proceedings, which had not been relayed to the Attorney General of the Federation for appropriate review and execution.
He acknowledged that the process was still in its early phases and added that more actions would be made as soon as all the information was available.
A committee had been established by the FG to examine the viability of the ruling, the minister said, adding that the Federal Government had not yet started paying the relevant LGs directly because of certain “practical impediments.”
The committee assembled on Monday to discuss the “practical impediments” that were making it difficult to put the Supreme Court’s ruling on LG autonomy into effect. It has been revealed that the Federal Government encountered difficulties putting the decision on local government financial autonomy into practice because of worries about how it would affect operational viability and wage payments.
Concerned with the ruling, Oyo State Governor Seyi Makinde demanded a domestic remedy to make sure the populace was not harmed.
“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,” Makinde was quoted to have said.
Speaking exclusively to The PUNCH on Monday, a number of individuals close to the NGF and the federal government claimed that the federal government was at a loss on how to carry out the ruling regarding the financial autonomy of local government areas.
“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 told The PUNCH.
“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 conveyed the governors’ worries that a small number of local government units nationwide might genuinely endure and readily pay their debts with funds allocated by the FAAC and internally generated income.
“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,” he added.
Upon being contacted by Newsmen on Monday, Ozekhome stated that he had only come across the purported agreement between the federal government and the states to postpone the implementation of LG autonomy in newspaper articles.
He claimed that he did not receive this information from his client, ALGON. The constitutional attorney added that he was unaware that state finance commissioners had received the July allocation for LGs.
“If that were done, it would be a frontal attack on the valid and subsisting judgment of the apex court and there are serious legal consequences for such indiscretion,” Ozekhome said.
He clarified that ALGON had not issued a directive through his chambers to begin contempt proceedings against the financial commissioners of the 36 federation states for failing to pay the 774 LGs’ allocation right away.
Attempts to contact Lateef Fagbemi (SAN), the Minister of Justice and Attorney-General of the Federation, regarding the AGF’s stance on the LGs July allocation to state finance commissioners, in violation of the Supreme Court Judgement, were unsuccessful as of the time this report was filed. This was communicated through his spokesperson, Kamarudeen Ogundele. In addition, calls to Mohammed Manga, the Director of Press, at the Ministry of Finance’s line were unanswered, making it impossible to get a response.
Mrs. Anestina Iweh, the chairperson of the Akwa Ibom State chapter of the National Union of Local Government Employees, verified on Monday that the 774 LGAs’ July allocation had been forwarded to the state commissioners of finance in the corresponding states.
Speaking with one of a news correspondents in Uyo, the capital of Akwa Ibom State, Iweh stated that the commissioners received the allocation since the FG had not yet received the account details of the 774 LGAs.
“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.”
Nonetheless, Dr. Wali Ahmed, the Chairman of Gombe State’s Kwami Local Government Area, defended the commissioners’ receipt of the July allocation by pointing out that the ruling had a ninety-day window in which to be implemented. Ahmed affirmed that the councils had received instructions to update their Treasury Single Account account information.
Speaking in a telephone chat with one of our correspondents on the supposed illegality of disbursement to states’ accounts, Ahmed said, “They wrote a letter that within 90 days, all LG signatories should ensure they link their accounts with TSA. So, it’s not yet over.”
In Plateau State, an LG boss, who spoke on condition of anonymity, revealed that the FG allowed a three-month interval before the implementation of the verdict.
“Don’t forget that after the Supreme Court judgement, the Federal Government passed a circular giving a three-month window before the commencement of the implementation. As it is, the period has not elapsed and so there is no cause for alarm,” our source said.
“We at the local government areas are not complaining that our monthly allocations are still channeled through the state government. We receive the allocations due to us as LGs. I don’t know of other LGs but we in Plateau are receiving ours accordingly and the state government does not tamper with it.”
