FG Reaches Three-month Agreement With Governors On LG Allocations

The Federal Government has reached an agreement with state governors over a three-month moratorium on Local Government autonomy.

This comes amid concerns arising from its impact on salary payments and operational viability.

The development means Local Governments may wait till October before the implementation of the law in the direct payment into their respective accounts.

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The Supreme Court, on July 11, 2024, gave a landmark judgment affirming the financial autonomy of the 774 LGs in the country and ruled that governors could no longer control funds meant for the councils.

The apex court also directed the Accountant-General of the Federation to pay LG allocations directly to their accounts, as it declared the non-remittance of funds by the 36 states unconstitutional.

Under former President Muhammadu Buhari, the Nigerian Financial Intelligence Unit issued a regulation, effective from June 1, 2019, which banned transactions on State and Local Governments Joint Accounts. Funds were sent directly to the accounts of the local governments.

It also limited cash withdrawals from local governments accounts to a maximum amount of N500,000 per day with penalties for banks that failed to comply.

The Nigerian governors under the aegis of the Nigerian Governors’ Forum kicked against this regulation and the NFIU eventually capitulated.

The status quo was maintained until May 2024 when the Attorney-General of the Federation, Lateef Fagbemi (SAN), filed suit marked SC/CV/343/2024 at the Supreme Court to strengthen the autonomy of the local government areas as guaranteed by the constitution.

It sought to prevent state governors from unilaterally dissolving democratically elected local government councils and establishing caretaker committees, actions that violate constitutional provisions.

The AGF argued that the constitution mandates a democratically elected local government system and does not allow alternative governance structures.

The suit also prayed that the funds from the Federation Account be channelled directly to local governments, bypassing the allegedly unlawful joint accounts managed by state governors.

The Federal Government also sought an injunction to stop governors and their agents from receiving or spending local government funds without a democratically elected local government system in place.

It contended that the governors’ failure to establish such a system constitutes a deliberate subversion of the 1999 Constitution.

The Supreme Court heard parties to the case on June 13, with the state governments, through their respective attorneys-general, opposing the suit.