State governors are making fresh efforts to stop the federal government from paying allocations directly to local government councils, despite a Supreme Court ruling granting them financial autonomy.
During a meeting with President Bola Tinubu at the State House in Abuja last Tuesday, some governors argued against transferring local government funds through the Central Bank of Nigeria (CBN). They cited concerns over multi-billion-dollar debts allegedly incurred by local councils.
A presidency official revealed that the meeting was part of an ongoing effort by governors to influence the implementation of the Supreme Court’s verdict on local government autonomy.
“When the governors came on Monday for Iftar, they requested a meeting with the President. Some of them met with him on Tuesday afternoon and were with him for a long time,” the source said.
Another government insider explained, “The federal government wants local government allocations to be paid directly into accounts opened with the CBN, but the governors are against this. They claim that if the money is handled by the CBN, it would still be under federal control.”
Governors Push for Commercial Bank Accounts
A source familiar with the discussions disclosed that governors prefer the funds to be transferred to commercial bank accounts instead.
“One of the governors argued that if the CBN manages the accounts, local governments would require approval from the Accountant-General, which means the federal government would still have control. They don’t want that; they prefer commercial banks,” the source said.
Although the exact outcome of the meeting remains unclear, officials indicated that the talks were “positive.” However, local governments have yet to receive their allocations, and it appears that disagreements over payment methods are causing the delay.
Supreme Court Ruling and the Push for Local Government Autonomy
The battle over local government funding intensified after the Supreme Court’s landmark ruling on July 11, 2024. The court ruled that federal allocations must go directly to local government accounts, bypassing state governments. The decision aimed to end the long-standing practice where state governors controlled local government funds.
The Supreme Court also ruled that only democratically elected local government officials should manage these funds, making it unconstitutional for governors to appoint caretaker committees to run local councils.
To implement this ruling, the CBN required all local governments to submit a two-year audit before funds could be disbursed. The bank also started opening accounts for all 774 local government areas to ensure direct payments.
However, the process has faced resistance. The National Union of Local Government Employees (NULGE) accused the CBN of allowing governors to obstruct the implementation of financial autonomy. The Association of Local Governments of Nigeria (ALGON) also reported that some councils had not been able to open accounts due to undisclosed requirements.
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Governors Cite Local Government Debts as Justification for Delay
Reports indicate that governors are attempting to delay direct allocations by citing outstanding debts incurred in the names of local governments. Speaking to The PUNCH, ALGON’s Secretary-General, Mohammed Abubakar, confirmed that governors are using local government liabilities as an excuse to slow the implementation of financial autonomy.
“The federal government is facing bottlenecks. The last time I engaged with the federal team, they said the governors were making excuses about liabilities in the names of local governments. There’s a need to properly itemize these debts and find a way to balance the situation,” Abubakar said.
He warned that local governments might lose access to their funds if the CBN is pressured into diverting allocations to settle debts.
He cautioned, “The governors are pressuring the CBN to use local government funds to pay off debts that the local councils may not even know about. If this happens, local governments may be worse off than before.”
Fears Over Mismanagement and Legal Issues
Abubakar also expressed concerns that local government funds could be mismanaged if financial autonomy is not implemented properly. He pointed out that court judgments and garnishee orders against the CBN could result in creditors seizing local government funds.
He revealed, “There is fear that CBN is in court with many so-called consultants who claim they worked for local governments through ALGON. If these consultants obtain court orders, local governments could lose billions of dollars.”
Additionally, he criticized the CBN for failing to provide clear guidelines on how local government chairmen should submit account details and verify signatories.
Abubakar said, “Our chairmen don’t have clear instructions on how to engage with the CBN. If this process is not properly managed, we might see more confusion and delays.”
Call for Stakeholder Engagement
To prevent mismanagement and ensure transparency, Abubakar urged the government to engage key stakeholders, including ALGON, NULGE, and financial experts.
He suggested, “The Attorney-General should coordinate this process properly. The Secretary to the Government of the Federation, George Akume, should involve all relevant stakeholders in discussions on how to implement the Supreme Court ruling effectively.”
While President Tinubu has stated that his administration is not in conflict with state governors over local government autonomy, he emphasized the need for collaboration.
Tinubu said during a New Year visit from the Nigeria Governors Forum, “We need to work together to ensure development at the grassroots level. Nobody is taking control away from you, but we must ensure the right thing is done.”
For now, the fate of local government autonomy remains uncertain as negotiations between the federal government and governors continue.