The Federal Government and state governors have agreed to delay the implementation of financial autonomy for Local Governments until October.
This decision was made due to concerns about salary payments and the overall functioning of these local councils.
However, as of July 2024, Local Governments were still not receiving their funds directly. At a meeting of the Federation Allocation Account Committee (FAAC), where funds were distributed to all levels of government, the Local Governments’ share of N337.019 billion was not paid into their accounts as directed by the Supreme Court.
In reaction, the Association of Local Governments of Nigeria (ALGON) expressed frustration over the delay. They accused state finance commissioners of working with governors to block the direct payment of funds to Local Governments. The body also threatened legal action against these commissioners if they failed to comply with the Supreme Court’s ruling.
On July 25, the Federal Government eventually confirmed that the direct payment of funds to Local Governments had not yet started.
The Minister of Finance, Wale Edun, explained that there were still “practical impediments” to implementing the Supreme Court’s order. He mentioned that a committee had been formed to study the ruling and find a way to put it into practice
The implementation of the Supreme Court’s judgment on Local Government autonomy is being hindered by logistical obstacles.
Specifically, the Federal Government is said to be encountering difficulties in enforcing the ruling due to concerns about its potential effects on salary disbursements and the operational sustainability of Local Governments.
Governor Seyi Makinde of Oyo State had earlier voiced concerns about the judgment and urged for a homegrown approach to safeguard the welfare of the people.
“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 said.
According to multiple sources close to the Nigeria Governors’ Forum and the Federal Government, the Federal Government is currently facing a dilemma over how to move forward with enforcing the court ruling granting financial autonomy to 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 said.
He added, “The governors are happy that the judgment came eventually, as it would relieve them of the burden of having to augment monthly FAAC allocation of the LGs to be able to pay local government staff, primary school teachers, and primary health workers, among others.
“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 added, “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.
Mrs. Anestina Iweh, Chairperson of the National Union of Local Government Employees in Akwa Ibom State, confirmed on Monday that the July allocation for the 774 Local Government Areas was disbursed to the state commissioners of finance.
She said, “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.”
The Supreme Court had on July 11, 2024, ruled that governors could no longer control funds meant for Local Governments and directed the Accountant-General of the Federation to pay allocations directly to their accounts.
In 2019, under former President Muhammadu Buhari, the Nigerian Financial Intelligence Unit took steps to protect Local Government funds. They issued a regulation that banned state governments from withdrawing large sums from Local Government accounts.
The move was however met with resistance from the Nigerian Governors’ Forum, and the policy was eventually toned down.