LG Financial Autonomy: Governors Lose Grip As Supreme Court Decides

The age-long battle between the State and Local Governments in Nigeria over the financial autonomy of the third tier of government which has as it were, subjected the councils to the whims and caprices of their respective State Governors is over with the State governors hitting the canvass after a protracted legal battle.

This follows a landmark judgement of the Supreme Court on Thursday, July 11, 2024, relying on section 162, sub-sections 4, 5 and 6, of the 1999 Nigerian constitution striped the State governors of their grip on the local government council funds, ordering direct payment to the councils from the federation account.

In its lead judgement read by Justice Emmanuel Agim, the apex court scolded the decades-long refusal of the state government on financial autonomy for local governments.

Justice Agim noted that the 774 local government councils in the country should manage their funds themselves.

He dismissed the preliminary objections of the defendants (state governors).

The apex court directed that Local Government allocations from the Federation Account should be paid directly to them henceforth, and not to state government coffers.

Justice Agim pointed out that the state governors’ retention of the monies meant for the Local Governments truncates the latter’s activities.

Justice Agim ordered the immediate compliance of the judgement, stating that no state government should be paid monies meant for Local Governments.

There are 774 local government areas in the country but the efficiency of the third tier of government has been hampered by the weight of some controlling and overbearing governors who have been accused of mismanaging funds meant for the administration of local governments.

In the last few months, calls for local government autonomy have increased in Nigeria. President Bola Tinubu also supported the calls. In May, the Federal Government, through the Attorney-General of the Federation (AGF), Lateef Fagbemi, sued the 36 state governors over alleged misconduct of local government funds.

Currently, the Federal Government gets 52.68%, and states get 26.72%. In comparison, LGs get 20.60% of the country’s monthly revenue allocated by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) which operates under the Presidency, and disbursed by the Federation Account Allocation Committee (FAAC).

Interestingly, LG funds are paid into a joint account operated by state governments and local governments in their domains.

In the suit filed by AGF, the Federal Government sought an order preventing the governors from arbitrarily dissolving democratically elected councils. The suit by the AGF was on 27 grounds.

The 36 state governors, defendants in the suit, opposed the AGF for instituting the case. But Justice Agim said the AGF has the right to institute the suit and protect the constitution.

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