State governors are making fresh moves to delay the implementation of the Supreme Court ruling on local government autonomy by opposing the direct disbursement of federal allocations to local councils.
Some governors met with President Bola Ahmed Tinubu at the State House in Abuja last Tuesday, using the opportunity to express their concerns about paying local government (LG) allocations through the Central Bank of Nigeria (CBN).
They argued that local councils have multi-billion-dollar debts that need to be addressed first.
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Presidency sources revealed that the meeting, which took place after an Iftar dinner, was part of efforts to negotiate a more favourable disbursement process for LG funds.
“When the governors came on Monday for Iftar, they sought to meet the President, which they did on Tuesday afternoon. Some of the governors stayed with him for a long time, leaving around past six in the evening,” an insider to The PUNCH.
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Another official, speaking anonymously, added; “They met with the President to find a solution. They don’t want the Federal Government to control the process. The government wants local councils to open accounts with the CBN, but the governors are against it. They fear that if the funds go through the CBN, they will need approval from the Accountant-General, which means the Federal Government will still have control.”
Instead, the governors are pushing for allocations to be deposited into commercial bank accounts rather than the CBN.
“One of the governors argued that if the CBN handles the accounts, it still puts the Federal Government in control. They don’t want that. They prefer using commercial banks,” another source stated.
The dispute follows a Supreme Court ruling on July 11, 2024, affirming that local government allocations must be paid directly to their accounts, bypassing state governments. The ruling came after the Federal Government sued to enforce the financial independence of LGs as outlined in the 1999 Constitution (as amended).
The court also ruled that only democratically elected local government leaders can receive federal allocations, declaring that caretaker committees appointed by governors are unconstitutional.
To implement the judgment, the CBN has mandated all local governments to submit a two-year account audit before receiving funds. It has also begun profiling local government chairmen and signatories to their accounts.
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Meanwhile, the Central Bank of Nigeria had mandated all LGAs to submit a two-year account audit before funds can be disbursed.
The CBN had also begun opening accounts for local governments to facilitate direct payments.
The apex bank in February announced that it had begun profiling local government chairmen and signatories to the bank accounts of the 774 local government areas as part of the process to implement financial autonomy.
The Director of Legal Services at the CBN, Kofo Salam-Alada, stated that this step was necessary to ensure financial accountability.
However, the National Union of Local Government Employees cautioned the CBN against aiding governors in obstructing financial autonomy, following reports that the bank had refused to open accounts for some councils due to alleged non-compliance with auditing requirements.
On its part, the Association of Local Governments of Nigeria said it had received no formal communication from the apex bank regarding the opening of accounts.
Nonetheless, direct payments to LGAs have faced resistance and logistical challenges nine months later.
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