State governors are taking new steps to postpone the enforcement of the Supreme Court’s decision regarding local government independence by challenging the direct allocation of federal funds to local councils.
Recently, certain governors convened with President Bola Tinubu at the State House in Abuja last Tuesday, seizing the chance to voice their apprehensions about the distribution of local government (LG) funds via the Central Bank of Nigeria (CBN). They contended that local councils have substantial debts requiring urgent attention.
Sources within the Presidency disclosed that the gathering, which occurred following an Iftar dinner, was part of attempts to negotiate a more advantageous funding distribution process for local government finances.
“When the governors gathered on Monday for Iftar, they requested an audience with the President, which they achieved on Tuesday afternoon. Some of the governors remained in discussion for an extended period, departing around past six in the evening,” an insider reported.
Another anonymous official remarked:
“They convened with the President to explore a resolution. They are opposed to the Federal Government maintaining control over the disbursement process. The government intends for local councils to establish accounts with the CBN, but the governors resist this. They are concerned that if the funds pass through the CBN, they will require sanction from the Accountant-General, effectively allowing the Federal Government to retain influence.”
Conversely, the governors advocate for allocations to be credited to commercial bank accounts instead of the CBN.
“One of the governors asserted that if the CBN oversees the accounts, it still places the Federal Government in a dominant position. They reject that notion. They favor the use of commercial banks,” another source noted.
This disagreement follows a Supreme Court ruling on July 11, 2024, affirming that local government allocations should be directly transferred to their accounts, circumventing state authorities.
The decision arose after the Federal Government initiated legal action to uphold the fiscal autonomy of local governments as specified in the 1999 Constitution (as amended).
The court also determined that only democratically elected local government officials are entitled to receive federal funds, declaring that caretaker committees appointed by governors are unconstitutional.
To enact the ruling, the CBN has mandated that all local governments provide a two-year financial audit before qualifying for funding. Additionally, it has begun assessing local government chairpersons and authorized signatories for their accounts.