The agreement between the Federal Government and state governors regarding a three-month moratorium on Local Government autonomy has been reached.
This development arises amidst concerns regarding the impact on salary disbursements and operational sustainability.
The implication of this agreement is that Local Governments may have to wait until October before the enforcement of the law for direct payment into their individual accounts.
In a landmark judgment on July 11, 2024, the Supreme Court affirmed the financial autonomy of the 774 Local Governments in the nation, asserting that governors are no longer permitted to control funds allocated to these councils.
Furthermore, the apex court instructed the Accountant-General of the Federation to transfer Local Government allocations directly to their accounts, while also deeming the failure of the 36 states to remit funds as unconstitutional.
During the tenure of former President Muhammadu Buhari, the Nigerian Financial Intelligence Unit introduced a regulation effective from June 1, 2019, prohibiting transactions on State and Local Governments Joint Accounts.
Funds were directed straight to the local governments’ accounts, with cash withdrawals limited to N500,000 per day, along with penalties for non-compliant banks. The regulation faced opposition from the Nigerian Governors’ Forum, eventually leading to the NFIU’s withdrawal.
The situation remained unchanged until May 2024 when the Attorney-General of the Federation, Lateef Fagbemi (SAN), filed a suit at the Supreme Court (marked SC/CV/343/2024) to bolster the autonomy of local government areas as guaranteed by the constitution. The lawsuit aimed to prevent state governors from unilaterally dissolving democratically elected local government councils and setting up caretaker committees, actions deemed unconstitutional. The AGF argued that the constitution mandates a democratically elected local government system and prohibits alternative governance structures.
The lawsuit also requested that funds from the Federation Account be directly allocated to local governments, bypassing joint accounts managed by state governors. The Federal Government also sought an injunction to prevent governors and their representatives from accessing or utilizing local government funds without a democratically elected local government system in operation, as this was viewed as a deliberate violation of the 1999 Constitution. The Supreme Court entertained arguments from all parties involved on June 13, with state governments, represented by their respective attorneys-general, opposing the lawsuit.
