The Association of Local Governments of Nigeria (ALGON) is advocating for a crucial amendment to the legal framework governing the Federal Allocation Committee (FAAC). This amendment seeks to grant local governments direct representation in the committee’s deliberations, particularly concerning the distribution of federally allocated revenues among the three tiers of government – federal, state, and local. Currently, local governments are excluded from these pivotal discussions, a situation ALGON deems unfair and detrimental to effective local governance. The Secretary-General of ALGON, Muhammed Abubakar, has emphasized the necessity of this legal change, asserting the right of local government chairmen to participate in decisions that directly impact their financial resources and, consequently, their ability to deliver essential services to their constituents. This call for inclusion reflects a broader push for greater local government autonomy and financial independence.
ALGON’s pursuit of direct representation in FAAC aligns with their broader efforts to secure greater financial autonomy for local governments. A key aspect of this autonomy is the ability of local governments to operate independent bank accounts, enabling them to receive allocations directly from FAAC, bypassing the state governments. This direct access to funds, ALGON argues, would enhance transparency and accountability in the management of local government finances. Significantly, ALGON has reported support from state governors and commissioners of finance for the establishment of these independent accounts. This apparent alignment of interests suggests a potential shift in the dynamics of intergovernmental fiscal relations in Nigeria, with a move towards empowering local governments with greater financial control.
However, the path to achieving this financial autonomy and direct FAAC representation faces significant obstacles. ALGON has highlighted resistance from certain quarters, particularly concerning their inclusion in FAAC meetings. According to ALGON, some state governors and commissioners of finance have expressed opposition to allowing local governments a seat at the table where revenue sharing is discussed. They cite the existing FAAC Act as justification, claiming it doesn’t provide for local government representation. This resistance underscores the complex power dynamics at play and the potential challenges in amending the FAAC Act. It raises questions about the willingness of state governments to relinquish control over the flow of funds to local governments, even with the backing of a Supreme Court ruling.
The legal basis for ALGON’s push for direct funding and FAAC inclusion was significantly strengthened by a landmark Supreme Court ruling on July 11, 2024. The court ordered that local government allocations from the federation account be paid directly to the councils. This ruling stemmed from a lawsuit filed by the Attorney-General of the Federation, Lateef Fagbemi (SAN), on behalf of the Federal Government, seeking to enhance the autonomy of all 774 local government councils in Nigeria by granting them direct access to their allocated funds. The Supreme Court’s decision, in theory, should have paved the way for greater financial independence for local governments and addressed the long-standing issue of state governments acting as intermediaries in the disbursement of funds.
Despite the clarity of the Supreme Court’s ruling, its implementation has faced significant hurdles. Nearly eight months after the judgment, local governments are still struggling to gain full control over their allocated funds. A major stumbling block has been the Central Bank of Nigeria’s (CBN) requirement that all 774 local governments submit at least two years of audited financial reports before they can open accounts to receive direct remittances. This requirement has effectively delayed the implementation of the Supreme Court’s order, leaving local governments in a precarious financial position and dependent on state governments. The CBN’s insistence on audited reports raises concerns about the capacity of some local governments to meet this requirement, potentially exacerbating existing inequalities in access to resources.
The situation surrounding local government autonomy and financial independence in Nigeria presents a complex interplay of legal pronouncements, bureaucratic hurdles, and political maneuvering. While the Supreme Court ruling provided a clear legal mandate for direct funding to local governments, its implementation has been hampered by bureaucratic requirements imposed by the CBN. Furthermore, the resistance from some state governors and commissioners of finance to local government representation in FAAC underscores the political dimension of this issue. ALGON’s persistent advocacy for legislative amendments and direct access to funds represents a critical struggle for greater local government autonomy and, ultimately, for more effective and accountable governance at the grassroots level. The outcome of this struggle will have significant implications for the delivery of essential services and the overall development of local communities across Nigeria.
