The landmark Supreme Court ruling of July 11, 2024, declaring the financial autonomy of Nigeria’s 774 Local Government Areas (LGAs) and mandating direct disbursement of federal allocations to their accounts, has initiated a flurry of activity across the nation. LGAs have embarked on the process of establishing accounts with the Central Bank of Nigeria (CBN) in anticipation of receiving direct funding starting in January 2025, marking a significant shift in the financial landscape of local governance. This decision overturns the previous practice where state governors controlled LGA funds, a system often criticized for fostering opacity and hindering grassroots development. The Supreme Court deemed this practice unconstitutional, paving the way for enhanced local autonomy and potentially improved service delivery at the grassroots level.
The transition, however, is not without its challenges. While the Association of Local Governments of Nigeria (ALGON) has confirmed the ongoing account opening process with the CBN, logistical hurdles remain, especially in states lacking a physical CBN presence. This poses a practical problem for LGAs in these states, requiring alternative strategies to ensure seamless access to their allocated funds. Furthermore, despite the Supreme Court’s ruling six months prior, reports indicate that governors have continued to manage LGA funds, underscoring the ingrained nature of the previous system and the potential resistance to change. This highlights the need for robust implementation mechanisms and continuous monitoring to ensure full compliance with the court’s directive.
ALGON, playing a crucial role in facilitating this transition, has been actively engaging with various stakeholders, including state governors, finance commissioners, and the Attorney General of the Federation. These consultations aim to address concerns, streamline the implementation process, and ensure the long-term sustainability of the new financial framework. The focus extends beyond mere implementation to ensuring the enduring effectiveness of the new system. This proactive approach recognizes the importance of building a sustainable framework that safeguards against potential relapse into the old practices.
A key concern voiced by ALGON relates to the “gaps” within the Supreme Court’s judgment, which require clarification and resolution to ensure smooth implementation and prevent future disputes. These unspecified gaps could pertain to various aspects of the financial arrangement, such as specific disbursement mechanisms, auditing procedures, or dispute resolution processes. Addressing these gaps is crucial to building a robust and legally sound framework that supports the long-term financial autonomy of LGAs. The collaborative efforts between ALGON and other stakeholders reflect a commitment to building a comprehensive solution that addresses both the immediate logistical challenges and the long-term sustainability of the new system.
The transition to direct funding for LGAs holds the promise of empowering local communities and fostering more responsive governance. By having direct control over their finances, LGAs can prioritize local needs and implement projects tailored to their specific challenges and opportunities. This shift in financial control has the potential to significantly impact development at the grassroots level, driving improvements in critical areas such as infrastructure, education, healthcare, and social welfare. However, the successful realization of this potential hinges on the effective implementation of the new system and the sustained commitment of all stakeholders to upholding the principles of local autonomy.
The ongoing efforts to establish individual LGA accounts with the CBN represent a crucial step towards achieving true financial autonomy for local governments. While challenges remain, the collaborative approach adopted by ALGON, involving continuous engagement with relevant stakeholders and a focus on long-term sustainability, offers a promising path forward. The successful implementation of this new system holds the potential to transform local governance in Nigeria, empowering communities, enhancing accountability, and driving more effective and responsive service delivery at the grassroots level. The coming months will be crucial in determining the effectiveness of the transition and its ultimate impact on local development across the nation.
