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News Flash: Supreme Court Stops Governors From Controlling LG Funds, Backs Direct Allocation


The Supreme Court of Nigeria delivered a groundbreaking judgement on Thursday, declaring that the practice of state governors withholding funds meant for local government administrations is unconstitutional.

The Court mandated that funds allocated to local government councils must be disbursed directly to them from the federation account, without passing through state governors.

The court cited Section 162 (4, 5, and 6) of the Constitution, emphasizing that it does not authorize the establishment of joint accounts for states and local government councils.

Justice Emmanuel Agim delivered the lead judgement, highlighting that the practice of state governments retaining these funds has persisted for over two decades, stifling the autonomy and functionality of local governments across the country.

The Federal Government filed the lawsuit against all 36 states of the federation through the Attorney-General of the Federation, Lateef Fagbemi.

The suit sought an order preventing governors from arbitrarily dissolving democratically elected councils.

Additionally, the Federal Government requested the apex court to authorize the direct transfer of funds from the federation account to local governments, as mandated by the Constitution.

Justice Agim underscored that the 774 local government councils in Nigeria should manage their funds independently, free from the control and interference of state authorities.

Calls for local government autonomy have gained momentum in recent months, echoing widespread concerns over the mismanagement and diversion of funds intended for grassroots development.

President Bola Tinubu and other prominent figures have voiced support for granting local governments greater autonomy.

In May, the Federal Government, through the Attorney-General of the Federation, Lateef Fagbemi, took legal action against the 36 state governors, accusing them of mishandling local government funds.

Currently, under the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), local governments receive 20.60% of the monthly revenue allocated from the Federation Account, which is disbursed through the Federation Account Allocation Committee (FAAC).

However, these funds have historically been paid into joint accounts operated by state governments, leading to allegations of financial misappropriation and hindering effective local governance.

The Attorney-General’s suit challenged the governors’ authority to arbitrarily dissolve democratically elected councils and sought judicial intervention to protect the constitutional rights of local governments.

The originating summons says, “That the Constitution of Nigeria recognizes federal, state and local governments as three tiers of government and that the three recognized tiers of government draw funds for their operation and functioning from the federation account created by the constitution.

“That by the provisions of the constitution, there must be a democratically elected local government system and that the constitution has not made provisions for any other systems of governance at the local government level other than the democratically elected local government system.

“That in the face of the clear provisions of the constitution, the governors have failed and refused to put in place a democratically elected local government system even where no state of emergency has been declared to warrant the suspension of democratic institutions in the state.

“That the failure of the governors to put democratically elected local government system in place is a deliberate subversion of the 1999 constitution which they and the president have sworn to uphold.

“That all efforts to make the governors comply with the dictates of the 1999 constitution in terms of putting in place a democratically elected local government system, has not yielded any result and that to continue to disburse funds from the federation account to governors for non-existing democratically elected local governments is to undermine the sanctity of the 1999 constitution.”

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