Despite a Supreme Court ruling in July 2024 ordering the Federal Government of Nigeria to begin paying local government allocations directly into the individual accounts of the 774 Local Government Councils (LGs), the directive remains unfulfilled. In a recent Federation Accounts Allocation Committee (FAAC) meeting held in Abuja, the government once again disbursed the September 2024 allocations into the states/LGs Joint Accounts, in defiance of the Supreme Court’s ruling.
Nigerians were initially led to believe that, following the judgment, local governments would receive their funds directly to promote autonomy and reduce the undue influence of state governments over their finances. However, the Federal Government cited operational issues as the reason for the delay, giving itself a three-month window to sort out these challenges. That window has now closed, and the payments continue to be routed through the joint accounts.
During the FAAC meeting, a total of N1.298 trillion was shared among the federal, state, and local governments for revenue generated in September 2024. This was a 7.9% increase from the previous month’s allocation of N1.203 trillion. The funds were divided as follows:
The Federal Government received N424.867 billion.
State Governments were allocated N453.724 billion.
Local Government Councils received N329.864 billion.
In addition, N90.415 billion, representing 13% of mineral revenue, was shared among states that benefit from derivation revenue.
The Supreme Court’s judgment was seen as a major victory for advocates of local government autonomy, who have long argued that direct access to funds would allow local councils to operate more effectively and independently. The joint account system has been criticized for allowing state governments to dominate local government finances, often leading to delays in payment and inadequate funding for local development.
However, three months after the court ruling, the Federal Government has not yet complied, raising concerns over its commitment to local government autonomy. The Office of the Accountant General of the Federation (OAGF), which disburses the funds, has provided no clear timeline for when the government will start making direct payments, despite the Supreme Court’s explicit directive.
Statutory revenue N124.716 billion, with the federal, state, and local governments receiving N43.037 billion, N21.829 billion, and N16.829 billion, respectively.
Value Added Tax (VAT) N543.518 billion, with the federal government receiving N81.528 billion, the states N271.759 billion, and the local councils N190.231 billion.
Electronic Money Transfer Levy (EMTL) N18.445 billion, distributed as N2.767 billion to the federal government, N9.222 billion to the states, and N6.456 billion to the local governments.
Exchange Difference revenue N462.191 billion, with the local governments receiving N85.448 billion of this share.
The meeting also saw the allocation of an augmentation fund of N150 billion, aimed at boosting the revenue of the three tiers of government. The local governments received N30.900 billion from this pool.
The failure to implement direct payments to local government accounts has sparked criticism from stakeholders who see it as a breach of constitutional and judicial authority. Many are now questioning whether the federal government is genuinely committed to implementing the court’s decision or merely delaying the process.
Local government councils are the closest tier of governance to the people and play a crucial role in grassroots development. Direct access to funds would empower these councils to invest in infrastructure, education, healthcare, and other essential services that directly impact communities.
With the allocation of billions in revenue, it remains to be seen whether the federal government will resolve the operational issues it claims are hindering the direct payment process or if this will continue to be a prolonged battle between different levels of government. In the meantime, local governments will continue to rely on the joint account system, which many argue hampers their ability to effectively govern and serve their constituents.