In a landmark ruling on July 11, 2024, the Supreme Court, through a unanimous decision by a seven-member panel of justices, barred the governors of Nigeria’s 36 states from receiving, withholding, tampering with, or utilizing funds allocated to the local government areas. This decision fundamentally shifts the financial autonomy to the local governments, ensuring they have direct control over their allocated funds, a significant departure from the previous system where funds were disbursed through the state governments.
This ruling has elicited mixed reactions across the country. The presidency and several state governments have lauded the Supreme Court’s judgment, emphasizing that the previous arrangement was unjust, as local governments were only receiving a fraction of their entitled funds from the state governments. Conversely, some critics argue that this decision undermines the federalism concept practiced in Nigeria, suggesting that it disrupts the balance of power between state and local governments.
The Supreme Court justified its decision by declaring the state governments’ control over local government funds unconstitutional. It referenced Section 162 of the 1999 Constitution (as amended), which provides for the Distributable Pool Account. The relevant provisions concerning local government funds include:
- Section 162(3): “Any amount standing to the credit of the Federation Account shall be distributed among the Federal and State Governments and the local government councils in each State on such terms and in such manner as may be prescribed by the National Assembly.”
- Section 162(5): “The amount standing to the credit of local government councils in the Federation Account shall also be allocated to the States for the benefit of their local government councils on such terms and in such manner as may be prescribed by the National Assembly.”
- Section 162(6): “Each State shall maintain a special account to be called ‘the State Joint Local Government Account’ into which shall be paid all allocations to the local government councils of the State from the Federation Account and from the Government of the State.”
- Section 162(7): “Each State shall pay to local government councils in its area of jurisdiction such proportion of its total revenue on such terms and in such manner as may be prescribed by the National Assembly.”
- Section 162(8): “The amount standing to the credit of local government councils of a State shall be distributed among the local government councils of that State on such terms and in such manner as may be prescribed by the House of Assembly of the State.”
These constitutional provisions clearly mandate that local governments should have financial autonomy, yet the state governments have been controlling these funds, allegedly disbursing them at their discretion. Accusations from local governments have long highlighted the misuse and mis-allocation of these funds by state governors.
The Supreme Court’s ruling aims to rectify these issues by ensuring local governments receive their full financial entitlements directly, thereby promoting transparency and accountability. This decision marks a pivotal moment in Nigeria’s governance, reinforcing the autonomy of local governments and aiming to enhance their capacity to serve their communities effectively.
This judgment, while welcomed by many as a necessary reform, also underscores the ongoing debate about the structure and principles of federalism in Nigeria. The full impact of this decision will unfold in the coming months as local governments begin to exercise their newly affirmed financial independence.
REFERENCE: 1999 Constitution of the Federal Republic of Nigeria (as amended)