Supreme Court Orders FG To Pay Allocations Directly To LGAs

• The Supreme Court has mandated the federal government to allocate funds directly to local government councils, bypassing state governments to prevent fund mismanagement and corruption.
• The federal government, led by Attorney-General Lateef Fagbemi, filed the lawsuit against the 36 state governors in May 2024, seeking financial autonomy for the 774 local governments in Nigeria.
• This decision aims to enhance the financial independence of local governments, improve local governance, and ensure adherence to the constitutional requirement for democratically elected local government systems.

Supreme Court Orders FG To Pay Allocations Directly To LGAs

In a landmark judgment, the Supreme Court has mandated that the federal government of Nigeria must now allocate funds directly to local government councils from the federation account.

This decision, delivered by a seven-member panel of justices on Thursday, aims to curb the abuse of power by state governments, who have been accused of retaining and misusing funds meant for local government areas (LGAs).

Background of the Case

The federal government initiated the lawsuit against the governors of the 36 states of Nigeria in May 2024, seeking full autonomy for the country’s 774 local governments.

The case, marked SC/CV/343/2024, was spearheaded by Lateef Fagbemi, the Attorney-General of the Federation (AGF) and Minister of Justice.

The primary aim was to ensure that funds from the federation account are directly transferred to local governments, as stipulated by the constitution.

The suit was built on 27 grounds, with a focus on upholding the constitutional recognition of federal, state, and local governments as the three tiers of government in Nigeria. The originating summons stated:

“The constitution of Nigeria recognizes federal, states 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.”

The Supreme Court’s Ruling

The Supreme Court justices ruled in favor of the federal government, highlighting the persistent issue of state governments failing to comply with the constitutional requirement of establishing democratically elected local governments. The judgment emphasized:

“State governments have continued to abuse their powers by retaining and using the funds meant for LGAs.”

The ruling asserted that the direct disbursement of funds to local governments is necessary to uphold the sanctity of the 1999 Constitution, which mandates a democratically elected system at the local government level.

The federal government had argued that the current practice of disbursing funds to governors for non-existing or non-democratically elected local governments undermines constitutional principles.

Implications of the Judgment

The Supreme Court’s decision marks a significant shift in Nigeria’s fiscal federalism. By ensuring that funds are directly allocated to local governments, the judgment aims to enhance the financial independence and operational efficiency of LGAs. This move is expected to:

1. Curb Mismanagement: By bypassing state governments, the direct transfer of funds will reduce the opportunities for financial mismanagement and corruption at the state level.
2. Enhance Local Governance: Local governments will have more control over their finances, allowing for better planning and execution of development projects tailored to the needs of their communities.
3. Strengthen Democracy: The ruling reinforces the constitutional requirement for democratically elected local government systems, promoting greater political accountability and participation at the grassroots level.

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Reactions and Future Steps

The decision has been met with mixed reactions. Advocates for local government autonomy and good governance have praised the ruling, seeing it as a step towards stronger and more independent local governance. However, state governments and governors may resist the change, given the loss of financial control.

The federal government is expected to implement mechanisms to ensure compliance with the Supreme Court’s directive. This includes setting up direct transfer protocols and monitoring systems to oversee the proper utilization of funds by local governments.

The Supreme Court’s ruling to mandate direct fund allocations to local governments represents a pivotal moment in Nigeria’s governance structure. It aligns with the federal government’s broader objective of promoting transparency, accountability, and democratic governance at all levels.

As the country moves forward, the successful implementation of this judgment will be crucial in achieving the intended outcomes of improved local governance and development.