Supreme Court Says It’s a Crime for Governors to Hold LGA Funds, Orders Direct Payments

The Supreme Court of Nigeria has declared it unconstitutional for state governors to withhold funds designated for Local Government Areas (LGAs), setting a precedent for financial autonomy at the local level. 

The ruling mandates that federal allocations be paid directly to LGAs, bypassing state administrations.

What this means

For over two decades, local governments in Nigeria have struggled under the financial control of state governors, a practice that has stifled their operational efficiency and autonomy. 

The Supreme Court’s judgment, delivered by Justice Emmanuel Agim, highlights a systemic abuse of power by state officials who have diverted funds meant for local development.

Justice Agim emphasized that the 774 local government councils across Nigeria should manage their funds independently. This decision comes after persistent calls for local government autonomy, supported by figures like President Bola Tinubu and various civic organizations.

Governors sued for lack of Compliance

The issue of LGA autonomy gained traction when the Federal Government, represented by Attorney-General Lateef Fagbemi, took the bold step of suing all 36 state governors for misappropriation of LGA funds. 

This lawsuit, filed under case number SC/CV/343/2024, was a significant move toward rectifying the longstanding mismanagement of funds meant for local development.

The current revenue allocation system in Nigeria assigns 52.68% to the Federal Government, 26.72% to state governments, and a mere 20.60% to local governments. The Supreme Court’s directive now ensures that the LGA portion is no longer routed through state-controlled joint accounts but is instead sent directly to the LGAs.

The Supreme Court’s decision is not just a ruling but a directive for immediate action. Justice Agim ordered that starting from the next fiscal cycle, all local government allocations from the Federation Account must be transferred directly to the respective LGAs. 

This ruling effectively cuts off the states’ access to these funds, forcing a reevaluation of state-local fiscal relationships.