On Thursday, the Supreme Court ruled that it is unconstitutional for state governors to withhold funds allocated to Local Government (LG) administrations. In the lead judgment delivered by Justice Emmanuel Agim, the court noted that state governments have been denying financial autonomy to local governments for over two decades. Justice Agim stated that local governments have stopped receiving their allocated funds from state governors who manage these funds on their behalf. He emphasized that the 774 local government councils in the country should manage their funds independently.
The court dismissed the preliminary objections raised by the state governors. Despite there being 774 local government areas, the efficiency of this third tier of government has been hindered by governors accused of mismanaging local government funds. In recent months, calls for local government autonomy have intensified in Nigeria, with President Bola Tinubu also expressing support. In May, the Federal Government, represented by the Attorney-General of the Federation (AGF) Lateef Fagbemi, sued the 36 state governors over the alleged mismanagement of local government funds.
Currently, the Federal Government receives 52.68% of the country's monthly revenue, states receive 26.72%, and local governments receive 20.60%, as allocated by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) and disbursed by the Federation Account Allocation Committee (FAAC). Local government funds are deposited into a joint account operated by state governments and local governments.
In the suit filed by the AGF, the Federal Government sought an order to prevent governors from arbitrarily dissolving democratically elected councils, listing 27 grounds for the suit. The state governors opposed the AGF's case. However, Justice Agim ruled that the AGF has the right to file the suit and uphold the constitution. The Supreme Court directed that local government allocations from the Federation Account should be paid directly to them, bypassing state government control. Justice Agim stated that state governors' retention of local government funds disrupts their operations and ordered immediate compliance with the judgment, ensuring that no state government receives funds intended for local governments.
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