Despite a Supreme Court judgement mandating the direct payment of allocation to local governments, the Federal Government disbursed N1.232trn to councils in the first quarter of 2025 through state governments, continuing the long-standing practice the court ruled against.
An analysis of data released by the Federation Account Allocation Committee shows that local governments received N434.57bn in January, N410.56bn in February, and N387bn in March, totaling N1.232trn.
The disbursement represents 24.8 percent of the N4.959trn shared among the three tiers of government during the quarter.
In January, FAAC shared N1.703trn with the federal, state, and local governments. From this sum, the Federal Government received N552.59bn, states received N590.61bn, and LGs received N434.57bn.
The disbursement was based on statutory revenue of N749.73bn, value-added tax of N718.78bn, Electronic Money Transfer Levy of N20.55bn, and an augmentation of N214bn.
February’s allocation stood at N1.678trn from which the Federal Government received N569.66bn, states received N562.20bn, and LGs got N410.56bn.
The revenue included N827.63bn in statutory revenue, N609.43bn from VAT, N35.17bn from EMTL, N28.22bn from solid minerals, and N178bn augmentation.
In March, FAAC shared N1.578trn. The Federal Government received N528.70bn, states got N530.45bn, and local governments received N387bn.
The distributable revenue comprised N931.33bn in statutory revenue, N593.75bn from VAT, N24.97bn from EMTL, and N28.71bn from exchange difference.
The increase in allocations was driven by higher collections from VAT, statutory revenue and augmentation funds.
“The apex court had ordered that allocations from the Federation Account be paid straight to the LGAs to ensure their financial autonomy and shield them from undue interference by state governments”
Gross revenue from VAT in January 2025 stood at N771.89bn, declining to N654.46bn in February and N637.62bn in March. Meanwhile, statutory revenue rose from N1.848trn in January to N1.653trn in February and N1.718trn in March.
Despite these higher inflows, Local Governments have yet to receive funds directly into their accounts, contrary to the Supreme Court’s directive delivered in July 2024.
The apex court had ordered that allocations from the Federation Account be paid straight to the LGAs to ensure their financial autonomy and shield them from undue interference by state governments.
How Governors stall implementation
The Central Bank of Nigeria had said the non-availability of up-to-date audited accounts for many local councils was among reasons for not opening dedicated accounts for them.
As a result, FAAC distributions continued to be routed through state treasuries.
The continued delay has raised concerns about adherence to the rule of law and fiscal transparency at the grassroots level.
While the Supreme Court ruling remains binding, the existing financial structure persists, leaving Local Governments dependent on the discretion of state governments for accessing funds.
Meanwhile, the Federal Government’s share of the Q1 2025 allocation stood at N1.651trn, while state governments received a total of N1.683trn.
The Excess Crude Account, which once served as a buffer against oil price volatility, remained unchanged at $473,754.57 as of the end of March.
The Association of Local Governments of Nigeria had accused the Office of the Attorney General of the Federation of frustrating the implementation of local government autonomy, despite the Supreme Court ruling in favour of direct funding for all 774 local councils.
ALGON had also taken legal action against the AGF and several other federal institutions in suit FHC/ABJ/05/353/2025, seeking full inclusion of local governments in the Federation Account Allocation Committee and the right to independently manage their funds.
The suit also names the Minister of Finance, Wale Edun; Minister of Budget and National Planning, Abubakar Bagudu; Accountant-General of the Federation; the CBN; NNPCL; and commercial banks as defendants.
ALGON says its push in court aims not just to enforce autonomy on paper but also to ensure practical implementation.
The case, initially scheduled for mention before Justice Inyang Ekwo, could not proceed as the court did not sit. The matter was rescheduled for May 29, 2025.
Reacting, the ALGON Secretary-General, Mohammed Abubakar, expressed frustration over the continued delay in the direct payment of funds to LGs despite the Supreme Court judgement.
Abubakar said the situation was becoming complicated and that many Nigerians who were once hopeful had become disappointed.
He said, “When the Supreme Court gave its judgment, everybody was happy and our hopes were high. But up till now, the money has not started coming directly to the local governments.”
He suggested that some people might be benefiting from the current system and were working against the implementation of the court’s ruling.
The challenges facing the implementation of the Supreme Court judgment on local government autonomy lately assumed a new dimension, with some state governors allegedly warning their council chairmen against opening an account with the CBN for the direct payment of their allocations from the Federation Account.
The latest development represents yet another significant hurdle, nearly nine months after the Supreme Court granted full autonomy to the 774 local governments across the country, paving the way for direct payment of federal allocations.
As part of the Federal Government’s commitment to the Supreme Court judgment, a panel was set up to ensure the implementation of LG autonomy.
In line with its recommendation, the panel directed the CBN to open accounts for the 774 LGs for direct payment of their allocation.
This process has, however, faced delays with the CBN and LGs trading accusations.
The immediate-past Account General of the Federation, Oluwatoyin Madein and the Attorney General and Minister of Justice, Lateef Fagbemi, SAN, and other officials recently commenced talks on the modalities for the LGAs to open accounts with the CBN for direct allocation but are reportedly facing challenges identifying LGAs with democratically elected officials.
A Federation Account Allocation Committee Technical Sub-Committee meeting revealed that only Delta State LGAs had submitted their account details.
Amid the controversy, fresh investigations revealed that some governors have resorted to intimidation and coercion, pressuring their local government chairmen to refrain from opening the designated accounts for direct allocation payment.
Several local government chairmen claimed that their respective governors have instructed them not to open accounts with the CBN for the direct receipt of their allocations.
One chairman revealed that a governor in the South East region refused to accept 50 percent of the monthly allocations, which was part of the agreement intended to facilitate the opening of the accounts for direct payment.
“Our governor has threatened us (all the chairmen in the state) not to open accounts with the CBN for the direct payment of our allocation”, one of the chairmen of South East states, who pleaded anonymity, alleged.
“We even tried to beg him, seeking to strike a deal, such that if he allows us to open the account with the CBN and our allocations are paid directly, we will remit 50 per cent of the LG allocation to him monthly, but he disagreed. So, this is where we are for now,” the LG chairman claimed.
Further investigations revealed that a significant number of governors are strongly opposed to the opening of CBN accounts, fearing it would sever their long-standing access to local government funds.
However, a negligible number of governors are said to be disposed to the idea of their LGAs opening the CBN accounts.
Some governors reportedly met with President Bola Tinubu recently and said they preferred the LGs to open accounts with commercial banks instead of the CBN.
However, it is unclear if the President is positively disposed to the idea.
Another Local Government chairman who spoke on the condition of anonymity, explained that the CBN’s stringent conditions might be one of the reasons the governors were not positively disposed to the idea, aside from the fact that it will cut off their access to Local Government funds.
A chairman in one of the local government areas in South West disclosed that the council chairmen in the state have not opened accounts with CBN due to the stringent conditions set by the apex bank.
The chairman said one of the stringent demands is the submission of a two-month statement of account from each local government area, which was not available.
“But as simple as that condition may look, all council areas here in our state can’t meet up. The situation is not peculiar to our state. If you check well, most states can’t meet up simply because their governors are the ones spending their allocation.
“They are only giving those in LGAs whatever they feel like giving them. That is the problem,” the Local Government boss said.
Other local governments have cited various reasons for the delay in opening CBN accounts. One council chairman in Benue State, who also spoke on the condition of anonymity, alleged that certain parties are working together to hinder the process.
He said, “Chairmen across the country are aware that state governors are trying to frustrate the financial autonomy of local government areas. What they are pushing for is for council chairmen to open their accounts in commercial banks where they can easily have access to control the councils’ money.
“They know that the moment the money is paid to CBN, it will go directly to us, and they will not have access to it. So, that is the reason the governors are frustrating the move.”
However, the Nigerian Union of Local Government Employees in Nasarawa State has said it is fully compliant with the directive to open accounts and is prepared to receive funds from the Federal Government.
The NULGE Chairman in the state, Adamu Sharhabilu, who disclosed this in Lafia, revealed that the state government and the House of Assembly have been working in collaboration with local government workers to ensure that local government autonomy is fully realized in the state, showing a unified effort to support the implementation of the Supreme Court’s ruling.
He noted, however, that despite the cooperation at the state level, the local government councils have yet to begin receiving their allocations directly from the Federal Government
The NULGE chairman said, “As I speak with you, all the Local Government accounts had been opened because we thought that the Federal Government would send our money there, but up till this moment, no Local Government in Nasarawa State has received allocation directly from the Federal Government.
“For now, there are no obvious plans by the Nasarawa State government to short-change the local government workers or frustrate the Local Government autonomy implementation in the state. From our own observation, the governor has been working towards ensuring that local government workers get what is due to them and also enjoy all the benefits of the Local Government autonomy.
“The monthly allocations are usually sent to the Joint Accounts under the State Ministry for Local Government and Chieftaincy Affairs. No local government has received funds from the Federation Account.’’
However, another local government chairman in the state, speaking anonymously, attributed the delay to the government’s failure to follow through on its promises.
The official stated, “What we are facing now is the fault of the Federal Government because the federal allocation committee is supposed to send the money straight to the local governments, not the joint account. We have so many accounts to receive the money, but they refused to send the money to the local government coffers.”
He, therefore, urged the Federal Government to align itself with the Supreme Court’s judgment and allow for the full implementation of the Local Government autonomy by ensuring that the funds are paid directly to the LGAs.
Findings showed that many state chairmen are unaware of the current stage of policy implementation.
The Chairman of the Nigeria Union of Local Government Employees, Kwara State chapter, Seun Oyinlade, hinted that no council has opened an account with the CBN.
Oyinlade said, “We are not aware that any of the 16 local government councils in the state have opened an account with the CBN. We do not know if the local government councils in the state operate an account with the Central Bank of Nigeria.”
He said he could not confirm if the state governor was similarly opposed to the direct payment of allocation to the councils.
“Though we heard it as a rumour that governors are trying to frustrate the implementation of the local government autonomy, we are yet to verify the claim. We will confirm if the local government councils have accounts with the CBN when allocation from the Federation Account is paid to them,” he said.
A local government worker in Damaturu, Yobe State, revealed that March salaries were paid through the Ministry for Local Government and Chieftaincy Affairs, rather than directly from the local governments’ accounts.
He said, “This is a setback in the implementation of the Supreme Court’s ruling aimed at granting more autonomy to local governments.”
“Even the new minimum wage implementation, local government staff members are yet to benefit from it. The state civil servants have benefited from the new minimum wage approved by the Federal Government. This development has brought some relief to state employees.”
In Zamfara, local government chairmen confirmed that they have yet to open accounts with the CBN.
The state’s ALGON chairman, Samaila Moriki, who also serves as the chairman of Zurmi Local Government Area, said that they were still awaiting further instructions before proceeding with the opening of accounts.
He said, “We have yet to open accounts with the CBN because we are waiting for further directives and instructions. Everything is done through due process, and we are waiting for the directives from above. So, that is why we have yet to open accounts with the CBN. We will do that later when things become normal.”
He, however, declined to make further comments on the directives and instructions they were waiting for.
Furthermore, the 44 local government councils in Kano State have yet to open an account with the CBN.
The chairman of Garko LGA, Saminu Garko, confirmed this, stating, “None of the 44 local government councils in the state has opened accounts with the Central Bank of Nigeria. But we heard that the apex bank has opened an account for all local governments, and what remains is to regularise the accounts.
“More so, the Central Bank of Nigeria has not invited any of the local government chairmen in the state for the regularisation of the accounts, let alone verification of signatories.
“We just read in the newspapers that the bank is inviting local government chairmen for the verification exercise.”
He noted that since the Local governments have not opened the accounts with the bank, there was no way the chairmen could be invited for the verification of signatories.
“Chairmen across the country are aware that state governors are trying to frustrate the financial autonomy of local government areas. What they are pushing for is for council chairmen to open their accounts in commercial banks where they can easily have access to control the councils’ money”
But the ALGON in Jigawa State denied that the governor threatened local government chairmen against opening accounts with the CBN.
The ALGON state chairman, Abdulrahman Salim, assured that the account opening process is ongoing.
“Everything is okay, and our local government areas are still visiting the CBN state headquarters to complete the necessary procedures,” he explained.
Salim added that “All 774 local government councils, including the 27 in Jigawa State, are expected to open dedicated accounts with the CBN for direct disbursement of funds from the Federation Account as we were directed.
“Jigawa State’s 27 local government areas are taking steps to open CBN accounts, which will enable them to receive direct allocations and manage their finances independently.
“The CBN has been instrumental in facilitating local government autonomy by providing a platform for local governments to open accounts and receive direct allocations.
“The delay in opening CBN accounts has been attributed to administrative bottlenecks, including the failure of the apex bank to fix a date for the biometric data capturing to complete the process,” he stressed.
He claimed that nearly all the necessary steps had been completed, with only biometric capturing remaining for some local governments, adding that “the chairmen are currently waiting for the CBN to schedule a date for them to revisit the office for biometric data capturing.”
