By Nchetachi Chukwuajah
On July 11, 2024, the Supreme Court delivered a landmark judgement granting financial autonomy to all 774 Local Government Councils (LGs), saying LGs should receive their funds directly from the Federation Accounts Allocation Committee (FAAC) and be allowed to manage them.
The judgement was delivered in the case of the Attorney-General of the Federation v. Attorney-General of Abia State and 35 others, with suit number SC/CV/343/2024.
The unanimous judgement of the seven-man panel, delivered by Justice Emmanuel Agim, read that it is unconstitutional for state governors to hold funds allocated for local government administrations.
The court ruled that since paying local governments through states has not worked, their allocation from the federation account should henceforth be paid directly to them.
Justice Agim said, “I hold that states’ retention of the local government funds is unconstitutional.
“Demands of justice require a progressive interpretation of the law. It is the position of this court that the federation can pay LG allocations to the LGs directly or pay them through the states.
“In this case, since paying them through states has not worked, justice of this case demands that LG allocations from the federation account should henceforth be paid directly to the LGs.”
Before the July 2024 Supreme Court judgement, the President Muhammadu Buhari administration had sought financial autonomy for local governments and had, in December 2022, accused governors of stealing local government funds.
President Buhari then proceeded to enforce the constitutional provisions that stipulate that local governments were entitled to receive their funds directly from the federation account.
Buhari sought the abolition of the joint accounts into which the various state governors diverted local government funds of their various states.
In enforcing this, the Nigerian Financial Intelligence Unit (NFIU) limited cash withdrawals from local government accounts to a maximum of N500,000 daily and warned banks to ensure strict compliance.
However, the 36 state governments opposed the move by NFIU, arguing that the NFIU’s action was illegal under a federal system of government, noting that the NFIU, being a federal government agency, lacked the power to decide how states should spend their money.
The Federal Government eventually recorded victory in July 2024.
However, two years after the landmark judgement, the Supreme Court’s verdict has yet to be implemented even as Federation Account Allocation Committee (FAAC) reports showed a total of N42.709 trillion was shared among the Federal Government, state governments, local government councils, and oil-producing states as derivation revenue between July 2024 and June 2026.
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The lingering controversy stems from the State Joint Local Government Account created under Section 162 of the 1999 Constitution, an arrangement which necessitated that funds due to local governments were transferred through joint accounts controlled at the state level.
This arrangement has been frowned at over the years by local council officials, labour unions, and civil society organisations, who accused governors of making deductions from council funds, controlling local government expenditure, and leaving councils with insufficient resources for basic services.
The July 2024 Supreme Court judgement was intended to end the practice by directing that allocations be paid directly to democratically elected councils.
However, the continued delay in full implementation has raised concerns that the financial relationship between states and councils has not changed significantly in many parts of the country.
Council allocations have increased since 2024
An analysis of FAAC reports, data from the National Bureau of Statistics (NBS), and the Office of the Accountant-General of the Federation shows that a total of N10.48 trillion has been allocated to local councils during the FAAC meetings held between July 2024 and June 2026.
The data show that between July 2024 and June 2025, local government councils received N4.496 trillion. The amount increased to N5.984 trillion between July 2025 and June 2026, representing an additional N1.488 trillion, or a year-on-year increase of 33.10 percent.
The average monthly allocation to councils consequently rose from N374.65 billion in the first 12-month period to N498.67 billion in the second, representing an increase of N124.02 billion.
In the first 12-month period, local councils received N337.02 billion in July 2024 from June revenue, N343.70 billion in August, N306.53 billion in September, N329.86 billion in October, N355.62 billion in November, and N402.55 billion in December 2024.
In January 2024, the monthly allocation stood at N361.75 billion and rose to N434.57 billion in February, fell to N410.56 billion in March, and declined further to N387 billion in April. In May, the figures increased to N406.63 billion and reached N419.97 billion in June 2025.
In the second 12-month period, councils received N444.85 billion in July 2025, N485.04 billion in August, N522.23 billion in September, and N529.95 billion in October before declining to N505.80 billion in November and plummeting to N445.27 billion in December 2025.
Councils received N513.27 billion in January 2026, N537.88 billion in February, N456.47 billion in March, N468.83 billion in April, N540.15 billion in May, and N534.28 billion in June.
Financial autonomy implementation remains in limbo
Despite the increase in revenue allocation in the two years, local councils still struggle with meeting their financial obligations due to the delay in the implementation of the financial autonomy ruling of the Supreme Court, with state governments still controlling local government allocations.
Reacting to the delay in the implementation of the landmark judgement, the National Union of Local Government Employees (NULGE) and local government officials say little has changed since the judgement was delivered.
In an interview with The PUNCH, the National President of NULGE, Aliyu Kankara, said the union has repeatedly appealed to the Federal Government to enforce implementation to no avail.
“Up till now, they have not started the implementation of the financial autonomy. You know the allocation comes from the Federal Government, so they are the ones to commence the implementation,” Kankara said.
He disclosed that the union had written several letters to the Federal Government, urging it to comply with the judgement and begin transferring allocations directly into the accounts of local government councils.
“We have written several letters to them to remind them of the need to start paying local governments directly, but they haven’t done anything yet,” he stated.
Kankara described the situation as disappointing, noting that state governments continued to receive allocations meant for councils despite the Supreme Court’s directive.
“We are still hoping that they will do the needful, but up till now, states are still being paid the local government allocations,” he said.
He added, “Nothing has changed. Until the allocations go directly to the local governments as ordered by the Supreme Court, we cannot say financial autonomy has been implemented.”
The situation remains the same across states in the country, with state and local governments running joint accounts.
A local government official in Kaduna State, who spoke to The PUNCH on the condition of anonymity, added that the amount states eventually approve and release to councils is often less than what was originally released by the federal government.
“You will always hear huge amounts being allocated to local governments on paper, but in reality we are still at the beck and call of the state government. For instance, when you hear that a local government received about N800 million, what eventually gets to the council may be as little as N50 million released through the Ministry of Local Government and Chieftaincy Affairs,” the source said
The official disclosed that much of the amount eventually released to councils was used to pay primary school teachers and local government workers.
“From the money released to us, we pay the salaries of teachers and local government staff. We are still operating the joint account with the state government,” the official stated.
In Kano State, a Government House source also confirmed that the state continued to operate joint accounts with its 44 local government councils, adding that council chairmen seeking to execute projects were required to submit requests to the state government for approval.
“Any local government chairman who wants to carry out a certain project must write a request and forward it to the government for approval of the funds needed for the execution of the project,” the source added.
The situation in Abia State appeared slightly different, as councils were said to operate separate bank accounts, although officials maintained that the Federal Government had not clarified or implemented the Supreme Court judgement.
The state chairman of the Association of Local Governments of Nigeria (ALGON) and Mayor of Umunneochi Local Government Area, Chinedu Ekeke, said the responsibility for interpreting and enforcing the judgement rested with the Federal Government, which filed the suit.
“There is a Supreme Court judgement from a suit filed by the Federal Government, which wanted to seek the interpretation. The onus is on the Federal Government to seek the clarification and to implement it,” he said.
Ekeke confirmed that the councils had independent bank accounts but said ALGON’s next action would depend on the Federal Government’s interpretation of the judgement.
The Abia State Secretary of NULGE, Andrew Okoro, said the union needed to establish whether councils had begun receiving their allocations directly.
Jigawa State, however, emerged as an exception to the widespread claims of non-compliance with the judgement as local government officials claimed that councils had begun receiving their allocations directly from the Federal Government.
The state ALGON Chairman and Chairman of Dutse Local Government Area, Sibu Abdullahi, said, “Yes, our LGAs are now receiving allocations directly from the FG without any deductions at the state level.”
Abdullahi also stated that the councils operated independent accounts and were no longer tied to the joint-account arrangement.
“All 27 LGAs in Jigawa operate independent bank accounts. We are no longer on joint accounts with the state government,” he said.
He claimed that the new system had improved transparency and enabled councils to respond more quickly to community needs.
The widespread reports of non-implementation of the Supreme Court’s landmark judgement granting financial autonomy to local governments raise concerns about the independence of the third tier of government amid challenges bedevilling local communities, requiring local government attention as the government closest to the people.
