Govs lobby Tinubu to block LG direct payment

State governors have launched a fresh push against the planned disbursement of federal allocation to the local government councils in a renewed bid to delay the implementation of the Supreme Court verdict on LGA autonomy.

Some of the governors, during a meeting with President Bola Tinubu at the State House, Abuja, last Tuesday, kicked against payment of the LG allocation through the Central Bank of Nigeria, citing the need to address the multi-billion dollar debts allegedly incurred by the councils.

Presidency officials said the governors used the opportunity of the Iftar dinner to lobby the President and renew negotiations on direct allocation to the councils, which has suffered delays.

“When the governors came on Monday for Iftar, they sought to meet the President, which they did on Tuesday afternoon. Some of the governors came to meet the president. They were there with him for long. They left around past six that evening,” one insider told The PUNCH.

Speaking on condition of anonymity because he was not authorised to speak on the matter, another official privy to the details, explained further, “They finally met the President on Tuesday to try to find a solution. They are jostling for a favourable outcome.

“What is happening are two things. The Federal Government wants the allocations paid to the CBN, and all local government areas should open an account with the CBN.

“But the governors said no. They don’t want it that way. They said if the money goes to the CBN, it is as good as the Federal Government still controlling the whole thing.”

A source privy to Tinubu’s discussions with the governors revealed that the state executives wanted the disbursements sent to commercial bank accounts instead.

“One of the governors said that with the CBN handling the account, they would need approval from the Accountant-General. That means it is still under FG’s control, and they don’t want it that way. They want it to go to commercial banks. But the FG is saying no,” the source stated.

On the outcome of the meeting, the official revealed, “They said the meeting was positive. But I don’t know what they agreed upon. It appears they are working with some officials to find a way out. But the main thing is that the local government allocation was being withheld. It has not been paid. And it is because of this.”

Historically, the funding of local governments has long been a contentious issue, primarily due to the power dynamics between the state and local governments.

On July 11, 2024, the Supreme Court delivered a landmark judgment affirming the fiscal autonomy of local governments nationwide.

It ruled that federal allocations to the LGAs must be paid directly to their respective accounts, bypassing state governments.

This followed a suit filed by the Federal Government, which sought to enforce fiscal autonomy for LGAs as enshrined in the 1999 Constitution (as amended).

The Supreme Court emphasised that state governments receiving and disbursing LGA funds was unconstitutional and ordered an immediate end to the indirect payment system.

The judgment also included a provision that only democratically elected LGA leaderships are eligible to receive federal allocation.

The provision was introduced to address the widespread practice of state governors appointing caretaker committees or administrators to manage LGAs.

The court ruled that such appointed officials are unconstitutional and that only leaders elected through a democratic process can legitimately access and manage LGA funds.

Meanwhile, the Central Bank of Nigeria had mandated all LGAs to submit a two-year account audit before funds can be disbursed.

The CBN had also begun opening accounts for local governments to facilitate direct payments.

The apex bank in February announced that it had begun profiling local government chairmen and signatories to the bank accounts of the 774 local government areas as part of the process to implement financial autonomy.

The Director of Legal Services at the CBN, Kofo Salam-Alada, stated that this step was necessary to ensure financial accountability.

However, the National Union of Local Government Employees cautioned the CBN against aiding governors in obstructing financial autonomy, following reports that the bank had refused to open accounts for some councils due to alleged non-compliance with auditing requirements.

On its part, the Association of Local Governments of Nigeria said it had received no formal communication from the apex bank regarding the opening of accounts.

Nonetheless, direct payments to LGAs have faced resistance and logistical challenges nine months later.

On March 2, 2025, this paper reported that the immediate-past Account-General of the Federation, Oluwatoyin Madein and the Attorney-General and Minister of Justice Lateef Fagbemi, SAN, had commenced talks on the implementation of the Supreme Court judgment on local government autonomy.

In a move to enforce the verdict, the two senior officials were said to be holding consultations on the modalities for submitting LGAs’ bank accounts for direct payment of council allocation but are reportedly facing challenges identifying LGAs with democratically elected officials.

This was contained in the Federation Account Allocation Committee Technical Sub-Committee meeting minutes.

On January 1, 2025, President Tinubu said that his administration was in no battle with state governors over the controversial local government autonomy.

Tinubu, however, called for collaboration from the 36 state executives, highlighting their crucial role in grassroots development.

“There were gossips that we had disagreements on local government autonomy. No…Nobody wants to take them away from you, but we need collaboration,” the President said when he received Vice President Kashim Shettima and members of the Nigeria Governors Forum, who paid him a New Year homage at his Ikoyi residence in Lagos.

“We will not fight within us. I will drive the change. You control your local governments. You can restore hope by effectively fulfilling what the people expect at the grassroots level. Just drive development at the local government. Let’s do it together and ensure Nigeria is better off for it,” Tinubu added.

Meanwhile, indications have emerged that the NGF was pushing for a delay in implementing direct allocation to the LGAs over multi-billion dollar debts reportedly incurred by the governors in the name of the LGAs.

Speaking with The PUNCH, ALGON’s Secretary-General, Mohammed Abubakar, said the apex bank was facing bottlenecks in implementing the judgment.

He hinted that governors were pressuring the apex bank to delay the process over the multi-billion dollar liabilities incurred in the name of the local government areas of their states.

Abubakar said, “The Federal Government is also having its bottlenecks. The last time I engaged the FG team, it said the governors were also coming up with different excuses that they have some liabilities incurred in the name of local government. So all these things need to be properly itemized and there is a need to find a way to balance each other.”

He pointed out that the local government may be worse off as the CBN was particularly under pressure from the governors to divert local government funds to settle the debts.

Rather than the haphazard implementation of the Supreme Court judgment, he called for the engagement of stakeholders to address the looming mismanagement of local government allocation by the governors.

“The proper thing to be done is to engage the stakeholders, put things on the table, involve stakeholders like the ALGON, Nigerian Union of Local Government Employees, those who have had the opportunity to be in the system and some other professionals with experience on how things can be done to achieve a common goal without getting to further endanger the fund of the local government.

“This is because if they just do it the way they want to do it haphazardly, I can assure you that local government funds may begin to go into the hands of some people using the CBN again as a funding path to divert local government money by saying they are paying debts owed by local governments and the local government do not even know when these debts were incurred. So, we need to be careful. All these have to be looked into,” Abubakar insisted.

He acknowledged the fear of local governments losing their allocation to creditors who might have obtained judgments and garnishee orders against the CBN.

Abubakar also expressed concerns that the CBN may have engaged multiple consultants in a manner that could hinder local governments’ access to funds.

He further highlighted the risk of local government funds being mismanaged due to court-ordered financial settlements involving consultants.

The ALGON scribe noted, “There is this fear from our end that the CBN is in court with many so-called consultants, who have been working for local governments through ALGON.

“And the kind of judgment and garnishee orders they have procured from the courts is a thing that we’re also not too sure how CBN can handle such a situation, because, in previous times, CBN would say it doesn’t have money for local government so taking us to court to liquidate whatever the local government is owing is going to be difficult.

“Now, if the money now gets there, what excuse will CBN give again for them not to take their money when they already have their judgment and even the Attorney-General and Ministry of Finance have cleared them to be paid? So, the local government may end up losing money as this debt we’re talking about is in billions of dollars.

“And if these people fall on that money in CBN, you should be rest assured that the local government may end up even worse than before.”

He added that the LG chairmen should be diplomatic to allay the anxiety of governors that implementing the financial autonomy may hurt their relationship with the councils.

“Yes, ALGON is the coordinating body for the 774 local government areas but you have to carry the chairmen along so that they can, in turn, talk to their governors to assure that the judgment will not harm them, hinder their operations or deny them the relationship with governors.

“So, things have to come in very plain terms so there won’t be a question of they are leaving the usual way of doing things and going for the worse.

“You can rest assured that some of these chairmen wait on their governors to direct them on what to do. And if these governors are not up to date on what to do at the CBN and how it will be coordinated, they will slow down their chairmen from going to engage CBN in that process,” Abubakar added.

Furthermore, Abubakar attributed the delay in implementing the Supreme Court’s judgment on local government financial autonomy to the CBN’s failure to provide clear guidelines on account submissions and signatory verification for local government chairmen.

He stressed that information about how the LG chairmen are to engage the CBN is unavailable, noting that the council leadership was not well-informed about how to engage the CBN.

Expressing concern over the opaque process, Abubakar urged the CBN to clarify which department local government chairmen should approach and to outline the specific procedures required for them to receive funds directly from the Federation Account.

“The proper information and the guidelines are not available. Our chairmen have not received any properly documented details of how they should go about this. You just asked the chairmen to approach CBN and we expect that there should be a proper detailing process that clarifies this whole thing.

“The information about how they want to run it is scanty. If it’s CBN, put it in the public domain. What department in CBN is handling it? Everything must be out there.

“The last information we received is that the committee set up by the Federal Government is working on it. There’s a committee that has an ongoing discussion on how to go about it. Yes, there’s a subcommittee of that committee and the subcommittee has to submit their recommendations to the main committee,” Abubakar said.

He emphasized that the AGF should play a coordinating role in ensuring a smooth implementation of the process.

He urged the committee headed by the Secretary to the Government of the Federation, George Akume, along with other relevant offices, to engage in broader consultations with ALGON, NULGE, and other key stakeholders in local government administration.

“My advice is that the office of the Attorney-General, which is coordinating this committee, should engage in more consultations. They should reach out to the stakeholders and those components that have common interests in the administration of local government in this autonomy regime can be successful.

‘’But if you’re handling these things just within the confines of your committee, without reaching out to other stakeholders who provide solutions and advice on how things can work out, you begin to dish out instructions that people will hardly obey because there’s no proper information. You should be able to speak out. Let people understand what it is.

“We have made our position known to the office of Attorney-General via our lawyer, Mike Ozekhome,(SAN), that information and what is being profiled from the committee should be in the public domain. Let everybody know; Call a stakeholders’ meeting, and get their opinion so that we can move on.

“If stakeholders are carried along, the people who know what is at stake, are all on the table to discuss this matter, autonomy will commence as soon as possible,” he declared.