LG autonomy: NULGE cautions CBN against colluding with govs, may hire auditors

The National Union of Local Government Employees has warned the Central Bank of Nigeria against aiding state governors in undermining the financial autonomy of local government councils, following reports that the apex bank has refused to open accounts for councils over alleged non-compliance with auditing requirements.

Speaking with The PUNCH on Sunday, the NULGE National President, Hakeem Ambali, dismissed claims that local governments had failed to provide two years of audited accounts, insisting that no council in the country lacks at least three years of audited financial records.

According to Ambali, LGs are ready to present their audited accounts, which will ensure a smooth opening of their accounts with the CBN to ensure that LGs receive their allocations directly following the landmark Supreme Court judgement which mandated that the FAAC remit LG allocations directly to them.

“There is no local government without at least three years of audited accounts. This is made possible due to the presence of the Auditors-General at the local government levels.

“The CBN must understand that it cannot go against a landmark Supreme Court judgment. No organisation should allow itself to be used by governors against the realisation of the autonomy for Local Governments,” Ambali stated.

He urged the apex bank to issue a formal directive on the requirements for opening accounts, adding, “Once the CBN releases a memo detailing what they want, the LGs will definitely provide it.”

The warning follows reports that local governments are struggling to access their statutory allocations because the CBN has allegedly refused to open accounts for them, citing the non-submission of two years of audited financial reports.

The Supreme Court, in a landmark ruling on 11 July 2024, had directed the Federation Account Allocation Committee to remit local government funds directly to their accounts, stripping state governors of control over the funds.

The ruling was a result of a lawsuit filed by the Attorney-General of the Federation and Minister of Justice, Lateef Fagbemi, in May 2024, challenging governors’ continued control over local government allocations.

The suit also sought to prevent state governments from dissolving democratically elected local councils and replacing them with caretaker committees.

Delivering its verdict, a seven-member Supreme Court panel, led by Justice Garba Lawal, ruled that governors’ management of local government funds was illegal and unconstitutional.

The apex court ordered the Accountant-General of the Federation to remit all local government allocations directly to their accounts, reinforcing financial independence for the 774 local councils, as it declared the non-remittance of funds by the 36 states unconstitutional.

With reports suggesting that the CBN’s position is delaying the full implementation of the ruling, NULGE has called on the apex bank to resist any attempts by state governors to obstruct the process.

An auditor at a leading firm in Abuja, who spoke anonymously to The PUNCH on Sunday, stated that local government audits required by the CBN could be completed within one to three months, depending on the capacity and staff strength of the auditing firms handling the process.

Based on the auditor’s comment, the local governments may likely not get their allocation directly in February.

This means that local governments’ funds will likely be paid into states’ accounts when allocations of the revenue earned in January 2024 are done later this month.

The auditor further noted that while the CBN’s stance aligns with best financial practices, it should also consider the urgency of local government funding and provide clear directives to facilitate compliance.

“It is standard for any public or private entity to have its books audited. This is not about witch-hunting; it is about financial discipline. However, if the CBN issues a formal directive, local governments can get this done within one to three months, depending on the audit firm’s capacity and staff strength,” the source said.

The PUNCH earlier reported that the Federation Accounts Allocation Committee disbursed a total of N2.08tn in allocations to Local Government Councils between July and December 2024.

However, despite the July 2024 Supreme Court ruling granting full financial autonomy to Nigeria’s 774 Local Government Areas, The PUNCH learnt that the allocations were still paid to state government accounts.

This, it was learnt, irked officials and members of the Association of the Local Governments of Nigeria and National Union of Local Government Employees.

Over the six-month period, the total amount allocated to the Local Government Councils was N2.075tn out of the N8.351tn total distributable revenue. This allocation represents approximately 24.9 per cent of the total revenue shared.

The PUNCH further observed that there was a 72.06 per cent increase in the allocations to local governments between July to December 2024 when compared to the same period of the previous year.

This means that there was an increase of N869bn from the N1.206tn allocated to local government councils within the same period last year.

The month of December saw the highest allocation to LGCs, marking a significant 13.2 per cent increase from the previous month.

This sharp rise in December followed a steady upward trajectory in LGC allocations, with the biggest percentage increase seen in the final month of the year.

Despite these large disbursements, the question of whether the Supreme Court’s directive will be fully implemented remains unanswered.

The PUNCH reported that the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the Federal Government was yet to commence direct payment to the respective LGs due to some “practical impediments.”

He added that a committee had been set up by the Federal Government to look at the practicability of the judgment.

The Federal Government, it was learnt, faced challenges implementing the ruling on local government financial autonomy, with concerns over its impact on salary payments and operational viability.

The Attorney General of the Federation and Minister of Justice, Prince Lateef Fagbemi (SAN), earlier issued a stern warning to state governors bypassing the Supreme Court judgment on local government autonomy, threatening to seek a contempt of court suit if the defiance continues.

Fagbemi also cautioned local government chairmen across the country against mismanaging or looting public funds.

The AGF stressed that the autonomy granted to local governments by the Supreme Court is to empower the grassroots and not for carting public funds into private pockets as such attitude will not go unpunished.

Earlier, the Secretary-General of the Association of Local Governments of Nigeria, Mohammed Abubakar, while speaking on the delay in the direct payment of federal allocation to local governments, lamented the non-implementation of the Supreme Court ruling.

“Sincerely, we are all in the dark as we stand now. People who don’t want this LG autonomy to work are having a field day. Ordinarily, the Supreme Court judgment should not be left unattended.

“We are in the dark, to the extent that we cannot pinpoint what the government is trying to achieve by not enforcing the Supreme Court judgment allowing allocation to be paid directly to local government accounts,” Abubakar had told The PUNCH.