Despite Supreme Court Ruling, Direct Payments to Local Governments Remain Unfulfilled as FG, States, and LGAs Distribute N1.424 Trillion in January 2025.”
In a shocking development that has drawn widespread concern and disappointment, the Federal Government’s long-awaited implementation of direct payments to local governments continues to fail. This comes despite a landmark Supreme Court ruling made several months ago, which directed the Federal Government to ensure local governments directly receive their allocation from the federation account. However, in January 2025, a total of N1.424 trillion was shared among the Federal Government, states, and Local Government Areas (LGAs), with no direct payment system in place for the latter.
Background on the Supreme Court Ruling
In 2024, the Supreme Court ruled in favor of the Nigerian Association of Local Governments (NALG) and other stakeholders, demanding that a portion of the monthly revenue from the Federation Account be directly transferred to local governments, bypassing state governors who have historically controlled these funds. The court’s decision was seen as a significant step towards financial autonomy for local governments, ensuring that they receive their rightful share of the national revenue.
The Federal Government, along with the 36 states and the Federal Capital Territory (FCT), was given a clear mandate to implement the judgment, ensuring that local governments would no longer rely on state governors for their allocations. This was expected to foster greater transparency, accountability, and better governance at the grassroots level.
January 2025 Federation Account Allocation
However, despite the ruling, January 2025 saw no meaningful progress in the execution of direct payments to local governments. According to the National Economic Council (NEC) and the Federation Accounts Allocation Committee (FAAC), a total of N1.424 trillion was distributed among the Federal Government, states, and local governments.
The breakdown of the allocation is as follows:
- Federal Government (FG): N580.5 billion
- States: N306.7 billion
- Local Governments (via State Governments): N204.8 billion
- Other Statutory Allocations and Deductions: N332.0 billion
While local governments were technically included in the allocation, the funds were still disbursed through the states, contradicting the Supreme Court’s directive for direct payments to be made to local governments. This failure to comply with the court’s ruling has raised alarm across various sectors, from political analysts to civil society organizations, all questioning the apparent reluctance of the Federal Government and state actors to implement the changes ordered by the judiciary.
The Consequences of Non-Compliance
This continued delay in the direct transfer of funds to local governments has significant implications for governance at the grassroots level. The failure to honor the Supreme Court’s judgment perpetuates the financial dependency of local governments on state governors, who are often accused of diverting or withholding these funds for personal or political reasons. As a result, local governments are left with insufficient resources to effectively carry out their constitutional responsibilities, including education, healthcare, infrastructure development, and social services.
Local government workers have also been particularly vocal about the issue, with some union leaders expressing concerns over unpaid salaries and dwindling resources. The situation exacerbates the already fragile financial state of many LGAs, which struggle to meet basic needs for their communities.
The Role of the Federal Government and State Governors
The Federal Government’s failure to implement the Supreme Court’s judgment raises questions about the political will to decentralize financial power. There have been growing calls from various quarters, including political analysts and citizens, for the Federal Government to stop paying lip service to the decentralization of funds and instead take tangible steps to empower local governments. Critics argue that the continued centralization of funds within the states only reinforces a culture of corruption and weak governance.
State governors, on the other hand, have been reluctant to relinquish control over local government funds. Many governors have voiced concerns about the practicality of the court ruling, suggesting that it could lead to financial mismanagement or a lack of oversight at the local level. However, these concerns have largely been dismissed by legal and financial experts, who argue that there are ways to ensure transparency without centralizing funds at the state level.
What Needs to Happen Next
To ensure that the Supreme Court’s ruling is respected, the Federal Government must act decisively. This involves not only the disbursement of funds directly to local governments but also the creation of mechanisms to ensure proper accountability and oversight in the usage of the funds. Civil society organizations, including the Nigerian Bar Association (NBA), have urged the Federal Government to comply with the judgment in good faith.
Moreover, local government autonomy can pave the way for greater development at the grassroots level, improve service delivery, and reduce corruption within the local government system. It is now imperative for the Federal Government to uphold the rule of law, implement the judgment in full, and promote greater decentralization of financial powers to achieve true federalism in Nigeria.
Conclusion
As Nigeria continues to grapple with pressing developmental challenges, the failure to implement direct payments to local governments stands as a stark reminder of the difficulties in achieving meaningful decentralization. Despite the Supreme Court ruling in 2024, the January 2025 allocation process indicates that the path to local government financial autonomy remains obstructed. Only time will tell whether the Federal Government will take concrete steps to honor the judgment and bring about much-needed reforms in the governance structure of the country.
For more on Nigeria’s fiscal policy and local governance issues, visit Nigerian Ministry of Finance and Nigerian Bar Association.
