The joint account run by states and local governments has been blamed for the inability of the councils to meet their primary responsibilities of promoting participatory democracy and rapid socio-economic development at the grassroots.
But it is freedom at last for the councils as a result of last week’s landmark judgement by the Supreme Court, which granted them financial autonomy. FELIX NWANERI reports
The local government is the closest administration to the people, but the inability of the country’s 774 councils to meet the two primary objectives spelt out in the landmark Local Governments Reform of 1976, which are, to promote participatory democracy and rapid socio-economic development at the local level, informed persistent calls by many Nigerians for a change in the local government system.
While some stakeholders have blamed the nation’s faulty federal structure for the failure of the councils, others maintained that the joint account run by the states and local governments is to be blamed for the council’s inability to meet their primary objectives. It was against these backdrops that most analysts agreed that it will require a constitutional amendment to liberate the councils.
The 1999 Constitution (as amended), guarantees a system of local government by democratically elected officials. However, the second component of the section makes the establishment, structure, composition, finance and functions of the local governments dependent on state laws.
Section 7 (1) of the Constitution states that “the system of local government by democratically elected local government councils is under this Constitution guaranteed; and accordingly, the government of every state shall, subject to section 8 of this Constitution, ensure their existence under a law which provides for the establishment, structure, composition, finance and functions of such councils.”
It is the provision that makes the establishment, structure, composition, finance and functions of the local governments dependent on the states that makes it possible for state governments to “cripple” the local governments financially by routing funds standing to their credit in the Federation Account through the State/ Local Governments’ Joint Account rather than allowing the councils direct access to the funds.
Whereas the Federal Government argued at the time the joint account was introduced that its operation was meant to bring even development to all parts of the country as well as to forestall a situation, where no single government official at the state or local level, corruptly enriches himself from the commonwealth, but the arrangement, has over time, adversely affected the financial viability of the councils as some state governments have continued to make inexplicable deductions from the joint accounts.
Section 162 (8) of the Constitution which explains how the amount standing in the joint accounts should be distributed to the local governments in each state, provides that “the amount standing to the credit of local government councils of a state shall be distributed among the local government councils of that state on such terms and in such manner as may be prescribed by the House of Assembly of the state.”
So, rather than ensure fiscal responsibility, the law provided a window for state governments, which are constitutionally required to fund the local government councils, to instead hold them hostage. In practice, operation of the joint account, has over time, denied the local governments’ their financial autonomy.
It should be noted that the state governments were not meant to be beneficiaries of the account, but trustees. They are required to maintain the accounts for the benefit of the local governments by ensuring that the amount allocated for the third tier of government is equitably and fairly shared among the councils.
Most state governments have continued to implement the joint account contrary to its intention. Instances abound, where some governors’ hand out only wage bills to council chairmen in their respective domains, a development, which prompted calls by some stakeholders for the Federal Government to either review the local government system or even scrap it.
The umbrella body of council workers, Nigerian Union of Local Government Employees (NULGE), which has repeatedly called for the joint account to be expunged from the constitution, reasoned that it will bring sanity to the local government system. According to NULGE, the joint account had been the main problem of local government system because state governments have continued to abuse it.
The group alleged that illegal and sundry deductions from local government fund through the joint account by the state governments and imposition of undemocratic structures (caretaker committees) by governors to run affairs of the local governments contravenes section 7 of the Constitution.
NULGE claim against the governors was supported by the immediate past president, Muhammadu Buhari, who in December 2022, confirmed the breach by accusing some governors of unbridled ill-treatment of local governments’ administration and mismanagement of resources of the councils.
This, according is responsible for what he termed “stunted development experienced at the third tier of government and unfair labelling of his administration at the grassroots.”
The then president, who cited a personal experience involving a governor he did not name, said it beats anyone’s imagination how some governors would collect money on behalf of local councils in their states, only to remit just half of such allocation to the chairman, who would further deplete the remittance in further pilfering of public resources.
His words: “If the money from the Federal Government to local government is N100 million, N50 million will be sent to the chairman, with a letter that he will sign that he received N100 million.
The governor will pocket the balance and share it with whoever he wanted to and then the chairman of the local government will see how much he must pay in salaries. To hell goes development. Monies for the salaries will be given and the balance he will put in his pocket. This is what is happening.”
Arguments for and against autonomy for LGs
Debate over autonomy for the councils has been a recurring decimal. Some stakeholders have always maintained that as a federal state, Nigeria has three tiers of government – federal, state and local – whose intergovernmental relations, which include political, financial, judicial and administrative, are established by the constitution.
These stakeholders further maintained that each tier is required to operate within its area of jurisdiction and any action to the contrary is null and void to the extent of its inconsistency with the law. This position explains calls for steps to be taken to save the local governments from extinction.
NULGE for instance, in 2018, sought the support of former President Olusegun Obasanjo (initiator of the 1976 Local Government Reform) to rescue the councils from the governors.
Obasanjo, who agreed with the union that state governments have incapacitated the councils, wondered whether the states could allow the federal government to do the same to them. His words: “There is no exception to this encroachment by states.
Even though both are supposed to be separate tiers of government, with each having its roles and functions, that is not the case anymore. I wish I could help, but I am helpless. As it is, I can only help you to shout and talk to the world.” Another former leader, General Ibrahim Babangida, who has repeatedly voiced out against the structural defect at the local government level, maintained that financial autonomy for the councils is the only way to Nigeria’s development.
According to Babangida, the envisaged development would be even and sustained if allocations meant for the various local governments are released to them directly. He, however, added that the councils should be made to account for how the funds are spent.
However, there are members of a political school, who argued that recognition of local governments as a tier of government will amount to a breach of Nigeria’s federal structure. Anambra State governor, Charles Soludo, who belongs to this political school, at a time, called for the strengthening of the councils based on the unique needs of each state rather than autonomy for them. Previous bids to free LGs from the states.
There is no doubt that efforts were made in the past to free the local councils from the grip of state governors but they hit the rocks. For instance, The 7th National Assembly, through the House of Representatives, initiated a bill for an Act to amend not only provisions of section 7 of the Constitution, but section 162 in order to provide for independence and financial autonomy of the local governments.
The bill, sponsored by the then member representing Anaocha/ Njikoka/Dunukofia federal constituency of Anambra State, Uche Ekwunife, sought to amend both sections to give the local governments’ independence and financial autonomy. While the bill passed second reading and was consequently committed to the House ad-hoc Committee on Constitution Review for further legislative action, but nothing meaningful came out of it.
A proposal by the then Peoples Democratic Party (PDP)-led Federal Government for the scrapping of the joint accounts also hit the rocks. The PDP administration at that time said it would not tolerate diversion of funds meant for the development of the grassroots but the then main opposition party, Action Congress of Nigeria (ACN), not only opposed the proposal but advised then President Goodluck Jonathan to jettison it.
It was another botched bid in 2017, during another amendment to the constitution. Whereas the Senate and House of Representatives voted in favour financial autonomy the local councils, the states Houses of Assembly turned down the proposal.
The Senate, not only voted for alteration to section 162 of the Constitution to abrogate the state/ local joint account and empower each local government to maintain its own “special account into which all allocations due to the council shall be directly paid from the Federation Account and from the government of the state,” it equally favoured a review the constitution to make democratic composition of local councils statutory.
While commendations trailed the position of the federal legislators at the time, some discerned minds, cautioned that it was not yet Uhuru given the rigorous amendment process to the Nigerian Constitution. The Constitution requires approval of two/ thirds of the state legislatures even after an amendment is passed by both chambers of the National Assembly.
It was against this backdrop that that the proposed amendments as voted for by the National Assembly were sent to the 36 state Houses of Assembly for consideration and concurrence. But as envisaged, the amendment that would have freed the local councils from the grip of the governors failed to scale the hurdle at the state level.
Twenty-seven out of the 36 states of the federation rejected autonomy for the local governments, while only nine endorsed the proposal. The states that gave yes votes were Ogun, Ondo, Niger, Benue, Plateau, Bauchi, Cross River, Kwara and Bayelsa. The 9th National Assembly also made efforts at granting autonomy to the local governments during its amendment to the Constitution.
Its constitution review committees headed by Ovie Omo-Agege (Senate) and Ahmed Idris Wase (House of Representatives) accorded priority to the issue, so it was not surprising that members of both chambers of the federal legislature voted overwhelmingly in support of autonomy for the councils after a clause-by-clause consideration of the recommendations of the Joint Committee on the 1999 Constitution (5th Alteration) Bills, 2022.
Ninety-two out of the 109 senators voted in favour of the local government autonomy bill in the Red Chamber, while 257 out of 360 voted in support in the Green Chamber. But, again, the states Assembly rejected the proposal.
The NFIU law
What seemed a temporary relief after the botched bids to grant local governments autonomy emerged, when the Buhari administration announced a new order to make it compulsory for all allocations meant for the local governments to go straight to their respective accounts. The directive was aimed at ensuring that the joint account system only exists for the receipt of allocations from the Federation Account but not for disbursement.
The directive, contained in a guideline released by the Nigerian Financial Intelligence Unit (NFIU) after a meeting with officials of the various commercial banks, was entitled: “Guidelines to reduce vulnerabilities created by cash withdrawals from LG funds throughout Nigeria, effective June 1, 2019.”
Though the directive was applauded by many, a legal hurdle was anticipated as section 162 (8) of the Constitution empowers the states to distribute allocations “among the local government councils of that state on such terms and in such manner as may be prescribed by the House of Assembly of the state.”
As predicted, the Nigerian Governors Forum (NGF) sued the Federal Government and NFIU for interfering on the power of state governments to initiate transactions on the joint accounts. However, the Federal High Court, Abuja, dismissed the suit. Justice Inyang Ekwo, who delivered judgement on the suit, held that the case of the plaintiffs lacked merit.
According to the judge, the plaintiffs did not show how the NFIU’s guidelines contradicted the provisions of sections 7(1), (6) (a) and (b) of the Constitution.
The judge further held that the guidelines did not contradict section 162(8) of the constitution which prescribed that the amount standing to the credit of the local government council of the state shall be distributed among the local government councils of that state on such terms and in such manner as may be prescribed by the House of Assembly of the state. Despite the court judgement and NFIU’s threat of sanctions, the states maintained their grip on the finances of the councils.
Journey to the Supreme Court
While there is no doubt that efforts in the past to free the local governments from the grip of state governors did not materialize, the present administration, led by President Bola Tinubu, in its determination to ensure financial autonomy for the councils, filed a suit against the governors of the 36 states of the federation at the Supreme Court over alleged misconduct in the administration of local governments.
The Federal Government, in the suit marked: SC/CV/343/2024, filed by the Attorney-General of the Federation and Minister of Justice, Lateef Fagbemi (SAN) on May 24, not only demanded full autonomy for the 774 councils as the third tier of government but an order deterring state governors from embarking on unilateral, arbitrary and unlawful dissolution of democratically elected local governments leadership.
It also sought an order permitting funds standing in the credits of local governments to be directly channeled to them from the Federation Account in line with the provisions of the Constitution as against the alleged unlawful joint accounts created by governors.
The Federal Government equally prayed the Supreme Court for an order stopping governors from further constituting caretaker committees to run affairs of local governments as against the constitutionally recognised and guaranteed democratic system.
It also applied for an order of injunction restraining the governors, their agents and privies, from receiving, spending or tampering with funds released from the Federation Account for the benefits of local governments, when no democratically elected local government system is put in place in the states.
In the 27 grounds it listed in support of the suit, the Federal Government argued that Nigeria, as a federation, was a creation of the 1999 Constitution, as amended, with the president as head of the federal executive arm, swearing on oath to uphold and give effect to provisions of the Constitution.
Consequently, the Federal Government asked the Supreme Court to invoke sections 1, 4, 5, 7 and 14 of the Constitution to declare that state governors and the states House of Assembly are under obligation to ensure a democratic system at the third tier of government in Nigeria and to also invoke the same sections to hold that the governors cannot lawfully dissolve democratically elected local government councils.
It further prayed for the invocation of sections 1, 4, 5, 7 and 14 of the Constitution to declare that dissolution of democratically elected local government councils by the governors or anyone using the state powers derivable from laws enacted by the State Houses of Assembly or any Executive Order, is unlawful, unconstitutional, null and void.
At its hearing on the matter on May 30 , the apex court, gave the 36 state governors seven days to file their defence, while the AGF was given two days to file his reply upon receipt of the governors’ defence.
A seven-man panel of the apex court led by Justice Lawal Garba, issued the order, while ruling in the application for abridgment of time argued by Fagbemi. Justice Garba held that the decision of the court was predicated on the national urgency of the suit and the non-objection from the Attorney General of the states of the federation.
The Attorney General of Ebonyi state and chairman of the body of state Attorneys-General, Dr. Ben Odo, who spoke on behalf of his colleagues, said they had a meeting and he has their consent of no objection to the suit.
Freedom at last
Delivering judgement on the matter on Thursday, the Supreme Court ordered that funds from the Federation Account in the credit of the councils must be paid directly to their respective bank accounts.
The apex court also barred the governors and their privies from directly or indirectly receiving, tampering or withholding funds meant for the local governments henceforth.
In addition, the court barred governors from dissolving democratically elected officials of local governments. In the lead judgment delivered by Justice Emmanuel Agim, the Federation Account was specifically ordered to ensure that henceforth all monies including shares from taxes and other sources are channeled directly into the purses of councils with democratically elected officials.
In the unanimous judgement of the seven-man panel of Justices, the Supreme Court agreed with Fagbemi that the Constitution of the Federal Republic of Nigeria recognised local governments as the third tier of government.
They also agreed with him that some state governors have in the past two decades been using Nigeria’s constitution to perpetrate unconstitutional acts. According to the justices, the constitution did not make local governments appendages of the state and that no tier of government should be subordinate to another.
Reacting to the judgement, governors of the 36 states of the federation described the development as a relief given that autonomy for the councils will ease their responsibilities.
Chairman of the Nigeria Governors’ Forum (NGF), Governor Abdulrahman AbdulRazaq of Kwara State, who spoke on behalf of his colleagues after their meeting in Abuja on Friday, said: “We welcome the ruling of the Supreme Court, compliance is a given and our Attorneys General have applied for the enrollment order, which we’ll study carefully.
But by and large, governors are happy with the devolution of power with respect to local government autonomy,” “It relieves the burden on governors. Our people really don’t know how much states expend in bailing out local governments, and that’s the issue there.”
Kalu: Autonomy for LGs, victory for democracy
Senator Orji Uzor Kalu, a former governor of Abia State and ex-Chief Whip of the Senate is the senator representing Abia North at the National Assembly The Supreme Court judgement on the autonomy of local governments is one that should be hailed and applauded especially for the courage and independence shown by the judiciary.
The Supreme Court being a policy court did what is right and beneficial to the society. While it may look like interference in the states, we should accept that all the calls for end of insecurity, kidnappings and banditry has just begun with this autonomy granted to the local governments.
When the local governments were in total control of their funds, there was flow of resources and activities in the local areas. For instance, when I was governor between 1999 and 2007, autonomy of the local governments was a major factor in the success of my administration. The local government chairmen built roads and gave contracts to local contractors.
The chairmen were able to take full responsibility of what happened in their local governments and crime was reduced to the barest minimum. I will also appeal to the Federal Government to consider making a case for local government elections to be conducted by Independent National Electoral Commission (INEC) instead of the State Independent Electoral Commissions (SIECs).
This will further strengthen autonomy of the local governments and reduce the pressure on the state governments. When governance gets to the grassroots, it becomes easier to identify and hold the leaders responsible. I sincerely appeal to the 36 state governors to accept this judgement as a victory for democracy, victory for themselves and victory for all Nigerians.
I congratulate President Bola Tinubu; the Attorney General of the Federation, Prince Lateef Fagbemi (SAN) and all the Supreme Court justices, who played a role in this landmark achievement for Nigerians. Let’s continue to keep our hopes alive.
Olawepo-Hashim: Accountability will make financial autonomy meaningful
Gbenga Olawepo-Hashim is a chieftain of the All Progressives Congress (APC) and a former presidential Candidate We have a real opportunity for development to resume at the local government levels with the Supreme Court landmark Judgement but only when we put up structures to ensure that these funds do not become the personal purse of certain individuals.
With these development, local governments should be able to pay attention to community policing, which is urgent and crucial in view of nationwide insecurity; Intra ward and neighbourhood public transportation; regular grading of local roads to ensure easy movement of farm produce ; Primary and rural health services as well as children’s early education, among others.
Let’s ensure that the real people benefit from this judgement and that the judgement does not create new local emperors from the treasuries of the local governments. On the face of it, the Supreme Court’s judgement is a good step in the consolidation of Nigeria’s democracy.
Okechukwu: Councils have been rescued from emperor-governors
Osita Okechukwu, a chieftain of the All Progressives Congress (APC), is a former Director General of the Voice of Nigeria (VON) To me, the iconic judgement was pure and simple; rescue grassroots democracy in Nigeria from emperor-governors.
The judgement has also restructured our local government system. Therefore, I call on all to monitor and ensure the prudent management of the 20.6 percent federal revenue allocation to local governments. I commend my Lord Justices of the Supreme Court and President Bola Tinubu as his perseverance for the autonomy of local government councils has paid off.
The emperor-governors have violently breached section 7 of the Nigerian Constitution by brazen rigging of local councils’ elections and by extension mismanagement of the 20.6 per cent local government funds; hence dampened the development of grassroots democracy.
Going further, Nigerians should rise up and monitor the 20.6 per cent federal allocation to local government councils for prudent use in development of rural communities.
Okupe: Autonomy for LGs amount to constitutional aberration
Doyin Okupe is a former presidential aide The Supreme Court has declared in a landmark constitutional judgement that it is unconstitutional for state governments to hold on to LGA funds. It also went ahead to direct the Federal Government to pay the 774 local governments directly.
On the surface and judging by our recent history, this political judgement sounds good and it is a great relief to the councils, which have hitherto been financially emasculated and starved of their lawful revenues by state governors, thereby preventing them from being administratively and developmentally functional at the grassroots level.
Many of those who have erroneously clamored for local governments’ autonomy, including the Federal Government, which is the plaintiff in this case, must feel victorious and justified. However, I see it differently. I see a major constitutional aberration and political confusion here.
I insist that the local governments are not part of the federating units under our federalism, which unequivocally is the union between the central government (Federal Government) and the subnationals (states) only.
Without doubt President Tinubu now, in the midst of this constitutional dilemma, must provide the nation with an opportunity to firmly take charge of its destiny through the provision of a new workable and acceptable constitution, be it, federalist/unitarist/any others.
That will once and for all address our varied yearnings, interests, desires, unresolved conflicts, cultures and sensitivities as sub-nationalities within the framework of a Nigerian federation and nation state.
Bwala: LG autonomy will be guaranteed if INEC takes over conduct of LG polls
Daniel Bwala is legal practitioner
Thank God for the Supreme Court verdict on local government autonomy to the effect that it is unconstitutional for state governments to hold onto local governments funds; henceforth the Federal government pays directly to the councils.
One victory down! The next is either a constitutional review or court verdict declaring that the Independent National Electoral Commission (INEC) to conduct council elections, otherwise governors might still use the chairman appointed by them to hold the monies in trust for them Governors are the problem of good governance, but many people don’t know.
Do you know how much they have received since President Bola Tinubu took office? Tell me what they are doing in their states to address hunger and unemployment? In my opinion even media houses hardly stay long on this conversation because their major clients are state governments. This democracy requires all of us to move it forward.
Ezema: LG autonomy step towards decentralization of power
Comrade James Ezema is the Deputy National Publicity Secretary of the Conference of Nigeria Political Parties (CNPP)
For too long, governors have usurped the powers and resources of local governments, stifling grassroots development and perpetuating poverty. The judgement marks a new dawn for local government autonomy and a significant blow to the impunity and recklessness of state governors in the last two decades.
The judgement is also a significant step towards decentralizing power, promoting grassroots development and enhancing the overall quality of life for Nigerians. We believe that this judgement will go a long way in addressing the issues of poverty, inequality and social injustice that have plagued our nation for decades.
We urge all stakeholders to respect and implement this judgement, and we demand that governors, who violate this ruling be prosecuted after leaving office. It is time to hold our leaders accountable for their actions and ensure that the rule of law is upheld.
We call on the Federal Government to ensure the immediate release of funds due to local governments directly to their respective accounts and to monitor their utilization to prevent further abuse. We also urge civil society organizations and the media to join us in holding governors accountable for their actions.
Olatunji: LGs autonomy will solve 50% of Nigeria’s problems
Ambali Olatunji is the National President of National Union of Local Government Employees (NULGE)
We believe that with the local government autonomy judgement, over 50 percent of Nigeria’s problems have been fixed. Also, we hope there will be financial integrity at the local government level and all financial transactions will be tracked.
We will be working with the anti corruption agencies to ensure growth and development. So, we are happy and it is a fulfillment of a long-awaited dream and the struggle in the last 15 years has come to a victorious end.
With the judgement, insecurity will become a thing of the past; joblessness will be addressed; poverty and infrastructural gaps will be reduced.
Ibori: LGs autonomy, a setback on true federalism
Chief James Ibori is a former governor of Delta State
The Supreme Court has dealt a severe setback on the principle of federalism as defined by section 162(3) of the 1999 Constitution (as amended).
The section expressly provides thus: ‘Any amount standing to the credit of the Federation Account shall be distributed among the Federal and State Governments and the Local Government Councils in each State on such terms and in such manner as may be prescribed by the National Assembly Section 6 provides further clarity on the subject matter.
(6) Each State shall maintain a special account to be called ‘State Joint Local Government Account’ into which shall be paid all allocations to the Local Government Councils of the State from the Federation Account and the Government of the State. The court’s ruling on the matter is an assault on true federalism.
The Federal Government has no right to interfere with the administration of local governments under any guise whatsoever. There are only two tiers of government in a federal system of government. I’m opposed to fiddling with the allocations to the Joint LG Accounts at the state level but that in itself does not call for this death knell to the clear provisions of section 162 of the Constitution.
The implications of the ruling are far-reaching and the issues that readily come to mind are constitutional interpretation, balance of power, state autonomy, financial independence and precedent setting. In the coming days, we will begin to fully understand the implications of the Supreme Court decision.
An assault on the constitution is not the answer to fiddling with the Joint Account. If the ruling is saying governors cannot temper, touch or fiddle with the Joint Accounts, that’s fine because they shouldn’t be doing that in the first place.