Two Years After Supreme Court Ruling, Nigerian States Retain Control of Local Government Allocations

Two years after a landmark Supreme Court judgment ordered the direct payment of federal allocations to Nigeria’s 774 local government councils, the implementation of financial autonomy remains stalled. Despite the apex court’s ruling, state governments continue to exercise control over local government funds, with an analysis of public finance data revealing that trillions of naira allocated to the third tier of government during this period have not reached their intended independent destination.

The Supreme Court’s decision barred state governments from retaining or spending funds meant for local councils, declaring the use of unelected caretaker committees unconstitutional. However, data from the Federation Account Allocation Committee (FAAC) shows that the practice of diverting these funds through Joint Local Government Accounts remains widespread across most states.

Local government allocations have risen significantly over the past two years, though grassroots developmental changes remain minimal. In the first year following the judgment, local councils were allocated trillions of naira, and this figure experienced a sharp increase in the second year. Despite the larger volume of funds being disbursed from the Federation Account, local government administrators, labor unions, and community leaders report that the financial relationship between states and councils has not fundamentally changed.

During this 24-month window, the Federal Government, state governments, local government councils, and oil-producing states all drew shares from the Federation Account. However, the National Union of Local Government Employees (NULGE) confirmed that the Federal Government has yet to commence direct statutory payments to the councils nationwide. According to NULGE leadership, states continue to receive the allocations on behalf of local governments despite multiple written appeals to federal authorities to enforce the 2024 court mandate. The persistence of the State Joint Local Government Account, established under Section 162 of the 1999 Constitution, remains the primary vehicle used by state governors to maintain financial control.

In Kaduna and Kano states, officials confirm that local councils still operate joint accounts. Council chairmen only receive funds approved and released by the state governments through the Ministry of Local Government and Chieftaincy Affairs, often leaving very little for capital projects after paying primary school teachers and staff salaries.

In Benue, efforts by local councils to open independent accounts have reportedly been stalled by bureaucratic bottlenecks, including requirements for approval letters from the state Accountant-General. Similarly, council representatives in Sokoto and Plateau state that financial autonomy exists “only on paper,” with local government officials reluctant to speak publicly for fear of political backlash. In Abia, local governments operate separate bank accounts, but local leaders argue that the onus of enforcing and interpreting the direct payment system rests entirely on the Federal Government.

While non-compliance is widespread, Jigawa State has emerged as a key exception. The state’s Association of Local Governments of Nigeria (ALGON) confirmed that all 27 local government areas in Jigawa have transitionally moved away from joint accounts. According to local representatives, the councils now operate fully independent bank accounts and receive their FAAC allocations directly from the Federal Government without state-level deductions. Local officials claim this shift has improved transparency and accelerated grassroots project delivery.