In a landmark move aimed at strengthening grassroots governance and ensuring equitable distribution of resources, the Office of the Accountant General of the Federation (OAGF) has established a dedicated unit to oversee the direct disbursement of funds to the 774 local governments across Nigeria. This development comes as the long-awaited financial autonomy for the third tier of government takes effect this month, marking a significant shift in the nation’s fiscal landscape.
The first meeting of the Federation Account Allocation Committee (FAAC) for the year, scheduled for Wednesday, is expected to finalize operational details for the direct allocation of funds to local governments. According to sources within the OAGF, all necessary structures and processes have been put in place to ensure a seamless transition. “Most of the 774 LGAs will fully start receiving their allocations from January 2025,” a source revealed, adding that the Inter-Ministerial Committee tasked with enforcing the Supreme Court judgment on direct revenue allocation will reconvene later this month to review progress and finalize implementation measures.
The move follows the approval of the Finance Minister and Coordinating Minister of the Economy, Wale Edun, who has given the green light for the direct disbursement of funds. “There won’t be a challenge because it’s something they (ministry officials) do day in day out for the states,” the source noted, emphasizing that a dedicated department within the OAGF is already equipped to handle the process.
A Step Toward Grassroots Development
The financial autonomy of local governments is not just a bureaucratic reform; it is a transformative step toward empowering communities and fostering development at the grassroots level. The Supreme Court’s landmark judgment on July 11, 2024, affirmed the constitutional right of local governments to receive their allocations directly from the federation account, bypassing state governments. Justice Emmanuel Agim, who delivered the lead judgment, described the previous practice of states withholding local government funds as “illegal and unconstitutional.”
The ruling has been hailed as a victory for democracy and accountability. However, it has also sparked concerns among some governors, who argue that an abrupt transition to financial autonomy could create administrative challenges. In response, the federal government has urged states to ensure that local governments are run by democratically elected officials, a condition for eligibility to receive monthly allocations from the federation account.
State Governments Respond
Many states have already taken steps to comply with the new directive. Council elections have been conducted in several states, while others, such as Lagos and Ondo, are in the process of organizing theirs. In Adamawa State, Information and Strategy Commissioner James Iliya affirmed the state’s alignment with the federal government’s position, noting that local government autonomy has been a longstanding practice in the state. “Our local governments have long been free. Local council autonomy in Adamawa State came before the autonomy worked out at the federal level,” he said.
Delta State Finance Commissioner Fidelis Tilije echoed similar sentiments, stating that the state has a tradition of allowing local governments to control their allocations. Since 2015, the state government has provided monthly grants to local councils, in addition to allocating 10% of its internally generated revenue (IGR) to them. “We have never taken one kobo accruing to them,” Tilije emphasized.
In Ogun State, Governor Dapo Abiodun’s Special Adviser on Information and Strategy, Kayode Akinmade, assured that there is “no cause for alarm,” emphasizing the importance of having elected chairmen in place to fulfill their mandates. Similarly, Plateau State Local Government and Chieftaincy Affairs Commissioner Ephraim Usman highlighted the state’s commitment to local government autonomy, stating that the governor has never interfered with their finances.
Challenges and Opportunities
While the financial autonomy of local governments is a welcome development, it is not without its challenges. Some governors have expressed concerns about the potential for mismanagement of funds at the local level, particularly in areas with weak administrative structures. To address these concerns, the Inter-Ministerial Committee, chaired by the Secretary to the Government of the Federation, Chief George Akume, is working to ensure a smooth and effective implementation of the new system.
The committee is also tasked with addressing attempts by some governors to undermine the autonomy of democratically elected local government officials. According to sources at the Federal Ministry of Justice, the committee is working round the clock to deliver on its mandate, with the ultimate goal of fostering grassroots development and reducing the burden on state governments.
A New Dawn for Local Governance
The financial autonomy of local governments represents a new dawn for governance in Nigeria. By ensuring that funds are directly allocated to local councils, the federal government is empowering communities to take charge of their development and address their unique challenges. This move is expected to enhance transparency, accountability, and efficiency in the use of public resources, ultimately leading to improved service delivery and better quality of life for citizens.
As the new system takes effect, all eyes will be on the local governments to see how they utilize this newfound autonomy. With the support of the federal government and the commitment of state governments, Nigeria’s third tier of government is poised to play a pivotal role in driving sustainable development and transforming the lives of millions at the grassroots level.
The journey toward full financial autonomy may have its hurdles, but the potential benefits far outweigh the challenges. As the nation embarks on this historic transition, one thing is clear: the future of local governance in Nigeria has never looked brighter.
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