Local Government Financial Autonomy: Give Them Their Money
Last week, the Supreme Court gave another landmark decision that potentially alters the relationship between the state and local government in Nigeria, as it pertains to revenue allocation.
What do we mean?
Well, some weeks back, the Attorney-General of the Federation filed an action against the 36 states, challenging the system of revenue allocation to the Local Governments in Nigeria.
The system for revenue allocation that has been operated over the years, involved the allocation of funds by the Accountant-General of the Federation to the State and Local Government Joint Account. The State Government would then distribute the funds to the local government.
Think of it like what happens in a typical African home, when visitors would give money to a child and the child’s parents would somewhat forcefully offer to “keep” the money for the child. Although we know how the story typically ends, the parents end up spending the money.
Similarly, for many years, there have been clamours concerning the unfair use and control of the Federal allocation by the state government. They would typically utilize a larger portion of the allocation and distribute the remaining to the local government in piecemeal.
This has made it difficult for many local governments to carry on capital intensive projects or generally to operate independently of the state, as the third tier of government that they are.
The Case
The Honourable Attorney-General of the Federation challenged this practice at the Supreme Court. He argued that it was unconstitutional, illegal and it posed a threat to the nation’s federalism.
The seven-member panel of the Court upheld this argument unanimously on the 11th of July 2024. The new arrangement ordered by the Court empowers the Accountant-General of the Federation to bypass the state governments in the monthly disbursement of federal allocations to the local governments.
Possible Implications of Local Government Financial Autonomy
- Better grassroots governance:
Being the closest tier of government to the people, the Local Governments are in an advantaged position to cater directly to the developmental needs of communities in the various states. Now, with adequate funds, it becomes easier and more seamless for them to achieve this.
- Lesser control of the local government by the state government:
If properly implemented, the scrapping of the joint account between state and local governments will ensure more independence for the local governments from the control or direction of the state government.
- The Need for closer monitoring of the Local Governments by anti-graft agencies:
With direct cash flow from the Federal account to the Local governments, comes the likelihood of corruption and fraud. Anti-graft agencies would generally be expected to pay closer attention to local governments than they probably did prior.
Frankly, this new development has prospects. We can only hope that it is properly implemented and there are structures to ensure accountability.
