BREAKING | Federal Government Explains Delay in CBN’s Release of Funds to 774 LGAs

The Federal Government has finally broken its silence on the delay in the Central Bank of Nigeria’s (CBN) release of funds directly to the 774 Local Government Areas (LGAs) across the country. This comes despite the Supreme Court’s landmark ruling on July 11, 2024, which granted financial autonomy to LGAs, mandating that allocations from the Federation Account be paid directly to them, bypassing state governments. The government has attributed the delay to administrative and procedural bottlenecks, including the profiling of signatories and the establishment of dedicated accounts for the LGAs .  

Supreme Court Ruling and Its Implications  

The Supreme Court’s decision was a significant milestone in Nigeria’s governance structure. The court ruled that it was unconstitutional for state governments to withhold or mismanage funds meant for LGAs, which are recognized as the third tier of government under the 1999 Constitution. The judgment also barred the federal government from disbursing funds to LGAs without democratically elected officials in place .  

This ruling was expected to usher in a new era of financial independence for LGAs, enabling them to address grassroots development challenges more effectively. However, the implementation has been slower than anticipated, raising concerns among stakeholders about the federal government’s commitment to enforcing the judgment .  

Reasons for the Delay  

According to the Attorney-General of the Federation (AGF), Lateef Fagbemi (SAN), the delay is primarily due to the ongoing profiling of individuals who will serve as signatories to the LGAs’ accounts. This process is crucial for ensuring transparency and accountability in the management of funds. The AGF, represented by the Director of Civil Litigation at the Federal Ministry of Justice, Tijjani Gazali, explained that an implementation committee has been working tirelessly to develop a framework for the direct payment of allocations from the Federation Account to LGAs .  

The committee, which includes representatives from the Federal Government, the Association of Local Governments of Nigeria (ALGON), and the Nigerian Governors’ Forum (NGF), is expected to finalize its recommendations soon. The AGF emphasized that the delay is not a sign of reluctance but a necessary step to ensure a seamless transition to the new system .  

CBN’s Role in the Process  

The Central Bank of Nigeria (CBN) has also played a critical role in the delay. The bank’s Director of Legal Services, Kofo Salam-Alade, stated that the CBN is currently profiling designated signatories for the LGAs’ accounts as part of its Know Your Customer (KYC) procedures. This step is mandatory to ensure that the accounts meet the required Customer Due Diligence (CDD) standards before they can be operationalized .  

Salam-Alade urged LGA officials to visit their local CBN offices for documentation, promising that the accounts would be activated within 48 hours of completing the necessary procedures. However, ALGON’s representative, Sam Akala, disputed this claim, stating that no official communication had been received from the CBN regarding the account setup process .  

Challenges and Concerns  

Despite the assurances from the federal government and the CBN, several challenges have hindered the timely implementation of the Supreme Court’s ruling. One major issue is the failure of some LGAs to submit the required bank details to the Federation Accounts Allocation Committee (FAAC). This has resulted in the undistributed allocation of N361.754 billion meant for the LGAs in January 2025 .  

Another concern is the continued interference of state governors in LGA affairs. The AGF condemned the illegal dissolution of democratically elected local government councils by some governors, describing it as “unconstitutional connivance” and an act of treason. He warned that such actions would have severe consequences for the states involved, despite the immunity granted to governors under Section 308 of the Constitution .  

Stakeholders’ Reactions  

The delay has sparked mixed reactions from stakeholders. The Nigerian Bar Association (NBA) has emphasized the importance of empowering LGAs for national stability and development. NBA President Mazi Afam Osigwe (SAN) warned that failing to strengthen governance at the grassroots level could lead to greater national challenges. He stressed that democracy must be allowed to thrive at the local government level, and all tiers of government must respect the autonomy of LGAs .  

On the other hand, ALGON has expressed optimism about the new system, despite the delays. ALGON National President Bello Lawal Yandaki assured Nigerians that the association is committed to ensuring grassroots development and transparency in the use of LGA funds. He also revealed that the Nigerian Financial Intelligence Unit (NFIU) would monitor the utilization of funds to prevent corruption and mismanagement .  

The Way Forward  

The federal government has reiterated its commitment to implementing the Supreme Court’s ruling and ensuring that LGAs receive their allocations directly. The AGF stated that the implementation committee is working round the clock to finalize the framework for direct payments. Once the necessary procedures are completed, the CBN will begin remitting funds directly to the LGAs’ accounts .  

In the meantime, stakeholders have called for patience and cooperation to ensure a smooth transition. They have also urged LGA officials to expedite the submission of their bank details and complete the required documentation to avoid further delays.  

Conclusion  

The delay in the release of funds to the 774 LGAs highlights the complexities of implementing a landmark judicial decision in a federal system like Nigeria’s. While the federal government and the CBN have cited procedural challenges as the reason for the delay, stakeholders remain hopeful that the new system will bring about positive changes in grassroots development.  

As the implementation committee finalizes its recommendations and the CBN completes the profiling of signatories, Nigerians eagerly await the full realization of LGA autonomy. This development promises to strengthen democracy at the local level, enhance transparency, and improve service delivery across the country.  

For now, the ball is in the court of the federal government and the CBN to ensure that the Supreme Court’s ruling is implemented without further delays. The success of this initiative will depend on the collective efforts of all stakeholders, including state governments, LGA officials, and civil society organizations.