LG autonomy | CBN, 774 chairmen differ over councils’ account opening

 The quest for local government autonomy in Nigeria has been a protracted journey, marked by legal battles, policy debates, and administrative hurdles. A significant milestone was achieved on July 11, 2024, when the Supreme Court delivered a landmark judgment affirming the financial independence of the 774 local government areas (LGAs) across the nation. This ruling mandated that allocations from the Federation Account be disbursed directly into the accounts of LGAs, effectively prohibiting state governors from exerting control over these funds. However, the path to actualizing this autonomy has been fraught with challenges, as evidenced by recent disagreements between the Central Bank of Nigeria (CBN) and local government chairmen regarding the procedures for account opening and fund disbursement.

CBN's Initiative for Financial Accountability

In response to the Supreme Court's directive, the CBN initiated a profiling exercise aimed at establishing dedicated bank accounts for each LGA. Kofo Salam-Alada, the Director of Legal Services at the CBN, emphasized that this process is essential to ensure financial accountability and compliance with standard banking procedures, particularly the "Know Your Customer" (KYC) requirements. Salam-Alada stated, "Anyone who will be a signatory to the account must be profiled. The process is ongoing, and we are collaborating with the Accountant-General's office. We have also written to the LGAs." The CBN assured that upon completion of the necessary documentation, the accounts would become operational within 48 hours. This initiative underscores the CBN's commitment to fostering transparency and accountability in the management of public funds at the grassroots level.

ALGON's Position and Communication Gaps

Contrastingly, the Association of Local Governments of Nigeria (ALGON) has expressed reservations about the CBN's approach, citing a lack of official communication regarding the account-opening procedures. Sam Akala, representing ALGON at a discourse on strengthening local government autonomy, remarked, "I cannot confirm that such communication has been received officially." This statement highlights a significant communication gap between the apex bank and the local government authorities, which could impede the swift implementation of financial autonomy. ALGON, while expressing readiness to embrace its role in grassroots development, emphasizes the necessity for clear and direct communication channels to facilitate a seamless transition to autonomous financial operations.

Federal Government's Commitment and Implementation Delays

The Federal Government has reiterated its dedication to actualizing local government autonomy. Attorney General of the Federation and Minister of Justice, Lateef Fagbemi (SAN), represented by Tijjani Gazali, disclosed that an implementation committee comprising representatives from the Federal Government, ALGON, and the Nigerian Governors' Forum has been established. This committee is tasked with developing a framework to operationalize the Supreme Court's ruling, particularly concerning the direct payment of allocations to LGAs. Fagbemi noted, "The committee is expected to complete its mandate any time from now and present its recommendations to Nigerians." Despite these assurances, the delay in implementing the court's decision has been a source of frustration among local government officials and stakeholders, who are eager to see tangible changes in the financial administration of LGAs.

Challenges in the Implementation Process

Several factors contribute to the delays in actualizing financial autonomy for local governments. One primary issue is the absence of direct banking relationships between the CBN and the LGAs, necessitating the establishment of new accounts and the fulfillment of KYC protocols. Additionally, discrepancies in communication between the CBN and local government authorities have led to misunderstandings and a lack of coordinated action. Furthermore, there are reports of state governments attempting to circumvent the Supreme Court's ruling by enacting laws that undermine local government autonomy or by coercing local officials into remitting funds back to the state, thereby perpetuating the status quo. These challenges underscore the complexity of restructuring intergovernmental financial relations in Nigeria and highlight the need for a concerted effort from all stakeholders to uphold the rule of law and promote effective governance at the local level. 

The Role of Anti-Corruption Agencies

To safeguard the integrity of the autonomy process, anti-corruption agencies such as the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices and Other Related Offences Commission (ICPC) have been enlisted to monitor the utilization of funds by local governments. The EFCC Chairman, Ola Olukoyede, cautioned local government chairmen to exercise prudence and accountability, emphasizing that they do not possess immunity from investigation and prosecution. Olukoyede stated, "Local government chairmen do not have immunity, and we are not going to wait until you finish your tenure to come after you." This proactive stance by anti-corruption agencies aims to deter financial mismanagement and ensure that allocations are utilized for their intended developmental purposes, thereby enhancing public trust in local governance structures.

Legal and Constitutional Perspectives

The Supreme Court's judgment unequivocally affirms the constitutional guarantee of local government autonomy as enshrined in Section 7(1) of the 1999 Constitution (as amended). This section stipulates that "the system of local government by democratically elected local government councils is under this Constitution guaranteed." Legal experts have lauded the ruling as a reinforcement of the constitutional framework designed to promote decentralization and democratic governance at the grassroots. However, the reluctance of some state governments to relinquish control over local government funds has led to legal confrontations and a call for stricter enforcement of the judgment. The Attorney General of the Federation has declared actions such as the suspension of local government officials by state authorities as illegal and unconstitutional, emphasizing that only the legislative arms of the respective local governments possess the authority to remove or suspend elected officials. 

The Way Forward

Achieving genuine financial autonomy for local governments in Nigeria necessitates a multifaceted approach:

1. Enhanced Communication and Collaboration: Establishing robust communication channels between the CBN, Federal Government, ALGON, and other stakeholders is crucial to synchronize efforts and expedite the implementation process. Regular consultations and updates can bridge existing gaps and foster mutual understanding.
   
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