The Federal government has set up a dedicated team in the Office of the Accountant General of the Federation (OAGF) to handle direct disbursement of funds to the 774 local governments across the country as the planned financial autonomy for the third tier of government takes effect this month.

The first meeting of the Federation Account Allocation Committee (FAAC) for this year has been scheduled for Wednesday; January 15, with operational details for direct fund allocations to the LGs expected to feature prominently.

Sources at the OAGF said the necessary structures and processes for the new dispensation were ready to ensure a seamless implementation.

“Most of the 774 LGAs will fully start receiving their allocations from January 2025.
“Our committee will reconvene later this month to review its progress and finalise measures before the Accountant-General of the Federation (AGF) issues authorisation for the complete rollout,” one of the sources said of the assignment of the Inter-Ministerial Committee set up to enforce the Supreme Court judgment on direct allocation of revenue to the councils.

The source said the Finance Minister and Coordinating Minister of the Economy Wale Edun had earlier given approval for the direct fund allocation.

The source said there should be no “challenge to carry out the approval from the Minister to start making the disbursements to the LGAs. There won’t be a challenge because it’s something they (ministry officials) do day in day out for the states.”

“A whole department is in charge of it, so it’s not going to be a challenge. The structure has been on the ground. I can confirm that,” 

It was also gathered that the Inter-Ministerial Committee would also “address the actions of some governors attempting to undermine the autonomy of democratically elected LGA chairmen, deputies and councilors.”

Sources at the Federal Ministry of Justice said separately that the committee set up by President Bola Tinubu to implement the Supreme Court judgment was working round the clock to deliver on its assignment.

The committee is headed by the Secretary to the Government of the Federation, Chief George Akume.

A source confirmed “The essence of the LG financial autonomy is to ensure grassroots development and not to impose a burden on governors.

“This necessitated the setting up of the committee chaired by the SGF to ensure smooth and charismatic implementation.”

Most of the states are also ready for the take-off of the LG financial autonomy, having taken steps or in the process of meeting the main condition stipulated by the federal government for their councils to be eligible for the monthly allocation from the federation account: running of the LGs by democratically elected chairmen and councilors.

Thus, council elections have been conducted in many of the states while Lagos and Ondo are about holding theirs.

The Supreme court, in its July 11, 2024 landmark judgment, affirmed the financial autonomy of the local governments as it upheld the suit brought by the federal government to strengthen the independence of local governments in the country.

A seven-member panel of the court said in the unanimous decision that local governments should immediately receive their allocations directly from the Accountant-General of the Federation.

Justice Emmanuel Agim, who read the lead judgment, said it was illegal and unconstitutional for governors to receive and withhold funds allocated to local governments in their states.
He said: “It is the position of this court that the federation can pay local governments allocations directly to the local governments or through the states.

“In this case, since paying them through the states has not worked, justice demands that local governments’ allocations from the federation account should henceforth be paid directly to the local governments.”

He described the states’ retention of local government funds as unconstitutional.
However, the governors reached out to the federal government to allow for a gradual evolution of the new process, arguing that an unplanned financial autonomy might create more problems for the councils.

The federal government subsequently warned that revenue allocation would be denied states that failed to have democratically elected officials run the local governments. The development prompted the states to conduct LG elections.