State governments continue to obstruct efforts to grant financial autonomy to 774 local councils in the country.
The battle has intensified as the Finance Commissioners Forum opposes the federal government’s plan to mandate the Central Bank of Nigeria (CBN) accounts for local councils’ revenue allocations.
Following a Supreme Court ruling in July 2024, granting local governments financial autonomy, the federal government proposed direct payments into their CBN purses, mandating the LGAs to open accounts with the apex bank.
Read also: LGAs financial autonomy faces fresh hurdle on CBN demand
Initially slated to commence in January, state governors secured a delay, but as the central government insisted on implementation, they pushed for funds to continue flowing through commercial banks, arguing no law mandates local governments to bank with the CBN.
Akin Oyebode, the chairman of Finance Commissioners Forum, described the federal directive as illegal, emphasising that local governments have long operated accounts with commercial banks without violating the constitution.
The Nation quoted Oyebode saying, “You can’t force me to open an account. No local government, to my knowledge, has gone to say we want an account in the CBN. Local governments already have bank accounts with commercial banks.”
He also defended the Joint Account system (JAC), through which states manage local government funds, citing its constitutional backing.
Oyebode, who is the finance commissioner for Ekiti, warned that direct payments alone would not ensure financial stability, as many local councils already struggle to pay salaries. He called for a review of the revenue-sharing formula and legal clarity on JAC’s role to prevent financial mismanagement.
“By not reviewing those indices, if you pay local governments directly, at least a third of the local governments are going to be insolvent,” he warned. “As of today, those local governments cannot even pay their salaries from their allocation.”
