Allocation of payments to local government directly from the federal account – Supreme Court ruling

July 11 (THWILL) – The Supreme Court has ordered that funds transferred from a federal account to local governments will now be paid directly to them.

A seven-member high court panel led by Justice Mohammed Lawal Garba has declared unconstitutional the act of state governors to withhold funds meant for the administration of local government (LG), finding that the act was in clear violation of Section 162 of the 1999 Constitution, as amended.

In a key judgment read on Thursday by Justice Emmanuel Agim, the court barred 36 governors of the federation from continuing to retain or use funds meant for the 774 local government units (LGAs) in the country.


Justice Agim held that no House of Assembly of any State has the power to make any law that may interfere in any way with the funds allocated to local governments.

“The demands of justice require a progressive interpretation of the law. This court is of the view that the federation can disburse LGA funds directly to the LGA or through the states. In this case, since disbursement of funds through the states has not worked, the court in this case directs that the LGA funds from the federation account be disbursed directly to the LGA henceforth,” the high court ruled.

The court also declared unconstitutional the appointment of temporary committees by governors to manage the affairs of LGAs. It ruled that the 36 states have an obligation to ensure democratic governance at the third level of government.

The court dismissed the preliminary objection by the state governors, citing the right of the Attorney General of the Federation (AGF) and Minister of Justice Lateef Fagbemi to file the suit.

THEWILL informs that the judgment was delivered following a lawsuit marked SC/CV/343/2024, filed on May 20 by the AGF on behalf of the federal government.

The AGF, seeking full autonomy for the 774 local governments in Nigeria, has asked the high court to issue an order prohibiting governors, their agents and officials from receiving, spending or handling funds released from the Federation Account in favour of local governments when there is no democratically elected local government system in the states.

The AGF has asked the court to issue an order allowing the direct transfer of funds held in local government accounts from the federal account, in accordance with the provisions of the Constitution.

The federal government has further requested the issuance of an order prohibiting governors from appointing temporary committees to manage the affairs of local governments, which would be contrary to the constitutionally recognized and guaranteed democratic system.

He therefore asked the court to issue an injunction restraining state governors from unilaterally, arbitrarily and unlawfully dismissing democratically elected local government officials.

“to invoke sections 1, 4, 5, 7 and 14 of the Constitution to declare that state governors and state houses of assemblies have the duty to ensure a democratic system at the third tier of government in Nigeria and also to invoke the same sections to declare that governors cannot lawfully dissolve democratically elected local government councils.

“Invoking Sections 1, 4, 5, 7 and 14 of the Constitution to declare that the dissolution of democratically elected local government councils by governors or anyone exercising state powers under laws made by the State Assemblies or any executive order is illegal, unconstitutional, null and void,” the suit sought.

He argued that “Nigeria, as a federation, was created by the 1999 Constitution, as amended, and the President, as Head of the Federal Executive, takes an oath to uphold and implement the provisions of the Constitution.

“The Governors represent the States comprising the Federation and the Executive Governors have also undertaken to uphold and abide by the Constitution at all times and the Constitution, being the supreme law, has binding force throughout the Federation of Nigeria.

“The Constitution of Nigeria recognises the Federal, State and Local Governments as the three tiers of government and that the three recognised tiers of government derive funds for their operations and functioning from the Federation Account created by the Constitution.

“According to the provisions of the Constitution, there must be a democratically elected system of local government and the Constitution does not make provision for any system of government at the level of local government other than a democratically elected system of local government.

“In the face of the clear provisions of the Constitution, the governors failed to deliver and refused to implement a democratically elected system of local government, even in the absence of a declared state of emergency that would justify the suspension of democratic institutions in the state.

“The failure of the governors to implement a democratically elected system of local government is a deliberate undermining of the 1999 Constitution that they and the president swore to uphold.

“All efforts to compel the governors to comply with the mandates of the 1999 Constitution in terms of establishing a democratically elected local government system have not yielded any results and the continued disbursement of funds from the Federation Account to the governors for the benefit of the non-existent democratically elected local government undermines the sanctity of the 1999 Constitution.

“In view of the violations of the 1999 Constitution, the Federal Government is not obliged under Article 162 of the Constitution to pay any State funds to local governments in the absence of a democratically elected local government.”

However, in separate opening arguments filed before the Supreme Court, the States sought dismissal of the action, seeking substantial costs.

They argued that the AGF, which had initiated the proceedings on behalf of the federal government, had no locus standi (legal title) to do so and further alleged that the AGF had violated their right to a fair trial when it failed to serve them with a copy of a subsequent affidavit filed in support of the claim.