Nigeria’s Supreme Court on Thursday issued a landmark ruling mandating the Federal Government to pay local government funds directly to the accounts of the Local Government Areas domiciled in the Central Bank of Nigeria.
While this spells a new lease of life for the LGAs, in states like Lagos with Local Council Development Areas (LCDA), which were created outside the rims of Nigeria’s constitution, the case becomes a bit messier. These LCDAs have existed for over two decades and may not be able to access any funding from the Federation Account Allocation Committee (FAAC) as they do not run accounts at the CBN.
The court also held that only Local Government Areas with elected officials and not appointees are to be funded, bringing to an end the reign of Joint Account Allocation Committee (JAAC) across Nigerian states.
The JAAC was a central committee that was set up to receive and disburse funds accruing to Local Government within the States and was managed by the Local Government Area officials and the State Government. In effect, in receiving the funds through the JAAC, state governments somewhat had control of the LGA funds, dictating how the funds were distributed along the lines of the core responsibilities of the LGAs particularly as relates to education, primary healthcare, sanitation and infrastructure development.
For over two decades, the state governments had choke-hold control on the funds, depriving LGAs of financial autonomy and effectively grounding governance at the council areas.
Another core element of the Supreme Court ruling was that only states with elected officials are to be funded. This is interesting as a number of local government areas across the states are administered by caretaker committees which are appointed by the state governors. As a result, over 20 states face the risk of having allocations to their LGAs withheld as they are currently run with caretaker committees. In essence, the new rule will ensure that they step up efforts to organise elections so as to be able to access the funds.
However, Lagos and a number of states in the South-West geopolitical zone face a peculiar and seemingly unfortunate fate as they may be starved of funds which before now may have been pooled from the JAAC to run their affairs.
The reverberating effects of these are also being felt as the Lagos State House of Assembly has summoned the state’s Attorney General, Mr. Lawal Pedro, to review the impact of the judgement on the state.
Ruling after a voice vote by lawmakers at plenary on Thursday, the Speaker of the Assembly, Rt. Hon. Mudashiru Obasa, said: “There is a need for us to seek clarification and understanding of this judgement. It will be good to invite the Attorney-General to brief us and give his understanding so that we do not run foul of the judgement.”
As expected, Lagos State is agitated and many pundits are watching to see how the State will respond to the new realities, especially how it will impact on the administration of LCDAs.
Before now, Lagos had sought for constitutional recognition of LCDAs, as their operations are only recognised at the state level. To ensure constitutional recognition, there has to be an Act of Parliament at the National Assembly. But this has not been done, which puts the 37 LCDAs across Lagos in a precarious position, especially as the new judgement makes it difficult for them to access funds.
