The National Union of Local Government Employees (NULGE) has issued a strong warning to the Central Bank of Nigeria (CBN), urging the bank not to collaborate with state governors in undermining the financial autonomy of local government councils. This comes in response to allegations that the CBN has declined to open accounts for councils due to supposed non-compliance with auditing standards.
NULGE National President, Hakeem Ambali, refuted claims that local governments had failed to submit two years of audited financial statements, asserting that every local council possesses at least three years of audited records. He emphasized that local governments are fully prepared to present these accounts, which would facilitate the opening of their accounts with the CBN and ensure direct allocation of funds, in light of a significant Supreme Court ruling that mandates the Federation Account Allocation Committee (FAAC) to remit local government allocations directly to the councils.
Ambali insisted, “Every local government has a minimum of three years of audited accounts, supported by the Auditors-General at the local levels.” He stressed that the CBN must respect the Supreme Court’s landmark ruling and not allow itself to be manipulated by state governors against the objective of local government autonomy.
The NULGE President called on the CBN to provide a formal directive outlining the requirements for account openings. “Once the CBN clarifies what they need, local governments will promptly provide it,” he added.
This warning follows reports that local governments are currently facing challenges in accessing their statutory allocations because the CBN has reportedly withheld account openings, citing non-submission of two years of audited financial reports.
In a historic ruling on July 11, 2024, the Supreme Court instructed the FAAC to allocate funds directly to local councils, curtailing state governors’ control over these funds. This decision arose from a lawsuit initiated by the Attorney-General of the Federation, challenging the unlawful management of local government funds by governors.
The Supreme Court’s ruling signals a pivotal shift in the financial independence of Nigeria’s 774 local councils, as it declared the non-remittance of these funds by state governments unconstitutional. However, reports indicate that the CBN’s stance may impede the implementation of this ruling, prompting NULGE to urge the bank to resist any gubernatorial interference.
An auditor from a prominent firm in Abuja noted that compliance with CBN’s audit requirements could be achieved within one to three months, depending on the auditing firms’ capacities. This timeframe raises concerns that local governments may miss out on receiving their direct allocations in February.
Due to the CBN’s current position, local government funds are likely to continue being deposited into state accounts when allocations for January’s revenue are processed. While the CBN’s approach aligns with best financial practices, there is a pressing need for clear directives to expedite local government funding.
Recent reports indicate that between July and December 2024, the total allocation to Local Government Councils amounted to N2.08 trillion, even as concerns linger regarding the full enforcement of the Supreme Court ruling. Despite the significant increase in allocations, questions remain on whether the federal government will begin direct payments to local governments, amidst claims of “practical impediments.”
The Attorney General has warned state governors against ignoring the Supreme Court judgment and cautioned local government officials against mismanagement of public funds. Local government leaders have voiced concerns over the delayed implementation of financial autonomy, indicating a growing frustration within the sector.
