LG funding: Govt agencies brainstorm as direct payment suffers setback

As direct allocation disbursement to the 7774 LGAs continues to be delayed, discussions have begun between the Attorney-General and Minister of Justice Lateef Fagbemi, SAN, and the Account-General of the Federation, Oluwatoyin Madein, regarding the implementation of the July 11, 2024 Supreme Court ruling on local government autonomy.

The two senior officials are reportedly having trouble finding LGAs with democratically elected officials, despite their efforts to enforce the ruling by holding consultations on the procedures for submitting LGAs' bank accounts for direct payment of council allocation.

The Federation Account Allocation Committee Technical Sub-Committee meeting included this information.

According to the minutes, which an insider shared, only Delta State's local government districts have turned in their account details to the Office of the Accountant-General of the Federation.

The FAAC Technical Sub-Committee meeting, which took place on January 17, 2025, at the Federal Ministry of Finance Headquarters in Abuja, confirmed that the Delta State LGAs had submitted their account details.

According to the document, only Delta LGAs had fully submitted their account details, even though the OAGF had begun receiving them from a variety of sources.

According to reports, some LGAs gave account information directly, while others did so via their state governments.

Despite these advancements, the AGF consultations have not yet been completed, and discussions regarding the procedures for submitting the accounts are still in progress.

The Office had begun receiving account details from a variety of sources, some directly and others via the states, the Accountant-General said.

Only Delta State's local governments have so far disclosed account information. Nonetheless, discussions regarding the procedures for submitting the accounts were still being held with the Attorney-General of the Federation.

According to the minutes, there were also concerns expressed regarding the legal processes for submitting these accounts, specifically with regard to constitutional provisions.

The process had faced difficulties, especially in identifying LGAs with duly elected leadership, according to the meeting, which was chaired by the Accountant General.

According to the minutes, identifying which local government councils had chairmen chosen by the constitution was a major challenge in putting the system into place.

According to reports, Madein pointed out that this foundational phase was still unclear and that the issue of how to guarantee local governments with duly elected leadership receive direct allocations needed to be resolved.

She clarified that before the system could operate efficiently, a number of issues needed to be fixed.

The minutes also revealed that Madein stated that in order to evaluate the current situation and decide on the next course of action, the Office of the Accountant General of the Federation would ask the AGF for clarification.

According to the document, AG Niger, the Accountant General of Niger State, recommended that after the AGF offers the required procedures, a formal a formal letter should be sent to the OAGF outlining the required steps for local governments to follow in submitting their accounts.

The representative emphasized that in the absence of clear guidelines, state-by-state variations in actions could result in inconsistent implementation of financial autonomy for LGAs.

According to the document, the chairman also instructed the Federation Account Director to note any issues with communication with the Attorney General's office.

It said, in part, "The chairman replied that a system was going to be put in place, but the first obstacle was figuring out which local government councils had chairmen who were elected by the constitution. This foundational stage was still unclear, she said.

Furthermore, it was unclear what procedures would be put in place to guarantee that individuals with duly elected leadership would receive direct allocations. This was due to the fact that there were many complexities that needed to be resolved.
The chairman further stated that in order to evaluate the current situation and determine how to proceed for the current month, OAGF would ask the Attorney-General of the Federation for clarification.

"The Director Federation Account was instructed by the chairman to communicate with the Attorney-General'sofficeand take note of the concerns."

Once the AGF issues clear instructions, other states are anticipated to follow suit, with Delta State LGAs setting the standard for account details submission.

Speaking on condition of anonymity, one of the recently elected local government chairmen in Ondo State revealed that LG's bank account would be turned in following today's (Monday) Joint Allocation Committee meeting.

"After the JAC meeting tomorrow (today), we will submit the accounts to the CBN," he said.

The Central Bank of Nigeria had commenced profiling the chairmen and signatories to the bank accounts of the 774 local government areas in the country, as part of processes to commence local government autonomy.

The Director of Legal Services at the CBN, Kofo Salam-Alada, explained that this was necessary to ensure financial accountability.

But according to the Association of Local Governments of Nigeria, the apex bank had not contacted them about opening bank accounts.

The CBN legal director revealed that the apex bank had no direct banking relationship with the LGAs, which helped to explain the delayed fund disbursement.

"This is about standard procedure in the form of KYC (Know Your Customer)," said Salam-Alada. Every person who will sign the account needs to have a profile. We are working with the AGF's office, and the process is still in progress. Additionally, we wrote to the LGAs.

He asked the Nigerian Association of Local Government to encourage its members to interact with the CBN locally, promising that after the necessary paperwork is finished,

Sam Akala, an ALGON representative at the event, refuted the CBN's assertion, claiming he had not received any formal correspondence from the top bank about the account opening procedure.

According to an insider with knowledge of the development who spoke to The PUNCH on condition of anonymity, the apex bank had discussed the issue with ALGON members.

The insider disclosed that although the framework has not yet been finalized, guidelines for the process are presently being drafted.

According to the source, after these guidelines are finished, they will open the door for the creation of special accounts that will help local governments implement financial autonomy.

LGs address CBN

The CBN's assertion that it was confirming signatories to the LGAs' bank accounts as a prerequisite for enforcing the Supreme Court ruling on council autonomy has been criticized by local government chairmen as being dishonest.

According to the councils, the apex bank has not yet instructed them to open special bank accounts for the monthly federal allocation.

The Association of Local Governments responded to the CBN legal director's claim that the apex bank had started profiling the 774 council chairmen and signatories to the LGAs' bank accounts in order to guarantee financial accountability, the Association of Local Governments of Nigeria across the states said it had received no communication concerning the opening of bank accounts.
Speaking, the ALGON Chairman in Abia State and Chairman of the Mayor Isuikwuato LGA, Chinesu Ekeke, said the CBN had yet to invite any LG chairman for signatory verification.

"No, we have not been invited for signatory verification," Ekeke stated. I just heard it. No other person has told me about it. Even at ALGON headquarters, no one has notified us of any publications to that effect that I have seen.

In a similar vein, a prominent member of the ALGON executive council in Oyo State revealed that neither the state Ministry of Local Governments and Chieftaincy Affairs nor any council chairman had received an invitation letter from the CBN.

In Ibadan, an ALGON official who wished to remain anonymous claimed that the apex bank was merely attempting to politicize the matter.

"Don't mind the CBN," he said. Most likely, they are acting in accordance with their mandate. The CBN has not invited any local government chairman in this state. It has not invited anybody at all.

"The state ministry of local governments does not withhold information if the CBN has conveyed the message to them. Therefore, the ministry of local governments is very proactive in all matters pertaining to local governments in this state.

In a similar vein, Benue State council chairmen reported that neither the federal government nor any state or ALGON had issued any formal letters or memos regarding the verification exercise.

According to one of the council chairmen, who spoke on condition of anonymity, "As far as I'm aware, there isn't a memo or directive requiring local government chairmen in the state or the 774 local government chairmen nationwide to open dedicated accounts with the Central Bank of Nigeria to enable the direct disbursement of allocations from the federation account, not to talk of verifying signatories.’’

Speaking, Ifunanya