The need to avert salary payments and operational viability crisis at the third tier of government, has necessitated a three-month moratorium agreement between the Federal Government and the States on the direct remittance of allocations to the Local Government Areas (LGA).

The implication of this is that the LGAs would wait till October before the implementation of the Supreme Court of Nigeria’s (SCN) ruling on the direct payment into their accounts.

Recall that on July 11, 2024, the SCN gave a landmark judgment affirming the financial autonomy of Nigeria’s 774 LGAs, with the import that governors could no longer receive the funds meant for the third tier of government.

The apex court also directed the Accountant-General of the Federation (AGF) to be paying the LG allocations directly to their accounts, as it declared the non-remittance of funds by the 36 states unconstitutional.

Under former President Muhammadu Buhari, the Nigerian Financial Intelligence Unit (NFIU) issued a regulation, effective from June 1, 2019, which banned transactions on State and Local Governments Joint Accounts, The Punch reports.

Hitherto, funds were sent directly to the accounts of the local governments.

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The NFIU also limited cash withdrawals from local governments accounts to a maximum amount of N500,000 per day with penalties for banks that failed to comply.

However, the Nigerian governors under the aegis of the Nigerian Governors’ Forum (NGF) kicked against this regulation and the NFIU eventually capitulated.

The status quo was maintained until May 2024 when the Attorney-General of the Federation, Lateef Fagbemi (SAN), filed suit marked SC/CV/343/2024 at the SCN to strengthen the autonomy of the LGAs as provided for in the constitution.

It sought to prevent state governors from unilaterally dissolving democratically elected local government councils and establishing caretaker committees, actions that violate constitutional provisions.

The AGF argued that the constitution mandates a democratically elected local government system and does not allow alternative governance structures.

The suit also prayed that the funds from the Federation Account be channelled directly to local governments, bypassing the allegedly unlawful joint accounts managed by state governors. The Federal Government also sought an injunction to stop governors and their agents from receiving or spending local government funds without a democratically elected local government system in place. It contended that the governors’ failure to establish such a system constitutes a deliberate subversion of the 1999 Constitution.

The SCN heard parties to the case on June 13, with the state governments, through their respective attorneys-general, opposing the suit.

That was the prelude to the landmark SCN judgment of Thursday, July 11, 2024, which has now affirmed the financial autonomy of Nigeria’s 774 LGAs.

In the unanimous judgment of its seven-member panel, the SCN upheld the suit brought by the federal government to strengthen the independence of local governments in the country.

A member of the panel, Emmanuel Agim, who delivered the court’s lead judgment, held that the LGAs across Nigeria should henceforth receive their allocations directly from the AGF.

He ruled it illegal and unconstitutional for governors to receive and withhold funds allocated to local government areas in their states.

Many Nigerians, including the LG chairmen, hailed the judgment of the SCN, describing it as a step in the right direction to restructure the country.

Although some governors voiced their concerns, the NGF, speaking through the chairman and Kwara State Governor, AbdulRahman AbdulRazaq, said the judgment was a relief from the financial burden to state governments.

AbdulRazaq, speaking to journalists after meeting President Bola Tinubu on July 12, a day after the judgment, said, “The governors are happy with the devolution of power regarding local government autonomy. The public really doesn’t know how much states spend on bailing out local governments.”