Two Years After Supreme Court Order, States Retain Role In Managing Councils’ Funds

Two years after the Supreme Court ordered the Federal Government to pay Federation Account allocations directly to Nigeria’s 774 local government councils, the financial autonomy envisaged by the landmark judgment remains largely unfulfilled.

An analysis of Federation Account Allocation Committee (FAAC) reports, based on data from the National Bureau of Statistics and the Office of the Accountant-General of the Federation, showed that local governments were allocated approximately N10.48 trillion between July 2024 and June 2026.

However, the figure represents allocations made to the local government tier through FAAC and does not establish that the money was transferred directly into the accounts of the 774 councils.

The Supreme Court, in its July 11, 2024 judgment, directed the Federal Government to pay funds standing to the credit of local governments directly to them and ruled that state governments had no constitutional authority to retain or spend such allocations.

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Before the judgment, local governments already had a constitutionally recognised share of Federation Account revenue. The ruling did not create that entitlement; rather, it sought to change the route through which the funds reached the councils.

Under the previous arrangement, allocations passed through the State Joint Local Government Account, giving state governments a significant role in the management and distribution of council funds.

Since the judgment, however, implementation of the direct-payment system has remained uneven.

The FAAC analysis showed that local government allocations increased from about N4.496 trillion in the first 12 months of the period under review to approximately N5.984 trillion in the second year, representing an increase of about N1.488 trillion, or 33.1 per cent.

The figures cover FAAC meetings from July 2024 to June 2026 and effectively represent revenue generated from June 2024 to May 2026.

Despite the substantial increase in allocations, the key issue remains whether the funds are reaching councils directly as ordered by the apex court.

In July 2026, National President of the Nigeria Union of Local Government Employees, Aliyu Kankara, said little had changed since the Supreme Court ruling, stressing that direct payments from the Federal Government to local governments had not commenced.

Following the judgment, the Federal Government moved to establish mechanisms for direct disbursement, including directing the Central Bank of Nigeria to facilitate dedicated accounts for the 774 councils.

The Association of Local Governments of Nigeria also said in January 2025 that councils were expected to open dedicated accounts with the CBN.

But the account-opening process has not translated into nationwide direct payments.

Investigations have continued to show that councils in several states still operate through state-level joint allocation mechanisms, including Joint Allocation Accounts Committees.

The financial stakes have grown considerably. For June 2026 revenue alone, FAAC shared N2.551 trillion among the Federal Government, the 36 states and the 774 local governments. Local governments received N591.39 billion, comprising N332.136 billion from statutory revenue and N259.254 billion from VAT.

The figures underscore the significance of the Supreme Court’s directive. More than half a trillion naira was allocated to the local government tier in a single month, yet questions remain over whether councils have direct control over the funds.

The judgment was intended to strengthen grassroots governance by giving local governments greater control over their finances and limiting the ability of state governments to retain or manage funds meant for councils.

Two years on, FAAC has continued to allocate huge sums to the third tier of government, but the evidence suggests that the court-ordered direct-payment mechanism has not been implemented nationwide.

The result is a growing gap between financial entitlement and financial autonomy, with local governments receiving allocations on paper while the mechanism for placing those funds directly under their control remains unresolved.