Nigeria’s local governments to receive direct federal allocations starting January 2025 – Presidency
The Nigerian presidency has confirmed a change in the financial management of local government areas (LGAs) across Nigeria.
Starting from the end of January 2025, local governments will receive their allocations directly from the Federal Allocation Account Committee (FAAC).
This decision is rooted in a landmark Supreme Court ruling delivered on July 11, 2024, which declared that state governments do not have the constitutional authority to control or retain funds allocated for local governments.
The Supreme Court’s unanimous judgment, read by Justice Emmanuel Agbim, emphasized that the previous practice of routing local government funds through state governments was unconstitutional. The court stated that “the federation can pay local government allocations to the LGs directly or pay them through the states.” However, given that paying through states had proven ineffective in ensuring proper fund allocation and utilization, the court mandated direct payments to enhance local government autonomy.
This ruling was initiated by a suit filed by Lateef Fagbemi (SAN), the Attorney General of the Federation, advocating for financial independence for all 774 local government areas in Nigeria. The Supreme Court’s decision aims to empower these councils financially so they can execute projects and programs more effectively without interference from state governments.
According to Sunday Dare, Special Adviser to President Bola Tinubu on Media and Public Communications, this new system is set to commence at the end of January 2025. Dare highlighted that this move reflects President Tinubu’s commitment to ensuring local government autonomy. He provided an example where a local government chairman reported an increase in funding from N200 million to N2.9 billion due to this direct allocation policy.
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The expectation is that with direct access to federal allocations, local governments will be better positioned to manage their finances and implement development projects tailored to their communities’ needs. This shift also places greater accountability on both state and local governments regarding how they utilize public funds.
In addition to enhancing financial autonomy for LGAs, there is a call for increased scrutiny regarding how state and local governments manage their resources. Dare pointed out instances where states received substantial allocations but showed little improvement in infrastructure or services. For example, one state reportedly collected N499 billion last year—almost four times its previous allocation—yet did not demonstrate corresponding advancements in public welfare.
This emphasis on accountability suggests an initiative within the Nigerian governance framework aimed at ensuring that funds are used effectively at all levels of government.
