By Jimoh Ahmed
Editor
In a historic judgment that is already reverberating across Nigeria’s political landscape, the Supreme Court has ruled that Local Government Areas (LGAs) have exclusive control over their funds, effectively stripping state governments of the long-held power to manage or interfere with allocations meant for the country’s 774 local councils.
The ruling — delivered in the Attorney-General of the Federation vs. 36 States of the Federation — represents one of the strongest affirmations yet of the constitutional autonomy of Nigeria’s third tier of government. And for Osun State, which became a flashpoint following months of withheld local government funds, the judgment marks a significant defeat with wide-ranging implications for governance and financial administration.
A Judgment Decades in the Making
For years, local government funds have been subjected to state control through the controversial State–Local Government Joint Account (SJLGA). Critics said the mechanism was abused by governors who diverted, delayed, or reallocated funds at will, starving LGAs of resources intended for grassroots development.
The Supreme Court, in a unanimous decision, declared the practice unconstitutional, ruling that no state governor or state institution has the authority to interfere with funds constitutionally allocated to local governments.
Justice Emmanuel Agim, who delivered the lead judgment, held that “a state governor has no power to hold, alter, or redirect funds meant for local councils, whether by law, directive, or administrative arrangement.”
The ruling also outlawed the use of caretaker committees, insisting that only democratically elected local government councils can receive and administer federal allocations.
Osun at the Center of the Storm
The legal battle intensified after the Federal Government accused the Osun State Government of unlawfully withholding up to seven months of LGA allocations, even after the July 2025 local government elections.
Osun claimed the funds were being “managed” to stabilize governance at the local level. But the Federal Government insisted that withholding allocations violated the Constitution, the Federation Account Act, and the Supreme Court’s earlier pronouncements.
The apex court agreed.
By ruling against Osun, the court reaffirmed that no state — regardless of internal administrative challenges — can touch LGA funds under any pretext.
A Turning Point for Grassroots Development
With this judgment, LGAs will now receive funds directly from the Federation Account — bypassing state governments entirely.
The ruling promises to reshape Nigeria’s developmental landscape in several ways:
1. End of State-Level Financial Capture
For the first time in decades, LGAs can plan and execute projects without seeking approval or release of funds from state capitals.
2. Strengthening the Third Tier of Government
The decision restores constitutional balance by empowering LGAs to function as the “government closest to the people.”
3. Boost to Accountability
Direct access to funds means LGAs can be held directly accountable for performance — removing the excuse of state interference.
4. Political Shockwaves in the States
Governors across Nigeria are expected to resist the ruling, as it erodes one of their most strategic political and financial tools.
“A Victory for Federalism” — Analysts React
Legal analysts, civil-society groups, and policy experts describe the ruling as “the most consequential constitutional pronouncement on local government autonomy since 1999.”
According to constitutional lawyer, Dr. Seyi Ajayi:
> “This judgment restores the federal structure envisioned by the Constitution. For years, governors behaved as though LGAs were departments under the Ministry of Local Government. That era is over.”
Others argue that Nigeria may be witnessing a new era of grassroots revitalization, provided that LGAs do not misuse the funds.
A Warning to Governors Nationwide
In unusually strong language, the Supreme Court warned all 36 governors to immediately comply with the ruling. The court emphasized that any attempt to interfere with LGA funds would amount to contempt of court.
Already, the Attorney-General of the Federation has signaled that the Federal Government will:
Audit past LGA allocations
Recover diverted funds
Prosecute state officials found in violation
This signals a harder stance from the Federal Government — and it sets the stage for possible constitutional showdowns between Abuja and several states.
What This Means for Ordinary Nigerians
If implemented faithfully, the judgment could transform daily life at the grassroots level.
Nigerians may begin to see improvements in:
Primary healthcare
Local roads and drainage systems
Primary school infrastructure
Waste management
Rural electrification
Markets and community centers
LGAs, now flush with constitutionally guaranteed funds, will be expected to deliver more visibly and more urgently.
But There Are Risks
Despite the optimism, many analysts warn of potential challenges:
1. Weak LGA institutions
Many local governments lack the administrative capacity to manage direct funds effectively.
2. Risk of local-level corruption
Without strong oversight, LGAs could become new centers of waste and mismanagement.
3. Political backlash from states
Some governors may attempt to create new laws or administrative bottlenecks to retain influence.
4. Citizens’ oversight becomes crucial
With power comes responsibility — and LGAs must be subjected to rigorous public scrutiny.
The Road Ahead
For Osun State, the ruling is both a legal defeat and a monumental opportunity. The state must now:
Immediately release pending allocations
Allow LGAs to operate independently
Strengthen local administrative structures
Ensure compliance with the Constitution
The Federal Government, meanwhile, must enforce compliance nationwide, ensuring this ruling is not just a win on paper.
Conclusion
The Supreme Court’s verdict is a watershed moment in Nigeria’s evolving democracy. By freeing local government funds from state control, the court has unlocked a new chapter in grassroots governance, accountability, and federalism.
Whether this becomes a new dawn or another missed opportunity will depend on political will, institutional reform, and citizen vigilance.
For now, the message is unmistakable:
Local governments are no longer under the financial grip of state governors.
Their autonomy is law. Their funds are theirs — and theirs alone.
FACT BOX
LOCAL GOVERNMENT AUTONOMY: KEY POINTS OF THE SUPREME COURT JUDGMENT
✔ LGA FUNDS MUST BE PAID DIRECTLY
No state government is allowed to receive, hold, or manage funds belonging to local councils.
✔ JOINT ACCOUNT SYSTEM INVALIDATED
State-Local Government Joint Accounts can no longer be used to intercept or control LGA funds.
✔ NO MORE CARETAKER COMMITTEES
Only democratically elected local government councils are recognized under the Constitution.
✔ GOVERNORS CANNOT SUSPEND OR DISSOLVE LG COUNCILS
Any attempt to do so violates the 1999 Constitution.
✔ FEDERAL GOVERNMENT CAN WITHHOLD FUNDS IF LGAS ARE NOT ELECTED
States operating caretaker committees risk losing allocations.
✔ LGAS NOW FULLY RESPONSIBLE FOR DEVELOPMENT PROJECTS
Primary healthcare, primary education, waste management, and local infrastructure fall under their direct control.
✔ NON-COMPLIANCE IS CONTEMPT OF COURT
Governors who interfere with LGA funds risk legal sanctions and recovery actions.
One Comment
Except there wasn’t any LG election held in July 2025 in Osun State, all other presentations are 100% correct