States shun autonomy ruling, retain N1.46tn LG funds

State governments received N1.46tn meant for local government councils in the first quarter of 2026, despite the Supreme Court judgment granting financial autonomy to the third tier of government, findings by The PUNCH have shown.

Data from Federation Account Allocation Committee reports, the Office of the Accountant-General of the Federation, and the National Bureau of Statistics, collated by The PUNCH on Monday, showed that local government councils were allocated N1.46tn from revenue earned in January, February, and March 2026, but shared in February, March, and April, respectively.

The amount represented a 19.05 per cent increase compared with the N1.23tn received by the councils from the corresponding revenue period in 2025.

However, the allocations were still processed within the FAAC distribution structure amid continued delay in the full implementation of the July 11, 2024, Supreme Court judgment, which ordered that allocations to local government councils be paid directly to democratically elected councils.

The apex court had held that state governments had no constitutional authority to retain, spend, or control funds standing to the credit of local government councils.

However, almost two years after the judgment, the implementation of direct payment to the 774 local government areas has remained stalled, with state governments still playing a dominant role in the management of council finances.

According to the FAAC figures, councils received N537.88bn from January 2026 revenue shared in February.

This was higher than the N431.48bn received from January 2025 revenue shared in February 2025, representing an increase of N106.40bn or 24.66 per cent.

For February 2026 revenue shared in March, local government councils received N456.47bn, compared with N410.56bn from the corresponding period of 2025. This showed an increase of N45.91bn or 11.18 per cent.

In April, when FAAC shared revenue generated in March 2026, councils received N468.83bn. This was N81.83bn or 21.14 per cent higher than the N387bn received from March 2025 revenue shared in April 2025.

On a month-on-month basis, local government allocations fell from N537.88bn in February to N456.47bn in March, a decline of N81.41bn or 15.14 per cent. The allocation, however, rose slightly to N468.83bn in April, indicating an increase of N12.36bn or 2.71 per cent.

The pattern showed that while councils received more funds year on year, the monthly flow remained unstable, reflecting the volatility in federation revenues, especially statutory and Value Added Tax receipts.

Across the three months, total distributable revenue to the three tiers of government stood at N6.97tn in 2026, compared with N7.40tn in the same period of 2025. This represented a decline of N427.19bn or 5.77 per cent.

Despite the drop in total distributable revenue, the Federal Government, states and local governments received higher direct allocations than in the previous year, while derivation payments to oil-producing states declined.

The Federal Government received N2.04tn in the first quarter of 2026, up from N1.65tn in the corresponding period of 2025. This showed an increase of N391.21bn or 23.70 per cent.

State governments received N2.10tn in the first quarter of 2026, compared with N1.69tn in the same period of 2025, representing an increase of N416.79bn or 24.72 per cent.

Oil-producing states received N321.90bn as 13 per cent derivation in the first quarter of 2026, down from N393.93bn in the same period of 2025. This amounted to a decline of N72.03bn or 18.29 per cent.

The figures showed that local governments accounted for about 20.99 per cent of the N6.97tn distributed in the first quarter of 2026.

Analysts have repeatedly argued that the impact of higher council allocations may remain limited unless the Supreme Court judgment is fully enforced and councils gain real control over their funds.

Under the old practice, allocations due to local governments were paid into State Joint Local Government Accounts, a system critics said allowed governors to control funds meant for grassroots development.

The Supreme Court ruling was expected to end that arrangement by compelling direct payment to local governments. However, delays in implementation have raised concerns that councils may continue to receive allocations in name while states retain practical control over spending.

The development is also significant because local governments are responsible for basic services such as primary healthcare, rural roads, markets, sanitation, motor parks and community infrastructure. Weak control over their finances has often been linked to poor service delivery at the grassroots.

The first-quarter figures suggest that while more money is flowing to local governments, the autonomy question remains unresolved.

The Citizens Centre for Integrated Development and Social Rights, a non-profit organisation, recently called for greater accountability in the implementation of financial autonomy for local government areas.

Executive Director of the Centre, Dr Emeka Ononamadu, made the call after a stakeholders’ engagement on the Freedom of Information Act and local governance in Nigeria, organised by the Centre in collaboration with the Nigeria Civil Society Situation Room, in Owerri.

Ononamadu said local government autonomy and improved accountability would reduce corruption in Nigeria, strengthen the local economy, and reduce insecurity.(Punch)