ALGON Directs LGAs to Open Accounts with CBN for Supreme Court-Mandated Financial Autonomy

 ALGON Directs LGAs to Open Accounts with CBN for Supreme Court-Mandated Financial Autonomy

The Association of Local Governments of Nigeria (ALGON) has issued a directive to all local government chairmen across the country to open dedicated accounts with the Central Bank of Nigeria (CBN). This move is aimed at operationalizing the Supreme Court ruling granting financial autonomy to local governments and ensuring direct disbursement of monthly allocations from the Federation Account.

*Background and Supreme Court Ruling*

The directive follows the Supreme Court's landmark judgment on July 11, 2024, which mandated financial independence for Nigeria’s 774 local government councils. In compliance with this ruling, the CBN has opened accounts for each council, but additional documentation and Know Your Customer (KYC) protocols must be completed before these accounts can become fully operational.

*ALGON’s Directive*

In a letter dated March 5, 2025, signed by ALGON Acting Director General Mrs. Evan Enekwe, council chairmen were urged to visit their nearest CBN branches to finalize all necessary procedures. The letter stated:

“Your immediate compliance is advised to enable the operationalization of local government accounts into which monthly revenue allocations from the Federation Account will be paid, giving full effect to the Supreme Court judgment.”

*Monitoring and Accountability Measures*

To ensure transparency and accountability in fund utilization, the Nigerian Financial Intelligence Unit (NFIU) will monitor expenditures by local governments. Additionally, anti-corruption agencies such as the Economic and Financial Crimes Commission (EFCC) and Independent Corrupt Practices Commission (ICPC) have been tasked with prosecuting any officials found engaging in financial misconduct.

*Concerns Raised by ALGON BoT*

Despite ALGON’s directive, its Board of Trustees (BoT) has expressed concerns about domiciling funds with the CBN. The BoT warned that this arrangement could expose local government allocations to fraudulent garnishee orders and bureaucratic obstacles. It called on the Attorney General of the Federation (AGF) to intervene and uphold provisions of Section 162 of the Constitution by allowing funds to remain in commercial banks.

The move marks a significant step towards implementing financial autonomy for local governments in Nigeria. However, delays in documentation and concerns over fund security highlight challenges in transitioning to this new system. 

As stakeholders work to resolve these issues, ALGON’s directive underscores its commitment to empowering local councils and ensuring compliance with constitutional mandates.