By Erewunmi Peace

In a landmark shift toward democratic accountability and improved service delivery, Nigeria’s local government areas (LGAs) have entered a new era of financial autonomy following the Supreme Court’s historic ruling affirming direct allocation of federal funds to LGAs.

This ruling—hailed by governance advocates as a bold step toward true fiscal decentralisation—is now reshaping the power dynamics between federal, state, and local authorities, giving LGAs direct control over their resources and development priorities.

A Supreme Court Milestone

In July 2024, the Supreme Court of Nigeria declared that state governments must no longer act as intermediaries in the disbursement of federal allocations meant for LGAs. Instead, these funds are now paid directly to local government accounts, strengthening their capacity for independent decision-making.

Legal experts and civic leaders have since described the ruling as a “democratic breakthrough,” with the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) and the Nigeria Governors’ Forum (NGF) expressing support for the transition.

Fiscal Decentralisation: The Game-Changer

With this shift, LGAs now have the legal and operational latitude to:

Prepare and execute their own budgets

Invest directly in local infrastructure and social services

Engage in community-based planning and development

“True fiscal decentralisation means local governments can now respond faster to the needs of their people without waiting for state approvals,” said Dr. Sani Bello, a public finance analyst.

Financial Autonomy Breeds Accountability

Financial autonomy is not just about access to funds—it is also about responsibility. Local councils are now under greater scrutiny to ensure funds are used transparently. The expectation is clear: autonomy must be matched by competence and accountability.

The Supreme Court’s directive also reinforces the constitutional role of LGAs as the third tier of government, expected to play a direct role in primary education, health care delivery, rural roads, waste management, and community development.

Impacts on Grassroots Governance

Observers are already reporting a renewed sense of urgency and innovation in some LGAs. In Lagos, Ondo, and parts of the North-Central region, community-led projects and participatory budgeting models are emerging as new governance tools.

Civic groups and traditional rulers are also playing advisory roles to ensure local councils remain citizen-focused.

Challenges Ahead

While this policy shift is widely celebrated, it also presents challenges:

Capacity gaps in local financial management

Potential resistance from state-level political actors

The need for robust oversight and audit systems

Experts warn that without transparent frameworks and citizen engagement, the gains of financial autonomy could be undermined by corruption or inefficiency.

Conclusion

The nexus between fiscal decentralisation, financial autonomy, and grassroots governance is no longer theoretical—it is now the frontline of Nigeria’s democratic journey. With strong leadership, institutional support, and community participation, this new system could redefine how government serves its people—from the grassroots upward.