Structural Hurdles Delay Direct Transfers to LGAs, Says Edun
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has assured that the Federal Government is working towards the full implementation of the Supreme Court ruling on local government autonomy, but structural issues remain a key obstacle to direct fund transfers.
Speaking in Abuja on Tuesday at the Agora Policy Conversation, Edun said that while the government recognises and upholds the landmark ruling affirming the financial independence of Nigeria’s 774 local government areas, translating policy into practice requires significant institutional adjustments.
According to him, the Supreme Court had made two key pronouncements — first, that only democratically elected local governments should receive allocations from the Federation Account; and second, that such allocations must be paid directly to them.
While the first directive has been enforced — with unelected councils excluded from receiving funds — the second is still being processed.
“Direct transfers to local governments are a work in progress,” Edun said.
“It is not as simple as flicking a switch.
There are embedded structures, such as those for primary healthcare and basic education, that currently operate under state supervision, and these require reconfiguration before direct funding can happen effectively.”
He said the ongoing challenge lies in modifying these legacy arrangements without disrupting vital services.
“You need a serious tinkering of the existing funding architecture to allow local governments to receive and manage allocations directly.”
The minister emphasised that the Federal Government was committed to upholding the rule of law and would fully implement the Supreme Court ruling.
“In a democracy, the rule of law is paramount. The Supreme Court has ruled. It is the duty and obligation of the Federal Government to implement it.”
He emphasised the strategic role of local governments in driving President Bola Tinubu’s Renewed Hope Agenda, adding that meaningful grassroots development could only occur if councils were empowered to manage their own resources.
“To lift millions of Nigerians out of poverty, we must start from the grassroots. Local governments must be engines of development,” Edun said.
He explained that Tinubu’s reform agenda had already laid the foundation for macroeconomic stability through difficult but necessary adjustments.
“The first phase removed major distortions, such as the petrol subsidy and the managed exchange rate system. Now we are entering the second phase — stabilising inflation, increasing reserves, reducing the fiscal deficit, and boosting revenue.”
Referencing recent data from the National Bureau of Statistics, Edun said Nigeria’s economy grew by 3.4 per cent in the first quarter of 2025. However, he noted that this was just half of the administration’s target.
“For real impact, particularly on the poor and vulnerable, the economy needs to grow at around 7 per cent annually,” he said, stressing that increased productivity and job creation were central to achieving that goal.
He added that local governments must be equipped to deliver services more efficiently if Nigeria’s growth is to be inclusive and transformative.
“Autonomy isn’t just a legal issue; it’s a development necessity,” he said. Edun also revealed that the government was pursuing multiple initiatives to strengthen local governance structures.
These include a national nutrition programme across all 774 local government areas and the Local Government Connectivity Project to improve digital access. According to him, better connectivity would enhance access to markets, education, and healthcare services — ultimately supporting inclusive growth.
Earlier, the Executive Chairman of the Fiscal Responsibility Commission, Victor Muruako, urged local governments to approach financial autonomy with fiscal discipline.
“I passionately urge all local governments in Nigeria to preface the implementation of their autonomy with clear commitments to fiscal transparency, accountability, and prudence,” he said.
He warned that while fiscal independence allows LGAs to seek development financing from banks and institutions, any borrowing must comply strictly with the Fiscal Responsibility Act to avoid unsustainable debt accumulation.
“Autonomy should not be mistaken for institutional independence without accountability. The goal is to improve service delivery and human development at the community level,” Muruako said.
Also speaking at the event, Chair of Agora Policy, Ojobo Atuluku, said Nigeria must go beyond court judgments to tackle entrenched structural and political barriers that have weakened local governance. “If we are truly committed to restoring the promise of local democracy, then we must pursue a roots-and-branch reform of our local governance system,” she said.
She called for the dismantling of political patronage systems and the transformation of local councils into accountable institutions that genuinely reflect citizens’ needs.
Atuluku announced that Agora Policy would soon launch the Local Governance Accountability Portal, an online tool designed to track statutory allocations to LGAs, elected officials, and governance profiles of all local councils since 1999. “It will be a powerful tool for genuine local governance systems development,” she said.
Also speaking, Lead Governance Specialist at the World Bank, Deborah Isser, said implementation of the Supreme Court ruling on local government autonomy remains fraught with political resistance and systemic weaknesses.
She noted that despite the court’s clear directive on political and financial autonomy for councils, many state governors remain reluctant to relinquish control, citing poor capacity and weak accountability structures at the local level.
Isser warned that Nigeria faces a deep crisis in public service delivery, with the country ranked among the bottom five globally in maternal mortality, under-five mortality, and learning poverty.
She urged stakeholders to move beyond legal and bureaucratic debates and focus instead on transforming how basic services, such as health and education, are delivered at the grassroots level.
Isser reaffirmed the World Bank’s support for reforms through its HOPE programme, which targets improved outcomes in governance, healthcare, and education at the subnational level.