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In a significant legal victory, the Federal Government (FG) of Nigeria and the Nigerian Financial Intelligence Unit (NFIU) have triumphed in their case against state governors regarding financial autonomy from the Local Government joint account. This ruling, delivered by Justice Inyang Ekwo of the Federal High Court on Monday, marks a pivotal step in the fight for financial transparency and accountability in local government finances.

In June 2019, the NFIU issued guidelines aimed at addressing crime vulnerabilities associated with cash withdrawals from local government accounts by state governments. These guidelines advised all banks to refrain from honouring transactions from joint accounts and directed that States/Local Governments Joint Accounts be used solely for receiving funds, which would then be transferred directly to local government accounts. Additionally, the guidelines capped daily cash withdrawals from local government accounts at five hundred thousand Naira.

The Nigerian Governors Forum challenged these guidelines, arguing that they interfered with state government powers as outlined in the 1999 constitution. Despite their efforts, the court ruled in favour of the FG and NFIU, emphasizing the importance of financial autonomy and accountability.

Following the implementation of the NFIU guidelines, many local governments across Nigeria experienced a reduction in financial mismanagement, particularly in the timely payment of staff salaries. This ruling is expected to further strengthen local governments by ensuring that funds are used appropriately and transparently.

Reacting to the judgement, Mr. Modibbo Tukur, Director/CEO of NFIU, praised the ruling, stating that it underscores the FG's commitment to protecting both state and local governments by ensuring the availability of funds for governance responsibilities. He highlighted that this financial autonomy would allow local councils to channel resources effectively, particularly towards improving local security.

Furthermore, Mr. Tukur announced that, following this judgement, all transactions involving Local Government funds will now be fully disclosed to the Independent Corrupt Practices Commission (ICPC) and the Economic and Financial Crimes Commission (EFCC), ensuring continuous monitoring and reporting.

This ruling not only reinforces the FG's stance on financial autonomy but also sets a precedent for improved financial governance and accountability at the local government level in Nigeria.