The Supreme Court has strongly criticised the Federal Government for failing to implement its July 2024 judgment mandating direct payment of federation account allocations to local governments.

Delivering the lead judgment, Justice Mohammed Idris said there was no credible evidence showing that the Attorney General of the Federation (AGF) had taken steps to operationalise the ruling in AG of the Federation v. AG of Abia State and others. He ordered the FG to commence immediate implementation of the decision.

The case, originally filed by Osun State through its AG, sought to compel the AGF to release withheld allocations to local governments. However, the Supreme Court struck out the suit in a 6–1 majority decision, ruling that the state AG lacked locus standi, as local governments are autonomous entities capable of suing independently.

Justice Idris emphasised that local governments are not appendages of states and solely own their allocations from the Federation Account. He stated:

“The Constitution does not envisage any form of joint ownership between the states and the Local Government councils.”

He criticised the AGF’s claim that Osun State was in contempt, asserting instead that the Federal Government bears responsibility for operationalising the ruling, including opening dedicated accounts for all 774 LGAs. He warned that any failure to comply constitutes a deliberate disregard of the rule of law.

In a dissenting judgment, Justice Emmanuel Agim held that the Osun AG had the locus standi, arguing that the plaintiff established a valid cause of action regarding withheld allocations.

The ruling was welcomed by the Osun chapter of the Association of Local Governments of Nigeria (ALGON). Chairman Abiodun Idowu described it as “a victory for democracy, good governance, and the common man”, saying it would end prolonged disputes over local government control and support socioeconomic development.

Meanwhile, the Osun State House of Assembly passed the Local Government Account Administration Bill 2025, aimed at regulating LG accounts in commercial banks. Introduced by Speaker Adewale Egbedun, the bill mandates that accounts be operated by only two signatories the Director of Finance and Director of Administration and General Services prohibiting political office holders from signing.

Penalties for non-compliance include five years’ imprisonment, a ₦50 million fine, or both. The bill is set to be sent to Governor Ademola Adeleke for assent.