Financial Autonomy Struggle: Over Half of Nigeria’s Local Governments Fail to Generate Revenue in 2023
More than 350 local government councils across 17 Nigerian states and the Federal Capital Territory failed to generate or remit any revenue in 2023, according to data from the National Bureau of Statistics (NBS). This stark finding highlights deep-rooted challenges in local governance, as calls for financial autonomy grow louder amidst strained relations with state governments.
The NBS report shows a troubling rise from 2022, when councils in only seven states reported zero revenue. This year, 352 councils across 17 states were unproductive financially, adding to concerns about resource management and the implications of granting local governments autonomy. The NBS data underscores the financial struggles faced by many councils, with only 20 of Nigeria’s 36 states recording revenue from their local governments in 2023.
Amid these revelations, the Nigerian Supreme Court ruled in July to grant financial independence to the nation’s 774 local government areas. The landmark judgment decreed that governors could no longer control federal allocations meant for local councils, directing the Accountant-General to remit funds directly to local government accounts. The ruling, which mandates the direct payment of statutory allocations by November 2024, has been seen as a critical shift towards empowering local governments and strengthening their accountability.
Despite this, the NBS data shows a decline in total local government revenue from N48.7 billion in 2022 to N37.05 billion in 2023 across the 20 states that generated revenue. Lagos led with N10.49 billion, followed by Ebonyi at N6.13 billion, and Kwara at N3.35 billion. Meanwhile, Rivers, Delta, Kano, and other states reported zero revenue from their local councils.
With autonomy now imminent, the spotlight falls on the capability of local governments to effectively manage and mobilise resources. The Supreme Court’s ruling not only grants financial independence but also calls for stricter monitoring of how local councils utilise their funds to ensure transparency and efficiency in local governance.
The Attorney-General’s office, which championed the autonomy lawsuit, has advocated for greater oversight to prevent mismanagement, while local councils are urged to seize this opportunity to bolster their financial infrastructure. However, with many councils struggling to generate revenue, questions persist over whether they are equipped to handle this newfound independence responsibly.
