The Socio-Economic Rights and Accountability Project (SERAP) has instituted a legal action at the Federal High Court in Lagos, seeking an order to compel the Central Bank of Nigeria (CBN) to publicly disclose detailed records of any direct payments made to Nigeria’s 774 local government councils from the Federation Account. The rights group is demanding a breakdown of the amounts disbursed to each council and a specific explanation regarding the flow of funds to local governments in Rivers State.
In a suit marked FHC/L/MSC/521/2025, SERAP is invoking the July 2024 Supreme Court judgment, which categorically mandated that all allocations from the Federation Account must be paid directly to democratically elected local government councils. The apex court held that state governors lack the constitutional authority to intercept, control, or withhold these funds.
SERAP argues that the CBN, as the custodian of the Federation Account, has a constitutional and statutory duty to ensure full compliance with the Supreme Court’s pronouncement. The organization stated in its affidavit that the current opacity surrounding the disbursement of federal allocations is undermining transparency, deepening corruption, and endangering the constitutional role of local governments.
“Local governments are the closest tier of governance to the people. Yet they are systematically deprived of funds that are rightfully theirs, thus compounding poverty and underdevelopment across the country,” SERAP stated.
The organization also claimed that some state governments continue to flout the court’s judgment by intercepting and diverting federal allocations meant for LGAs, further weakening grassroots development and service delivery. According to SERAP, the CBN’s failure to disclose these transactions not only enables illegality but also undermines public trust in democratic institutions.
The group cited Section 162(6) of the 1999 Constitution (as amended), which provides that funds from the Federation Account should be distributed “among the three tiers of government: Federal, State, and Local Governments.” By extension, the judgment of the Supreme Court reinforces the legal expectation that these funds reach the local councils directly, without interference from state governors.
“If the CBN fails to ensure this level of transparency and enforcement, it will be enabling violations of both the Constitution and international anti-corruption standards,” the suit added.
SERAP is further requesting that the CBN not only release payment data but also establish a framework that guarantees continued transparency of future disbursements. This, it says, is necessary for safeguarding the autonomy and viability of the local government system in Nigeria.
The rights group argued that Nigeria’s growing poverty crisis is exacerbated by the mismanagement of public funds meant for development at the grassroots level. By failing to uphold fiscal transparency, the CBN is contributing to a broader governance breakdown, especially in underserved communities.
Analysts believe this legal action, if successful, could set a significant precedent for fiscal federalism and accountability in Nigeria’s democratic governance. It could also compel the apex bank to develop a mechanism for real-time publication of disbursement data—an initiative that aligns with global best practices in public finance management.
The case is yet to be assigned to a judge, but legal observers say it will test the Nigerian judiciary’s commitment to enforcing fiscal discipline and the autonomy of the local government system, which is enshrined in the Constitution but often neglected in practice.
In July 2024, the Supreme Court ruled in favour of financial independence for local government areas, a decision widely praised by civil society but largely ignored in implementation. Despite this, reports have continued to surface of state governors withholding LG funds, effectively rendering the councils powerless and dependent on state executives.
If SERAP’s request is granted, the CBN may be forced to disclose all records of LG disbursements since the Supreme Court’s judgment—an unprecedented move that could trigger broader inquiries into state-level fund management and misuse.
The outcome of this suit may also influence ongoing constitutional reform debates and energize calls for full implementation of the Financial Autonomy Act for Local Governments.