The Socio-Economic Rights and Accountability Project (SERAP) has taken significant legal action against the Central Bank of Nigeria (CBN), filing a lawsuit in the Federal High Court of Lagos. This suit concerns the CBN’s alleged failure to disclose the details of direct payments to the 774 local government councils across Nigeria. The issue arises in the wake of a landmark Supreme Court ruling that mandated that allocations from the Federation Account must be paid directly to democratically elected local government councils, stripping state governors of the power to withhold or divert these funds.
Background of the Lawsuit
Filed under case number FHC/L/MSC/521/2025, SERAP’s lawsuit addresses a critical governance concern: the transparency and accountability of public funds. The Supreme Court’s decision in July 2024 established that state governors could not control or utilize money intended for local councils, yet SERAP argues that many state governors continue to circumvent this ruling. The organization contends that the CBN should facilitate compliance with the court’s orders by publicly disclosing how much money has been sent to each of the local government councils since the judgment was issued.
Key Arguments Presented by SERAP
SERAP’s legal representatives, Kolawole Oluwadare and Oluwakemi Oni, emphasize that access to information regarding direct payments is vital for ensuring accountability and assessing whether the CBN and other agencies are adhering to the Supreme Court ruling. They argue that:
Transparency is Crucial: Disclosure of payment details would empower citizens and ensure that public funds are utilized properly.
Protection of Local Governments: The CBN has a constitutional duty to safeguard the financial allocations meant for local governments, preventing any abuse by state authorities.
Challenge to Rule of Law: The ongoing disregard by state governors for the Supreme Court’s orders represents a significant challenge to the rule of law in Nigeria.
Implications of the Lawsuit
This lawsuit has far-reaching implications beyond the immediate transparency issue. By pressing for clarity on local government funding, SERAP seeks to strengthen democratic governance and protect the rights of local councils. A successful outcome could help ensure that funding directly benefits communities rather than being misappropriated by state officials.
The Context of Financial Allocation in Nigeria
Former President Muhammadu Buhari noted the troubling trend where funds meant for local councils are often mismanaged by state governors, who exploit these resources for personal benefit. For example, he highlighted a scenario where a local council chairman might only receive a portion of the allocated funds, pocketing the rest.
According to SERAP, the Federation Account Allocation Committee recently reported that a total of N1.578 trillion was shared among the three tiers of government for March 2025, indicating the significant financial stakes involved in this case.
As this case unfolds, it highlights the need for accountability in local government financing. The outcome could redefine the relationship between federal, state, and local governments in Nigeria, establishing a clearer framework for financial transparency and the proper management of public resources. SERAP’s determination to hold the CBN accountable reflects a broader commitment to fostering good governance and protecting the rights of Nigerian citizens.
By seeking judicial intervention, SERAP not only aims to secure compliance with existing laws but also seeks to fortify democratic principles that underpin the governance structure in Nigeria. The resolution of this case will be pivotal in shaping the future of local government efficacy and public financial management in the country.
