Nigeria’s Local Governments: The Paradox of Wealth Without Development

Nigeria’s local government system, designed as the tier of government closest to the people, remains caught between constitutional promise and structural dysfunction. While mandated to oversee critical sectors such as primary healthcare, basic education, local roads, and sanitation, many councils operate under a framework that enriches a few while stifling genuine development.

Recent fiscal data reveals a startling reality: some Nigerian local governments now command revenues larger than those of entire states, yet the impact on citizens’ lives remains disproportionately low.

Revenue Titans: Lagos LGAs Dominate the Fiscal Ladder

In 2024, the Federation Account Allocation Committee (FAAC) disbursed an unprecedented ₦15.26 trillion, representing a 43 percent increase from previous years. Within that massive pool, a striking pattern emerged — the top 20 highest-earning LGAs in Nigeria are all from Lagos State.

At the top of the list, Alimosho LGA received ₦11.13 billion in the first half of 2024 alone — more than double the annual allocation of several Nigerian states. It was followed by Ajeromi/Ifelodun (₦8.9 billion), Kosofe (₦8.8 billion), Mushin, Oshodi-Isolo, Ojo, Ikorodu, and Surulere.

Between 2017 and 2023, Alimosho alone received about ₦55.04 billion, averaging ₦9.17 billion annually. Beyond Lagos, high-revenue councils such as the Abuja Municipal Area Council (AMAC) and Port Harcourt City LGA each received more than ₦15 billion from FAAC in 2023, with total budgets (including internally generated revenue) often surpassing ₦30 billion — comparable to resource-rich states.

Lagos State’s fiscal dominance is also fuelled by its internally generated revenue (IGR), which hit ₦1.3 trillion in 2024, a 45% jump from ₦895 billion in 2023. This wealth flows down to its local governments, turning them into fiscal oases in an otherwise resource-scarce governance landscape.

The Development Disconnect: Where Does the Money Go?

Despite massive allocations, the impact on citizen welfare remains minimal. The disconnect between revenue and results manifests in multiple ways:

• Infrastructure deficits amid abundance: In Port Harcourt, residents still wade through flood-prone streets despite huge oil-derived revenues. In AMAC, densely populated areas like Nyanya and Karu continue to suffer from inadequate schools and healthcare facilities.

• Politically driven spending: Many projects prioritise visibility over value — from rice distributions during festivals to motorcycle donations and pilgrimages — reflecting welfare populism rather than sustainable development.

• Recurrent expenditure overload: A significant portion of LGA budgets is consumed by salaries, allowances, and political appointments, leaving little for capital projects.

However, there are exceptions that show how local governance can deliver tangible progress when resources are effectively managed.

• Alimosho LGA has built 15 new primary health centres since 2022 and completed a ₦4.2 billion hospital upgrade, reducing infant mortality by 18% in two years.

• Ikeja LGA invested ₦2.8 billion in a Digital Innovation Hub, creating over 1,200 jobs and attracting tech startups.

• AMAC’s adoption of e-payment systems increased revenue collection efficiency by 67%, while its public-private waste management partnership achieved 78% coverage, reducing cholera and typhoid cases by 43%.

Systemic Barriers: Why Wealth Doesn’t Equal Development

Experts point to structural inefficiencies, not lack of resources, as the root cause of local government underperformance.

• The Joint Account Trap: The State-Local Government Joint Account system allows state governments to control LGA funds, effectively stripping councils of fiscal autonomy despite constitutional guarantees.

• Transparency deficits: Many LGAs fail to publish budget implementation reports or expenditure data, enabling corruption and weakening public oversight.

• Capacity gaps: Several councils lack the technical manpower for planning and executing large-scale projects, resulting in poor-quality infrastructure and wasted funds.

Until these systemic barriers are dismantled, Nigeria’s local governments — even the wealthiest among them — will continue to embody a paradox: abundant resources but limited results.