The Reputational Cost of Osun’s Local Government Funds Crisis

By Segun Ojo

The ongoing crisis over the control and management of local government funds in Osun State has grown beyond a legal and political disagreement, leaving behind reputational damage for institutions and political actors involved. The matter now tends towards criminal implications and questions about financial accountability and transparency.

What began as a dispute over local government administration has weakened public confidence in governance, strained relations between political parties and labour unions, and dragged a major financial institution, United Bank for Africa (UBA), into a controversy with implications beyond the state. The matter is already a test case for democratic practices at sub-national level.

The crisis started as a disagreement between the Osun State Government, led by Governor Ademola Adeleke of the Peoples Democratic Party (PDP) now Accord Party and the opposition All Progressives Congress (APC) over the status of local government councils and the handling of statutory allocations meant for grassroots administration. Facts before the public indeed blame current on actions and decisions of the former governor after his electoral defeat in July 2022.

The APC insists that local government chairmen elected during the administration of former governor Gboyega Oyetola now the current Minister of Marine and Blue Economy, remain valid following court judgments, while the Adeleke-led government maintains that the councils were lawfully dissolved and that continued recognition of the APC-backed officials undermines constitutional order and local government administration. But the widely held non-partisan viewpoint is that the tenure the APC claimed lapsed last October, 2025.

As the dispute lingers, its effects are being felt across political, financial, and labour circles. Already allegations and counter-allegations are flying around about local government money being shared among politicians when no kobo has been paid to local workers in the last 12 years.

Local governments are the closest tier of government to the people, responsible for basic services such as primary healthcare, sanitation, markets, and local infrastructure. The governor however prevented total paralysis of grassroots governance by paying local workers from the state treasury in the last 12 months.

Yet, the prolonged tussle over who controls council administration and funds has disrupted these functions, leaving many councils unable to operate effectively. The governor paying almost 15 billion naira monthly for local government workers and pensioners has become unsustainable.

For residents, the crisis has reinforced perceptions of political power struggles taking precedence over service delivery.The people are particularly shocked at the violation of democratic principles. The people felt neglected and insulted.

Civil servants and pensioners at the local government level have repeatedly raised concerns about delayed payments, while development projects remain stalled in several councils. The deepening level of impunity generates suppressed anger among the grassroots populace.

Analysts say this breakdown at the grassroots level has damaged public trust in the political system and weakened confidence in the ability of elected officials to manage public resources responsibly. In more specific terms, political pundits are of the view that the local government leadership crisis will determine voters’ choices across the 30 local governments.

The crisis has also taken a toll on the image of the APC in Osun, particularly among voters who associate the party with the controversy. The APC appears to have added the current backlash to her long list of political baggage and deficit namely the half salary debacle, the pensioners hangover, the guber primaries challenges alongside current infighting on sharing formula for the local government funsd.

The APC claim that it is maintaining and defending the rule of law and court judgments was taken with a pinch of salt by members of the public who tend to believe that there was no court judgement that reinstated the APC chairmen and that its current occupanttion of the council secretariats was illegal and a demonstration of brute force in a democratic setting.

For many members of the electorate, especially at the local level, the details of court rulings matter less than the visible impact on their daily lives.They see a political party forcefully imposing itself and tampering with money meant for local development for private pockets. They are angry but powerless as they read of millions of naira been shared among politicians from fund meant for local development.

Delayed salaries, stalled projects, and administrative uncertainty have shaped public perception, with the APC increasingly viewed by many voters as the architect of the political conflict that has brought governance at the grassroots to a standstill.

With future elections in view, political observers note that the APC’s association with the crisis could affect its support base, particularly in rural areas where local governments play a central role in community life. Even pro-APC pundits are secretly voicing apprehension of the downward slope in the popularity rating of the party among the populace. Even, the party’s parroting of federal might has not stop the widening level of disapproval for the party among the people.

Perhaps one of the most significant consequences of the crisis has been the growing tension between the APC and organised labour. No party has won Osun election in the past without the full support of the labour movement. Already the labour groups have endorsed Adeleke especially flowing from the local government crisis among others.

Labour unions, including the Nigeria Labour Congress (NLC) and the Nigeria Union of Local Government Employees (NULGE), have consistently raised concerns about workers’ welfare amid the dispute. For labour groups, the crisis represents more than a political disagreement; it is seen as a direct threat to job security, wages, and pensions.

This perception has damaged the APC’s standing within the labour movement, traditionally an influential bloc in shaping public opinion and political mobilisation.

Labour leaders argue that any political action that disrupts salary payments and workers’ welfare will naturally attract resistance, regardless of legal arguments. This has widened the gap between the APC and labour unions, making reconciliation increasingly difficult. Attempts to hound the labour leaders by the APC has driven labour groups deeply into the fold of Accord/PDP in the state.

The involvement of United Bank for Africa (UBA) in the handling of local government funds has added a financial and institutional dimension to the crisis. Most observers accept the narration that the UBA breached the state law which regulate management of local government finances. Even national finance experts are worried as to why UBA is entangled in what appear like direct disobedience of local regulatory laws.

Allegations and counter-allegations surrounding the management and custody of the fund, arising from compliance with court orders and government directives, have placed the bank under public scrutiny. The general impression out there is that in Osun the UBA appears to have decided not to operate within regulatory frameworks. The public is increasingly associating the names of the bank with political impunity and partisan banking practices in a politically sensitive dispute that poses reputational risks, particularly in a climate where public trust in financial institutions is closely linked to transparency and neutrality.

Industry experts note that for a bank with international operations, even local controversies can attract wider attention, especially when they involve public funds and government accounts. What is more disturbing is the reported plan to picket UBA offices and petition local and international regulatory agencies.

How the matter is resolved, they argue, will influence perceptions of institutional responsibility and governance standards. The public expect restoration of normalcy; the grassroots also seek accountability of reported billions allegedly being shared among politicians. What is more, voters are anxiously waiting to deliver electoral judgement come August 8th.

●Segun Ojo, a public affairs analyst, writes from Ikirun, Osun state