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LG autonomy: States defy court judgement, hold on to funds

The failure of the governors to comply with a court order and presidential executive order on the financial autonomy of local governments has continued to…

The failure of the governors to comply with a court order and presidential executive order on the financial autonomy of local governments has continued to be a source of concern. 

Although the 1999 Constitution recognizes local governments as the third tier of government with assigned responsibilities, states have subsumed their finances under their control. 

Local government functions include civil registration, kindergarten, vocational and technical education, primary health care, health protection, urban rail, ports, airports, water and sanitation, refuse collection and disposal, cemeteries and crematoria, slaughterhouses, parks and open places, water supply, electricity, agriculture, local economic development/promotion. 

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Section 162(3) of the constitution provides that, “Any amount standing to the credit of the Federation Account shall be distributed among the federal and state governments and the local government councils in each state on such terms and manner as may be prescribed by the National Assembly.” 

But the provisions in sub-sections 6, 7 and 8 appear to be the adopted option for the states in the country except few. The sections provide thus: “Each state shall maintain a special account to be called “State Joint Local Government Account” into which shall be paid all allocations to the local government councils of the state from the Federation Account and the government of the state. 

“Each state shall pay to local government councils in its area of jurisdiction, such proportion of its total revenue on such terms and in such manner as may be prescribed by the National Assembly.   

“The amount standing to the credit of local government councils of a state shall be distributed among the local government councils of that state on such terms and in such manner as may be prescribed by the House of Assembly of the state.”  

Determined to ensure autonomy for the other arms of government—the judiciary and legislature at the state level—President Muhammadu Buhari, in May 2020, signed an Executive Order 10 (EO10) relying on sections 5 and 121(3) of the constitution.   

But the Nigerian Governors Forum (NGF), chaired by the Ekiti State governor, Kayode Fayemi, on September 2020, filed an originating summon before the Supreme Court through their lawyer and former president of the Nigerian Bar Association (NBA), Austin Alegeh, a Senior Advocate of Nigeria (SAN), challenging the threat of the Attorney General of the Federation and Minister of Justice, Abubakar Malami (SAN) to proceed with the implementation of the EO10 by deducting the funds from the source. 

Although the Supreme Court, on February 11, in a split decision, overruled the president on the issuance of the EO10 against the 36 states’ governors based on constitutional limitations to presidential powers in a federal system, the apex court was silent on the implementation of the constitutional provision on direct funding of the courts and the legislature at the state level.  

It was a federal agency, the Nigerian Financial Intelligence Unit (NFIU) that filed an objection to a suit by the 36 states’ attorneys- general before a Federal High Court, seeking an order restraining it from implementing the directive on the joint accounts.  

The suit came on the heels of the NFIU’s May 18, 2019 regulation to the states, that effective from June 1, 2019, the constitutional joint account from the federation account should strictly be for receiving the joint funds and not for disbursement or they would lose control of the funds. 

The NFIU, in a statement by its spokesman, Ahmed Dikko, also maintained its “understanding of the 1999 Constitution that no debit is allowed on any local government fund unless and until the funds are credited to and reach the bank accounts of a local government in any part of the federation. 

“The provision of the cumulative cash withdrawal not exceeding N500,000 per day is also firmly in place, effective June 1, 2019.” 

In its judgement on May 23, the Federal High Court in Abuja dismissed the suits by the 36 governors and upheld the power of the NFIU to issue the guidelines on the financial autonomy of local governments. 

Justice Inyang Ekwo ruled that sections 23(2)(a); and 28(2) of the NFIU Act were meant to entrench financial transparency in government transactions, that is, states’ and local governments’ finance.  

It requires political solution – Analyst  

An analyst, Dr Ndu Nwokolo, a managing partner at Nextier SPD, an international consulting outfit, said the joint account standoff between states and local governments was political and could only be resolved politically through the restructuring of the country. 

He said the overbearing powers of the governors were such that they control state electoral commissions and local government chairmen, and could impeach a chairman who did not pander to their wishes. 

“Restructuring will play a big role in addressing the issue of local government autonomy, with two tiers of states and the federal government. This will allow the states to create the number of local governments they want,” he said. 

He advocated that the states should adhere to their supervisory responsibility to the local governments in terms of spending funds deployed through the joint account and not usurp such funds. 

According to him, in a properly devolved system, local governments have clear and legally recognised functional boundaries over which they exercise authority and within which they perform public functions. 

However, an Abuja-based lawyer and public affairs analyst, Isaac Anumudu, said the judgement of the court must be obeyed as it had exposed the exploitation of the loophole in the constitutional provision for a joint account, while at the same time demarcating government to three tiers of federal, states and local governments. 

“If a judgement has come to set aside that joint action on the account by state governors, it remains binding until set aside by the Supreme Court,” he said. 

Similarly, Hameed Ajibola Jimoh, a lawyer, maintained that non-compliance with the principle of financial autonomy of the local government would remain an act of disobedience to valid and subsisting court orders, no matter how.

Govs mum on compliance

The media aide to the chairman of the NGF, Governor Fayemi, turned down the request for comment on the matter, but directed our reporter to the head of the media unit of the group, Mr Barkindo, who did not respond to phone calls and text messages on the matter.