Just In : LG financial autonomy: FG, NFIU win case against governors



Just In : LG financial autonomy: FG, NFIU win case against governors

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A Federal High Court sitting in Abuja presided over by Justice Inyang Ekwo on Monday delivered a judgement in favour of the Federal government and Nigerian Financial Intelligence Unit, NFIU, on Local government joint accounts nationwide.


Delivering the judgment, Justice Ekwo dismissed the suit for lacking in merit.

The court held that upon studying the provisions of the NFIU’s guidelines, he was unable to see where the provisions thereof contradict or conflict the provision of Sections 7(1), (6) (a) and (b) of the constitution.

“I am also unable to see how the provisions of the 2nd defendant (NFIU)’s guidelines contradict or conflict with the provisions of Section 162(6) of the constitution which creates the ‘State Joint Local Government Account’ into which allocations to the local government councils of the state from the Federation Account and from the government of the state shall be paid,” he said.

He said that the guidelines did not contradict Section 162(8) of the constitution, which prescribed that the amount standing to the credit of the local government council of the 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.

According to him, the provisions of the 2nd defendant’s guidelines do not contradict or conflict with the provisions of the 4th Schedule to the 1999 Constitution which prescribes the functions of a local government council.


“On the whole, I see the provisions of the guidelines of the 2nd defendant as seeking to direct the monitoring of accounts, transfers and any other means of payment or transfer of funds of local government councils as provided for in Section 3 (1) (r) of the Act of the NFIU.

“It only limits cash withdrawal made from any Local Government Account anywhere in the country to amount not exceeding N500,000.00 (Five Hundred Thousand Naira) per day.
“Any amount higher than that can be done using other methods of banking transaction save cash.

“Unless it can be shown that there is any provision of the 1999 Constitution (as amended) which these provisions of the 2nd defendant’s guidelines have contradicted or conflicted directly and practically, then the issue of unconstitutionality cannot be said to arise,” he said.

The judge further said that he found that there was no provision of the NFIU’s guidelines that has contravened the provisions of Sections 7(1), (6) (a) and (b), 162 (6), (7) and (8), and the 4th Schedule to the 1999 Constitution (as amended).

Justice Ekwo, consequently, answered questions 1 to 5 formulated by the plaintiffs on the originating summons in the negative.

“I find in the end, that the case of the plaintiffs lacks merit and ought to be dismissed and it is hereby dismissed. This is the order of this Court,” the judge declared.

Earlier the judge also struck out the name of the 37th plaintiff (Incorporated Trustees of the Nigeria Governors’ Forum) from the suit for lack of locus standi (legal right) to institute the suit.

We reports that the 36 states AGs and the 37 plaintiff had sued the Attorney-General of the Federation (AGF), the NFIU and the Nigeria Union of Local Government Employees (NULGE) to court as 1st to 3rd defendants respectively.

They asked the court to determine that whether having regard to the combined effect of Sections 7 (1) (6) (a) and (b), 162 (6) and 162 (7) and (8) and the 4th Schedule of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) which, among others.

They said the Section guaranteed the existence and structure of Local Government Councils under Local Government Laws of each State, the state governments of the federation are subject to the directives or control of the NFIU or anybody howsoever called, other than the House of Assembly of each state as to the manner and terms of the operation of State Joint Local Government Accounts in their respective States.

on May 6, 2019, NFIU had issued guidelines to stimulate the reduction of crime vulnerabilities created by cash withdrawals from local government funds across the country, beginning from June 1, 2019.

The guidelines, the agency said, include full enforcement of corresponding sanctions against violations.

The guidelines limited the cumulative amount that can be withdrawn from a local government account to not more than N500,000 daily.

It also directed that any other transaction must be done through valid cheques or electronic funds transfer, among others.

It said that cash withdrawal and transactions from State Joint Local Government Accounts, (SJLGA, “posed biggest corruption, money laundering and security threats at the grassroots and to entire financial system and the country.”

But the state governments had dragged the AGF, the NFIU and NULGE to court arguing that such directive was in breach of financial autonomy as enshrined in the Nigerian constitution.

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