Nigeria’s highest court says local governments can spend their funds without interference: why this matters

Nigeria’s Supreme Court has affirmed the financial autonomy of the country’s 774 local government areas. It upheld the suit brought by the federal government to strengthen the independence of local governments in the country. Nigeria’s attorney-general and minister of justice filed the suit in May. Local governments have been hampered in most states, where the governors seize their federal allocations and only release funds to them piecemeal. Public law scholar Abiodun Odusote explains the implications of the judgment.

Why did the federal government ask the court to decide on local government autonomy?

There are three tiers of government in Nigeria: federal, state, and local governments. The duties of the federal are spelt out in the exclusive list of the constitution; they include aviation, defence, currency and diplomacy. The states’ duties are spelt out in the concurrent list of the constitution (concurrent because shared with the federal government). The local governments’ functions are in the fourth schedule of the constitution. They include things like collection of rates, licensing of bicycles, trucks and canoes, and naming of streets.

The case was triggered by a history of state governments usurping the powers of local government councils. They also deprive local governments of the use of funds allocated to them from the federation account (a sort of “central pocket”).

All tiers of government depend on the federation account to finance development projects. Section 165 of the 1999 constitution and the Allocation of Revenue Act 1982 stipulate that the revenues generated by the federal government should be credited to the federation account and disbursed monthly among the three tiers of government.

But there has been no significant development in the local government councils across the country. Some state governors also suspend elected local government officials and replace them with caretaker committees who are basically their proxies.

Local government elections have been turned by state governments into a scam. The party of the state governor “wins” all local government elections in the state.

Some local government councils, particularly those in Lagos State, appear to have donated all their constitutional powers to the state government. This is seen in Lagos State agencies performing the constitutional duties of local governments. Such duties include control and regulation of outdoor advertising, collection of rates, radio and television licences, and maintenance of cemeteries and parks. These are local government functions, as spelt out in the constitution. The primary reason, I think, is for the state government to be able to appropriate local government council money.

What are the major points of the judgment?

The judgment affirms local governments’ financial autonomy. The judgment doesn’t change the law, but the procedure that should be used in achieving financial autonomy. It says governors may not dissolve local government councils. Any installed caretaker committee or interim council for a local government will not receive any allocation from the federation account. It’s illegal for a state government to keep or use money that’s due to a local government council.

Local governments, and not state governments, are now in practice free to determine their priorities. They can manage their finances and perform their constitutional duties without any interference from the state government. Local governments now have the potential to relate with the local people and become more accountable, and perhaps more transparent and responsive. Citizens should be able to take a walk to the local government offices and ask questions. This will facilitate grassroots development as we used to know it in the first republic and as it is in other parts of the world.

What’s your assessment of the judgment?

I have mixed feelings. The majority judgment uses law as an instrument of social engineering or transformation. It is meant to engineer political and economic change in the local government council. To that extent and in view of the potential benefits, I am happy that the judgment will promote democracy and enhance grassroots development.

The Supreme Court in this judgment has interpreted and applied the constitution to solve a peculiar problem. It specifically noted that paying the local government councils through the states has not worked. And the court noted that the state governments are “endangering the continuous existence of the local government councils and most of them are virtually extinct”. Hence, they should be paid directly. This may be interpreted as progressive interpretation of the law and applying the law to achieve social engineering.

However, Justice Habeeb Abiru’s dissenting opinion makes the valid point that the majority judgment contradicts sections 162(6) and 162(8) of the 1999 constitution. These provisions require that a state maintain a joint account with the local government where all allocations from the federation account to local government council are paid. The provisions for the joint accounts were introduced during the parliamentary debates leading to the enactment of the constitution. They were intended to address the problem of local government councils being unable to pay their primary school teachers and employees in the 1990s.

How would this judgment affect Nigeria’s status as a federal state?

There is no doubt that Nigeria remains a federation. Section 2 (2) of the 1999 constitution provides that Nigeria is a “federation consisting of States and a Federal Capital Territory”. The same constitution gives duties and powers to the local government councils.

There are different types of federalism across the globe. In the US, for example, power is shared between the central government and the federating units. In India, predominant powers reside with the central government. Nigeria appears to be moving in the direction of concentrating more powers in the central government.

Abiodun Odusote, Associate professor, University of Lagos

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