Local Govt: States lose battle over funds management

The 36 Governors have lost in their opposition to the Federal Government’s efforts to monitor their handling of Local governments’ funds.

Justice Inyang Ekwo of the Federal High Court in Abuja dismissed a suit filed to that effect by the 36 states, through the Nigeria Governors’ Forum (NGF) and their Attorneys General.

In the suit marked: FHC/ABJ/CS/563/2019, the states challenged the legality of the Nigerian Financial Intelligence Unit (NFIU) Guidelines, which came into effect on June 1, 2019.

The NFIU 2019 guidelines required among others, that the States/Local Governments Joint Accounts should be used only for receiving funds and subsequently transferring them to Local government accounts only.

The NFIU claimed that the guidelines, which also limit daily cash withdrawal from the State/LG joint account to N500,000 are intended to reduce “crime vulnerabilities created by cash withdrawal from local government funds throughout Nigeria effective from June 1, 2019.”

They argued among others that the NFIU guidelines: known as “the NFIU Enforcement and Guidelines to Reduce Crime Vulnerabilities Crafted by Cash Withdrawal From Local Government Funds Throughout Nigeria,” particularly provisions 1 to 6 and the penalties prescribed are ultra vires the power of the NFIU under Sections 3 (1) and 23(2) (a) of the Nigerian Financial Intelligence Unit Act, 2018 and therefore unconstitutional.

In the judgment on Monday, Justice Ekwo held that he is unable to see where the guidelines contradict the provisions of sections 7(1), (6) (a), and (b) of the Constitution.



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