Nigeria: LG Funds: Implications of a Verdict

14 December 2004

Lagos — After a prolonged legal battle between Lagos State and the Federal Government over the propriety or otherwise of the latter's decision to suspend and withhold allocation accruing to councils in the state, the Supreme Court, last week, delivered its judgement with farreaching implications as Tokunbo Adedoja, Joseph Ushigiale, Ndubuisi Ugah and Olawale Olaleye report

What today, resulted in a war of wits between the Federal and the Lagos State Government, for the benefit of hindsight, started on April 20, 2004, at the Federation Account Allocation Council (FAAC) meeting in Abuja, the nation's capital. At the meeting, Minister of State for Finance, Mrs. Esther Nenadi Usman read a presidential directive stopping allocation to five states. All along, FAAC had distributed N186 billion to the three tiers of government consisting of about N172 billion from the statutory funds and N14 billion from Value Added Tax (VAT). The directive however, implied that Lagos, Ebonyi, Katsina, Niger and Nasarawa States no longer had the constitutional right whatsoever, to be allocated therewith, from the federation account.

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