The collective efforts of Nigeria’s 36 state governments and the Nigeria Governors’ Forum (NGF) to oppose the Federal Government’s oversight of local government finances have been unsuccessful.
The Court of Appeal in Abuja upheld a previous ruling from the Federal High Court, which confirmed the legality of the Nigerian Financial Intelligence Unit (NFIU) Guidelines implemented on June 1, 2019.
These guidelines mandate that States/Local Governments Joint Accounts be utilized solely for receiving and transferring funds to local government accounts.
The NFIU introduced a daily cash withdrawal limit of N500,000 from these joint accounts to mitigate crime risks associated with cash transactions.
In a unanimous decision, the three-judge panel led by Justice Hamman Barka dismissed the appeal filed by the states and the NGF, marking the case as CA/ABJ/CV/822/2022. The Attorney General of the Federation, the NFIU, and the Nigeria Union of Local Government Employees were named as respondents.
The states and the NGF had contested the NFIU guidelines, arguing that they exceeded the NFIU’s statutory powers under the Nigerian Financial Intelligent Unit Act, 2018, and were thus unconstitutional.
However, Justice Inyang Ekwo of the Federal High Court found no merit in the plaintiffs’ case, stating that:
“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.”
The court concluded that the guidelines did not infringe upon the constitutional framework and dismissed the plaintiffs’ case for lack of merit.
