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MID-WEEK ESSAY: Confusion as Political Masterpiece - Supreme Court Rules on Inchoate LGs and their Impounded Funds

On December 10, 2004, the Supreme Court made a firm landmark ruling in the case of A.G. (Lagos) v. A.G. (Federation), brought before it by Lagos State on April 20, 2004.

December 15, 2004

Introduction

On December 10, 2004, the Supreme Court made a firm landmark ruling in the case of  A.G. (Lagos) v. A.G. (Federation), brought before it by Lagos State on April 20, 2004. 

To the layman, stripped of legal mumbo-jumbo, the long and short of the rulings are three-fold:

1. that the president had no constitutional right (as he did by a presidential directive dated April 19, 2004,  and announced at a Federation Account Allocation Council (FAAC) meeting in Abuja on April 20) to withhold funds from the 20 Lagos State local governments already approved by the constitution;  it ruled that no such withholding right was certainly implied or guaranteed in 'Public Revenue" Section  162 [(1) - (10)] of the 1999 Constitution.  The directive initially affected Lagos, Ebonyi, Katsina, Niger and Nasarawa States (See Table 1).

             QUOTE

            'No allocation from the Federation Account should henceforth be released to             the Local Government Councils of the above mentioned states and any other   that may fall into that category until they revert back to their local government             areas specified in part one of the First Schedule of the Constitution".

      UNQUOTE

2. that the Lagos State that created 37 new local governments in addition to the existing 20 local governments (according to Lagos State Creation of New Local Government Areas Law No. 5 of 2002 and its amendment of October 6 of 2003) had the right to do so (as empowered by subsections 7(1) and (4) of the 1999 Constitution), and furthermore had the right to conduct elections to them (as it did on March  27, 2004) to elect chairmen and other councilors to replace the executive secretaries selected for the same councils in November 2003;

3. that the now 57 local governments were not constitutional, but were inchoate,  since they had not fulfilled the last hurdle of approval by the National Assembly as required by the Constitution. (Section 8(5) of the 1999 Constitution).

While the judges were unanimous on the first two points, there were dissenting voices on the third, including that of Supreme Court Justice Uwaifo on the bench.  He felt that since the National Assembly would have no basis to deny the states their constitutional power to form new local governments, the approval by the National Assembly was really pro-forma, and was  a foregone conclusion.  The relevant subsections here are Section 8(3) - 8(6) of the 1999 Constitution:

QUOTE

http://www.ngex.com/nigeria/govt/constitution/con1p2p5.htm

8(3) A bill for a Law of a House of Assembly for the purpose of creating a new local government area shall only be passed if:-

(a) a request supported by at least two-thirds majority of members (representing the area demanding the creation of the new local government area) in each of the following namely:-

(i) the House of Assembly in respect of the area, and

(ii) the local government councils in respect of the area, is received by the House of Assembly;

(b) a proposal for the creation of the local government area is thereafter approved in a referendum by at least two-thirds majority of the people of the local government area where the demand for the proposed local government are originated;

(c) the result of the referendum is then approved by a simple majority of the members in each local government council in a majority of all the local government councils in the state; and

(d) the result of the referendum is approved by a resolution passed by two-thirds majority of members of the House of Assembly.

8(4) A bill for a Law of a House of Assembly for the purpose of boundary Adjustment of any existing local government area shall only be passed if:-

(a) a request for the boundary adjustment is supported by two-thirds majority of members (representing the area demanding and the area affected by the boundary) in each of the following, namely:-

(i) the House of Assembly in respect of the area, and

(ii) the local government council in respect of the area, is received by the House of Assembly in respect of the area: and

(b) a proposal for the boundary adjustment is approved by a simple majority of members of the House of Assembly in respect of the area concerned

8(5)  An Act of the National Assembly passed in accordance with this section shall make consequential provisions with respect to the names and headquarters of States or local government areas as provided in Section (3) of this Constitution and in Parts I and II of the First Schedule to this Constitution.

8(6)  For the purpose of enabling the National Assembly to exercise the powers conferred upon it by subsection (5) of this section, each House of Assembly shall, after the creation of more local government areas pursuant to subsection (3) of this section, make adequate returns to each House of the National Assembly.

UNQUOTE

In effect, the unconstitutionality of the local governments was an administrative figment that could be cleared up in no time, and should not have been used to delay what was the right to their money.  [One commenting lawyer Ipaye put it best:  that you require children to be registered in the nearest birth registration office when born does not mean that you will not count them as part of the population !]

Different interpretations of the case have since ensued, particularly by lawyers such as Gani Fahewinmi (who thinks the Federal Government won ¾ to Lagos ¼ ), and Itse Sagay (who thinks Lagos won hands down), as well as politicians like presidential spokesperson Fani-Kayode (who thinks that the Federal Government has been vindicated) to the Governor Bola Ahmed Tinubu (who naturally thinks that victory belongs to his Lagos State.)

I am neither a lawyer nor a politician, but in my own opinion, Lagos State won by 2/3 to 1/3   according to the essential three-fold judgment clauses that I outlined above, but those who claim total victory for Lagos State would not be too wrong ! J 

Since the Federal government must obey the Supreme Court, the two key issues now are:

(1)    what it must allocate and pay;

(2)    who it must pay to.

If the Federal government and the Lagos state government are both LAW-ABIDING and REASONABLE, these considerations should be a piece of cake.

What the Federal Government  Must Allocate and Pay

There are currently 774 local governments in the country.  The central plank of payment of federal allocations to local governments throughout the country has been the equality of such LGs.  Therefore if a state with a previous number of local governments X increases the number of its local governments by a number Y, and ALL other states increased theirs by W  - and if all are recognized as such by the federal government - then from a given pool of money Z available to local governments, the total LG allocation to that state with increased number of local governments automatically goes  from 

                         X*Z/774     to    (X+Y)*Z/(774+Y+W)

The percentage increase is therefore:

            100 *    [(X+Y)/(774+Y+W) - X/774] /(X/774)

or  

           Q = 100 *  [ 774 * (X+Y)/{X*(774+Y+W)} - 1]

In the situation where only Lagos State is involved, then:

          X = 20,  Y = 37, W = 0   and   Q =    172 %

Each of the other states (assuming no increase in their  local governments) would then lose R = 4.56% of their original LG funding (for Y = 37) viz:

          R = 100 * [ 1 - 774/(774+Y)]

If Lagos had merely doubled its LG size to 40, Q would have been  95% and R =  2.52% .

In effect, the ruling of the Supreme States that the Federal Government need not allocate and pay this otherwise-implied increase to Lagos State since the new LGs have not been approved by the National Assembly:  the federal government need (and must) only pay  the arrears equivalent to   X * Z / 774. 

It might be added that Lagos State has always disavowed its demand for this increase, as stated in a broadcast by Governor Tinubu viz:

QUOTE

http://allafrica.com/stories/200405101160.html

After all, we are not asking for any additionally revenue for them. We are content to spread the same revenue which went to the former 20 local government councils among the 57 new ones.

UNQUOTE

To Whom the Federal Government Must Allocate - and to What to Pay

There really should be no argument on this one:  the 1999 Constitution CLEARLY states that the money should be allocated to THE STATE GOVERNMENT, who will then determine how it is divvied up among the local governments within its territory.  Let us read  Subsections 162 (1) -(8) of the 1999 Constitution:

QUOTE

http://www.ngex.com/nigeria/govt/constitution/con6p1p11.htm

C - Public Revenue

162.

(1) The Federation shall maintain a special account to be called "the Federation Account" into which shall be paid all revenues collected by the Government of the Federation, except the proceeds from the personal income tax of the personnel of the armed forces of the Federation, the Nigeria Police Force, the Ministry or department of government charged with responsibility for Foreign Affairs and the residents of the Federal Capital Territory, Abuja.

(2) The President, upon the receipt of advice from the Revenue Mobilisation Allocation and Fiscal Commission, shall table before the National Assembly proposals for revenue allocation from the Federation Account, and in determining the formula, the National Assembly shall take into account, the allocation principles especially those of population, equality of States, internal revenue generation, land mass, terrain as well as population density;

Provided that the principle of derivation shall be constantly reflected in any approved formula as being not less than thirteen per cent of the revenue accruing to the Federation Account directly from any natural resources.

(3) Any amount standing to the credit of the Federation Account shall be distributed among the Federal and State Governments and the local government councils in each State on such terms and in such manner as may be prescribed by the National Assembly.

(4) Any amount standing to the credit of the States in the Federation Account shall be distributed among the States on such terms and in such manner as may be prescribed by the National Assembly.

(5) The amount standing to the credit of local government councils in the Federation Account shall also be allocated to the State for the benefit of their local government councils on such terms and in such manner as may be prescribed by the National Assembly.

(6) Each State shall maintain a special account to be called "State Joint Local Government Account" into which shall be paid all allocations to the local government councils of the State from the Federation Account and from the Government of the State.

(7) Each State shall pay to local government councils in its area of jurisdiction such proportion of its total revenue on such terms and in such manner as may be prescribed by the National Assembly.

(8) The amount standing to the credit of local government councils of a 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.

UNQUOTE

Subsections 162 (5) and (6) are so clear that they are not subject to alternative interpretation:  ALLOCATE to the States was is due to the local governments under their jurisdiction, and PAY such allocations into a 'State Joint Local Government Account."

Q.E.D.

After this ruling,  one prays that all politicians and lawyers should step aside and let the money for 20 local government be allocated and paid to the Lagos State government for re-distribution to its 57 local governments - that is,  in favor of the PEOPLE who reside in those local governments !

Period.

Looking Forward: Amending the Constitution with respect to LGs

But we should not stop there.  If Justice Uwaifo's reasonable position is taken that the National Assembly's 'consequential approval" is only formal, this ruling will surely open a pandora's box: a numbers race of local governments, a proliferation of which might exacerbate a constitutional crisis that will pit the Federal Government with the State governments. 

Already, we can see from Table 1 that  144 new local governments have been created by 6 states, more than doubling their present number of 122.  At that rate, the 36 + FCT entities will end up with 888 additional local governments, bringing the total from 774 to 1662 !

To prevent this ridiculous situation  - or to make such a proliferation inconsequential with respect to a Federal/state crisis -  at the very minimum, there are three possible amendments to the Constitution  to be considered, which will also have an impact on the revenue allocation formula of the RMFAC (Revenue Mobilisation and Fiscal Allocation Commission):

(1)   the local-government-based allocations be constitutionally fixed for all time IN PROPORTION to the relative current numbers of local governments in each state (or their successors) in the 1999 constitution.  Thus, no matter how many local governments that Lagos State may choose to have in the future, its LG allocation would be 20/774 ( = 2.58%), Kano would be 44/774 =( 5.68%), and my own Ekiti State would (for example) be 16/774 (= 2.07%).  Or preferably (and most simply):

(2)   the allocation to local governments be completely removed from the Constitution, and all monies be based on states which can then disburse to as many local governments as they wish within their jurisdiction.  Lagos, Kano, Ekiti and all other states would be 2.78 % each; Or yet:

(3)   a mixture that takes into consideration the institutional memory of the fractions of local governments of each state AND the population fractions of the states vis-à-vis the 1991 census or any revised ones in the future.  The 1991 census population fractions for example for Lagos (5.69 million out of 88.5 million total), Kano (5.63 million) and Ekiti (1.65 million) are 6.42%, 6.36% and 1.86%, giving revised averages of  4.50%, 6.02% and 1.97 % for the states respectively instead of 2.58%, 5.68% and 2.07%. [Kano could be magnanimous and shift its 0.34% increase to Lagos !]

Actually Options (1) and (3) require no constitutional amendment, and can be readily adopted by the RMFAC.

Then and only then will it be true that the creation of local governments is ONLY to bring government closer to the grassroots and not a sneaky way to obtain more funds from the federal government coffers.

I rest my case.

BIBLIOGRAPHY

http://allafrica.com/stories/200412141377.html

LG Funds: Implications of a Verdict

This Day (Lagos)

December 14, 2004

http://allafrica.com/stories/200412140699.html

It's Victory for Federalism

This Day (Lagos) - OPINION

December 13, 2004

http://allafrica.com/stories/200405060693.html  followed by http://allafrica.com/stories/200405101160.html

Lagosians And the New LGs

P.M. News (Lagos)

COLUMN - Governor Bola Tinubu of Lagos State

May 6, 2004

http://allafrica.com/stories/200406250072.html

Supreme Court Bundles States' Cases On LGs, Lagos to Serve As Benchmark

Vanguard (Lagos)

June 25, 2004

http://www.gamji.com/aluko121.htm

UN-STAR WITHOLDING:  Of Revenue to Some Local Governments by the Federal Government

Mobolaji E. Aluko, Ph.D. (See commentary)

April 26, 2004

http://allafrica.com/stories/200403310039.html

LG Polls: a Post-Mortem

This Day (Lagos) - ANALYSIS

March 31, 2004

[Out of the 36 states in the country, 30 states held LG elections on March 27. Sokoto and Niger had conducted theirs on January 10, while Yobe conducted its own on April 24. Anambra is yet to conduct its own LG elections because of political strife in the state.]

http://allafrica.com/stories/200410080420.html

Lagos Denies Reverting to 20 LGs

This Day (Lagos)

October 8, 2004

http://www.gamji.com/aluko117.htm

THURSDAY ESSAY: The 9% Fight Between Federal and State Governments Over Revenue Allocation

Mobolaji E. Aluko

March 4, 2004

TABLE 1:  States that have created additional Local Governments

APPENDIX I

The 20 Old Lagos State Local Government Councils:

Agege, Ajeromi-Ifelodun, Alimosho, Amuwo-Odofin, Apapa, Badagry, Epe, Eti-Osa, Ibeju/Lekki, Ifako-Ijaye, Ikeja, Ikorodu, Kosofe, Lagos Island, Lagos Mainland, Mushin, Ojo, Oshodi-Isolo, Shomolu, Surulere.

The 57 New Councils (with starred ones with names like old ones)

Agbado/Oke-Odo                        Iba                  

Agboyi/Ketu                        *Ibeju             

*Agege                        *Ifako/Ijaiye    

*Ajeromi                        Ifelodun           

*Alimosho                        Igando-Ikotun 

*Amuwo-Odofin                        Igbogbo/Bayeku                     

*Apapa                        Ijede               

Apapa-Iganmu                        *Ikeja             

Ayobo/Ipaja                        *Ikorodu         

Badagry West                        Ikorodu North 

*Badagry                        Ikorodu West  

Bariga                        Ikosi/Ejinrin     

Coker/Aguda                        Ikosi/Isheri      

Egbe-Idimu                        Ikoyi               

Ejigbo                        Imota              

*Epe                        Iru/Victoria Island              

Eredo                        Isolo               

*Eti-Osa East                        Itire Ikate        

Eti-Osa West                        *Kosofe          

*Lagos Island East                        Olorunda         

Lagos Island West                        Onigbongbo    

*Lagos Mainland                        Oriade            

Lekki                        Orile Agege     

Mosan/Okunola                        *Oshodi          

*Mushin                        Oto-Awori      

Odi-Olowo/ Ojuwoye                        *Shomolu        

*Ojo                        *Surulere        

Ojodu                        Yaba               

Ojokoro          

Source:   http://www.lagosstate.gov.ng/Local_govt/Local_govt2.0.htm