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June 22, 2024
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The Court of Appeal has Upheld the Federal Government’s Power to Monitor the Management of Local Government Funds by State Governments

The Court of Appeal has upheld the Federal Government’s power to monitor the management of local government funds by state governments, dismissing an appeal by the 36 states and the Nigeria Governors’ Forum (NGF) challenging the legality of the Nigerian Financial Intelligence Unit (NFIU) Guidelines. The Nigerian Financial Intelligence Unit (NFIU)Guidelines, brought into effect on June 1, 2019, requires state government to use specific accounts for receiving and transferring funds to local governments.

The unit’s guidelines aims at reducing crime vulnerabilities created by cash withdrawals from local government funds. The NGF and 36 states had challenged the legality of the guidelines, arguing that they were unlawful and unconstitutional. The Court of Appeal however dismissed their appeal, upholding the May 23, 2022 judgment of the Federal High Court, Abuja. In its judgment, the Court of Appeal held that the NFIU Guidelines are lawful and do not contradict the provisions of the Constitution.

The court also held that the guidelines are intended to prevent fraud and promote transparency in the management of local government funds. The NFIU Guidelines limit daily cash withdrawals from state/local government joint accounts to N500,000 and require funds to be transferred directly to local government accounts. The decision of Court of Appeal’s decision is a significant victory for the Federal Government’s efforts to monitor and regulate the handling of local government funds by state governments.

The decision is expected to promote transparency and accountability in the management of local government funds and prevent fraud and corruption. The 36 states and the NGF had argued that the NFIU Guidelines were unlawful and unconstitutional, and that they infringed on the powers of state governments to manage their affairs. However, the Court of Appeal held that the guidelines are lawful and do not contradict the provisions of the Constitution.

The court’s decision is final and binding, and it is expected to be complied with by all state governments. The decision is a significant step forward in the fight against corruption and fraud in the management of local government funds.

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