Rivers Court Judgement On Halting FAAC Allocation: The 2004 Supreme Court Precedent: Obasanjo and Lagos State - Fidelis Oditah SAN
By Wisdom Tide
November 2, 2024
In a recent interview with Arise TV, Professor Fidelis Oditah, a Senior Advocate of Nigeria (SAN) and a King's Counsel in the UK, sharply criticized Justice Joyce Abdulmalik of the Federal High Court in Abuja for her decision to halt the Federal Account Allocation Committee (FAAC) disbursements to Rivers State. Oditah argued that this ruling demonstrates a fundamental misunderstanding of federalism and asserted that the court does not possess the constitutional authority to restrict Rivers State's access to its rightful allocations.
Professor Oditah highlighted the critical nature of FAAC allocations in Nigeria’s federal structure, emphasizing that they are essential for maintaining the functional autonomy of each state. He compared the case to a notable incident in 2004 involving former President Olusegun Obasanjo and Lagos State. At that time, Obasanjo attempted to withhold funds designated for Lagos's local governments due to disagreements with the state government, but he refrained from seizing the state’s direct allocations. This restraint, Oditah contended, was because even a former president recognized the constitutional limitations on federal interference with state finances.
Federalism and the Constitution: The Right to Allocation
The Nigerian Constitution underscores the importance of revenue allocation as a means of supporting state and local government autonomy within the federation. Section 162 of the 1999 Constitution addresses the distribution of revenue from the Federation Account, mandating that funds are to be shared among the federal, state, and local governments. Subsection 3 of this section specifies that any revenue allocated to a state should be managed by that state’s government. This constitutional provision effectively guarantees that states receive a portion of federal revenue, reinforcing their status as semi-autonomous entities within Nigeria’s federal structure.
Justice Abdulmalik’s ruling, according to Oditah, contradicts these provisions by imposing a restriction that denies Rivers State access to its allocated funds. Such a decision potentially undermines the foundation of federalism in Nigeria by interfering with the financial autonomy granted to each state. Oditah argued that Rivers State, as a federating unit, has a constitutional right to its share of revenue, and the denial of such funds is not within the jurisdiction of any single court or branch of the federal government.
The 2004 Supreme Court Precedent: Obasanjo and Lagos State
The controversy surrounding Justice Abdulmalik’s ruling brings to mind the 2004 Supreme Court decision regarding the Obasanjo administration's attempt to withhold funds from Lagos State's local governments. During that period, then-President Olusegun Obasanjo attempted to withhold allocations intended for Lagos's local governments due to political disputes with then-Governor Bola Tinubu. However, Obasanjo refrained from cutting off Lagos State’s direct allocation, recognizing that such an action would exceed his constitutional authority.
In the landmark 2004 case Attorney General of Lagos State v. Attorney General of the Federation, the Supreme Court ruled that the federal government had no authority to withhold funds allocated to the local governments of Lagos State. The Court’s decision was grounded in the principle that the federal government cannot unilaterally restrict state revenue without violating constitutional protections. This case set a crucial legal precedent, affirming that the federal government lacks the authority to seize or withhold revenue allocations that are rightfully due to a state or its local governments.
Oditah contended that Justice Abdulmalik’s decision fails to account for this precedent and that, in issuing an order to halt FAAC allocations to Rivers State, the court acted beyond its jurisdiction. According to him, the ruling demonstrates a profound misunderstanding of federalism and the constitutional protections that underpin the Nigerian federation.
Federalism and Autonomy of Federating Units
At the core of federalism is the principle of shared governance and financial autonomy for each level of government. Sections 2 and 3 of the Nigerian Constitution define Nigeria as a federation consisting of distinct states and a federal capital territory. This federal structure implies that each state, while part of a united Nigeria, retains its own government, legislative authority, and financial independence. Revenue allocations are a cornerstone of this autonomy, providing states with the resources necessary to meet the needs of their populations without undue reliance on or interference from the federal government.
Denying Rivers State its allocations directly challenges the foundation of Nigeria's federalism. Oditah argued that such a move would undermine the financial independence of states and disrupt the balance of power intended by the framers of the Constitution. By interpreting federalism in a manner that restricts a state’s access to its lawful funds, the court effectively weakens the concept of federalism in Nigeria, turning states into dependent entities rather than partners within the federation.
Implications of Withholding State Allocations
There is a broader school of thought which argues that if a federal government withholds funds from a state, it risks severing that state’s connection to the federation. If a state is denied its share of federal revenue, it could be argued that the state ceases to function as a federating unit and might, in theory, have grounds to declare its independence. While this argument remains largely theoretical, it is grounded in the principle that revenue allocation is a fundamental right of each state within Nigeria’s federal structure.
Section 2 of the Constitution emphasizes the indivisibility of Nigeria; however, the withholding of allocations could potentially weaken this indivisibility by creating financial hardships for the affected state and its citizens. As Oditah suggested, revenue allocations from the Federation Account are critical to a state’s ability to function within the federal system. Denying these funds could, over time, push states towards political and economic marginalization, potentially leading them to seek alternative sources of governance and revenue.
Judicial Limitations and the Separation of Powers
Professor Oditah also pointed out that the judiciary, while empowered to interpret the Constitution, must operate within certain boundaries, particularly in matters affecting the autonomy of federating units. Section 6 of the Constitution grants the judiciary the power to adjudicate legal disputes, but this power is not absolute. Courts must interpret the law within the framework of federalism, balancing the rights of the federal government with the autonomy of states.
By halting FAAC allocations to Rivers State, Justice Abdulmalik’s ruling, according to Oditah, exceeds the judiciary's interpretative authority. Such a decision might set a dangerous precedent by empowering the judiciary to interfere with the financial administration of states, thereby upsetting the balance between state and federal governments that is central to Nigeria's federal system. Judicial orders that encroach on this balance risk disrupting the autonomy and financial stability of states.
Conclusion:
Upholding Federalism in Nigeria
Professor Oditah’s argument is a call for a more robust understanding of federalism within the judiciary. By overstepping its interpretative authority, the Federal High Court has, in Oditah's view, set a concerning precedent that threatens the financial autonomy of Rivers State. Revenue allocation is not just a financial transaction; it is a constitutional right embedded in Nigeria’s federal system, supporting the independence and functionality of each federating unit. Justice Abdulmalik’s ruling, Oditah argued, fundamentally misunderstands this concept and overreaches the court's constitutional powers.
The Constitution’s provisions on revenue allocation affirm that every state is entitled to its share, and any deviation from this principle should be seen as an encroachment on state sovereignty. Upholding federalism is essential to maintaining Nigeria’s unity, and denying a state access to its lawful revenue sets a dangerous precedent that could erode the country’s federal structure. Oditah's critique emphasizes the importance of respecting constitutional boundaries and ensuring that federalism is interpreted in a way that protects the autonomy of Nigeria’s states.
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