The Senate on Tuesday called on the Federal Government to ensure Local Government Councils from all 36 States and the Federal Capital Territory (FCT) are included in the Federation Account Allocation Committee (FAAC) in order to guarantee their direct involvement in the revenue-sharing process among the three tiers of Government.
Lawmakers said the move was necessary to fully implement the Supreme Court’s July 2024 ruling, which ordered that Local Government funds be released directly to the Councils, bypassing the State Governments.
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Following a motion presented by Jibrin Barau, the Deputy Senate President, the Red Chamber, passed a resolution at the plenary, recommending that each State and the FCT appoint a representative of the Local Councils to FAAC to protect grassroots interests.
Jibrin, while leading the debate on the motion entitled “Urgent Need to Alter the Composition of Federation Account Allocations Committee (FAAC) by Including Representatives of Local Governments and Area Councils”, emphasised that the Supreme Court judgment had effectively invalidated existing arrangements where Local Government funds were funnelled through State joint accounts.
He said, “By virtue of the apex court’s judgment delivered in July 2024, funds are now to be released directly to Local Governments.”
He further argued that the judgment had rendered obsolete “every earlier existing structure, such as the payment of Local Government funds through the State joint account,” stressing that
Local Councils must now have representation at FAAC.
The motion highlighted several Constitutional points and Judicial pronouncements, including the recognition of Local Governments as the third tier of Government under Section 7(1) of the 1999 Constitution. It stated that they are “entitled as such and by Section 162(3) CFRN 1999 to share directly in Federation Account Allocations as benefitting entities.”
It further recalled the Supreme Court’s interpretation of Sections 162(5) and (6), clarifying that State Governments are merely custodians tasked with transmitting funds to Local Councils and have no proprietary claim to those allocations.
According to the motion, “The Supreme Court went further to also state that the states must simply convey to the LGCs their allocations from the Federation Account.”
The Senate also noted the court’s conclusion that direct allocation to Local Governments would better fulfill the Constitutional vision and improve the functioning of the revenue system.
It quoted the court’s observation: “Paying the LGCs through the States of the Federation has not worked, therefore justice demands that LGCs’ allocations from the Federation Account should henceforth be paid directly to the LGCs.”
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Lawmakers pointed out that the existing structure of FAAC, as defined in Section 5 of the Allocation of Revenue (Federation Account, etc.) Act of 1981, includes only representatives from the Federal and State Governments, thereby excluding the third tier.
“Also observes that this provision of the Act is no longer consistent with the current interpretation of Sections 162(5) and (6) CFRN 1999 as recently determined by the Supreme Court in its judgment of July 2024,” the motion stated.
Given the new legal interpretation, the Senate maintained that the Revenue Allocation Act must be revised. It added, “It has become imperative that a representative of LGCs per State and Area Councils be nominated to represent their interest at FAAC.”
The Senate concluded by directing that the resolution be forwarded to Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, who also serves as the FAAC Chairman, for appropriate action.
