How Nwoko’s Activism Stopped Unathorised Deductions from State’s Revenue


By Paul Obi
Nigeria’s third foray into democracy in 1999 came at the time the
constitution was not painstakingly x-rayed before the inauguration on
May 29 of that year. What it meant was that under the pretense and
coercive tone of ‘we the people,’ the 1999 constitution was foisted on
the people, and it enslaved the states and local governments.
With these discrepancies, conflicts among the three tiers of
Governments became more embedded and entrenched. As a result, the idea
of ensuring equitable distribution of resources has generated more
conflicts and controversies in fiscal federalism than in any other
area. It is in the light of the above that the Supreme Court has heard
more than three dozen cases since 1999 between the federal and states
When the former President Olusegun Obasanjo’s administration began
negotiations for exiting the London and Paris Club debts, the role of
the state and local governments was never considered. Rather, the
federal government proceeded with the negotiations and subsequent
deduction from the federation account without recourse to the
acceptance or objection of the states and local governments.
Speaking on the illegality associated with unfair distribution of
revenues among the three tiers of government, Human Rights Lawyer,
Chief Mike Ozekhome, SAN, told THISDAY that there were constitutional
safeguards that prohibit the imposition of rules by the federal
government on state and local governments. Ozekhome held that the 1999
Constitution as amended holds sacred the idea of autonomy among the
three tiers of government.
He submitted, “Under section 162 of the 1999 Constitution, allocations
from the federation account are shared between the three tiers of
government -federal, state and local governments. None of the three
tiers has overriding authority and superintendence over another
tier.Consequently, any unauthorised deductions by the federal
government (except it be by prior consensual agreement), is illegal,
wrongful and ultra vires the power of the federal government.”
Though in practice, there is no indication to suggest the autonomy of
local governments from the states, nor states from the federal
government, the overwhelming and superimposing influence of federal
authorities has often held sway. That notwithstanding, Ozekhome
stressed that autonomy should be sacrosanct on issues bordering on
distribution of resources and revenue allocation among the tiers of
He said: “This is more so having regard to the provisions of section 7
of the 1999 Constitution which makes local governments separate,
autonomous and independent of any other tier of government.”
Conversely, the federal government, beginning from 2005 has been the
final arbiter on how such funds are to be shared. During Obasanjo’s
administration, many states and their governors did not have the
courage to challenge the anomaly. The practice of unauthorised
deductions by the federal government from states and local
governments, as well as by states from local governments continued
First to notify the states and LGAs about these deductions and the
implications was Hon. Ned Nwoko, who represented Aniocha/Oshimili
Federal Constituency in the House of Representatives between 1999 and
Nwoko, having practiced as a Solicitor in England and Wales, and
represented developing countries in debts negotiations in the UK,
understood the gimmicks on the part of the federal government.
Undeniably, he saw the loophole and reached out to some of the
governors, and decided to pick up the case against the federal
government to the consternation of many.
According to Nwoko, he had to go into contingency work plan with the
Nigerian Governors Forum (NGF) to pursue the case at his own cost. The
plan had a caveat that should he emerge victorious in court against
the federal government, the states were liable to pay him a certain
percentage. Former governors who gave their nods to the plan included
Jolly Nyame of Taraba State, Boni Haruna of Adamawa State and the late
Abdulkadir Kure of Niger State. He observed that during the period
under review, “there were deductions of funds every month; huge sums
of money, almost equivalent of 10 per cent from allocations to the 36
states in the name of servicing foreign loans.”
Given the enormity of the funds involved and the role of the federal
government in the illicit deductions, there was actually no leeway to
stop the illegality. It was Nwoko’s intervention that prompted the
Obasanjo’s government to constitute a committee made up of the Debt
Management Office (DMO), Federal Ministry of Finance, the Accountant
General of the Federation, Revenue Mobilisation Allocation and Fiscal
Commission (RMAFC) to look into the matter.
After three months, the federal government admitted that there were
over-deductions from the state’s allocations, but came short of
providing a definite solution.
With this approach, Nwoko’s team had no other option than to seek
legal redress. “At the time, I undertook this work; nobody knew it was
going to work. How could one man challenge the federal government on
behalf of states? They asked. I had to pay my accountants, lawyers and
staff; it took so many years. Then, Obasanjo did what was remarkable,
he asked the Ministry of Finance to stop further deductions. The case
continued, but we succeeded in 2013 with a court judgement,” Nwoko
Instructively, Nwoko’s constitutional fiscal activism had, to a large
extent, contributed to improving the economies and revenue base of
states and local governments in many respects. The intervention, the
stoppage of deductions of allocations by the federal government and
the court cases have today combined to bolster revenue allocation to
states and local governments, thereby, adhering to fiscal autonomy as
required by the 1999 Constitution.
Beyond the court victory and the settlement clause between Nwoko and
the NGF, his contribution to ensuring equitable distribution of funds
and that no tier of government is short-changed is a proof of his
belief in the system. His resolve to legally challenge the abuse of
laws of the land by the federal government and the manipulation of
states and local government’s funds has enthroned a new order in the
nation’s fiscal policy architecture. Be that as it may, much still
lies ahead for the Idumuje-Ugboko high prince to plough and conquer.