WHY OBASANJO WITHHELD THE FUND

WHY OBASANJO WITHHELD THE FUND

On this day, 24 July 2007, President Umaru Musa Yar’Adua ordered the release of funds belonging to the Lagos State Government that had been withheld by the previous federal administration which was headed by President Olusegun Obasanjo.

The move was widely seen as an effort to improve federal-state relations.

WHY OBASANJO WITHHELD THE FUND
In 2003, the Lagos State Government under Governor Bola Ahmed Tinubu created 37 new Local Council Development Areas (LCDAs) to bring government closer to the people. However, the 1999 Constitution recognises 774 local government areas in Nigeria.

While states can initiate the creation of new local governments, they do not become constitutionally recognised until the National Assembly amends the Constitution.

President Olusegun Obasanjo argued that Lagos had acted beyond its constitutional powers by treating the LCDAs as full local governments before constitutional approval. As a result, the Federal Government withheld statutory allocations intended for Lagos State’s local governments beginning in 2004.

Lagos State challenged the action in court and in that same 2004, the Supreme Court of Nigeria ruled that the President had no constitutional power to withhold the allocations. The court also said the 37 LCDAs were not constitutionally recognised as local governments until the Constitution was amended.

The court held that the allocations should be released to the existing 20 constitutionally recognised local governments.

Despite the ruling, Obasanjo’s government continued to withhold until 2007, when President Umaru Musa Yar’Adua assumed office and authorised their release.