Table of Contents
Section 162 (1)
The Federation shall maintain a special account to be called “the Federation Account” into which shall
be paid all revenues collected by the Government of the Federation, except the proceeds from the personal income tax of the personnel of the armed forces of the Federation, the Nigeria Police Force, the Ministry or department of government charged with responsibility for Foreign Affairs and the residents of the Federal Capital Territory, Abuja.
(This means that the Federal Government of Nigeria shall maintain an account called the Federation account in which all revenue generated from tax and/or other sources is paid into except proceeds from the Personal Income Tax of the Army, Police, the Ministry or department of government responsible for Foreign Affairs and the residents of the Federal Capital Territory, Abuja. )
Section 162 (2)
The President, upon the receipt of advice from the Revenue Mobilisation Allocation and Fiscal Commission, shall table before the National Assembly proposals for revenue allocation from the Federation Account, and in determining the formula, the National Assembly shall take into account, the allocation principles especially those of population, equality of States, internal revenue generation, land mass, terrain as well as population density;
(The above clause is to the effect that the President of Nigeria takes into cognizance the advice given by the Revenue Mobilisation Allocation and the Fiscal Commission before a table can be presented to the National Assembly on the sharing formula of the funds in the Federation Account especially taking population, equality of States, internal revenue generation, landmass, terrain as well as population density into account. )
Provided that the principle of derivation shall be constantly reflected in any approved formula as being not less than thirteen per cent of the revenue accruing to the Federation Account directly from any natural resources.
(The Principle of derivation is constant in the sharing formula on revenue that accrued directly from any natural resource and it shall not be less than 13%.)
Section 162 (3)
Any amount standing to the credit of the Federation Account shall be distributed among the Federal and State Governments and the Local Government Councils in each State on such terms and in such manner as may be prescribed by the National Assembly.
(The National Assembly shall prescribe the distribution of the amount standing in credit in the Federation Account amongst the Federal, State and Local governments in Nigeria.)
Section 162 (4)
Any amount standing to the credit of the States in the Federation Account shall be distributed among the
States on such terms and in such manner as may be prescribed by the National Assembly.
(The amount accruing to any state in the Federation Account shall be distributed in a manner prescribed by the National Assembly. )
Section 162 (5)
The amount standing to the credit of Local Government Councils in the Federation Account shall also be
allocated to the State for the benefit of their Local Government Councils on such terms and in such manner as may be prescribed by the National Assembly.
(Any amount/credit accruing to any Local Government in a State in the Federation Account shall be allocated to the particular state of the intended Local Government. Such credit is distributed in a manner prescribed by the National Assembly. )
Section 162 (6)
Each State shall maintain a special account to be called “State Joint Local Government Account” into which shall be paid all allocations to the Local Government Councils of the State from the Federation Account and from the Government of the State.
(This clause is to the effect that each state in Nigeria shall have a State Joint Local Government Account which Federal Allocation shall be paid into for the benefit of each and every Local Government Area in that State.)
Section 162 (7)
Each State shall pay to Local Government Councils in its area of jurisdiction such proportion of its total
revenue on such terms and in such manner as may be prescribed by the National Assembly.
(The proportion of total revenue payable to the Local Government Council by each State is prescribed by the National Assembly.)
Section 162 (8)
The amount standing to the credit of Local Government Councils of a State shall be distributed among the Local Government Councils of that State on such terms and in such manner as may be prescribed by the House of Assembly of the State.
(This means that the amount of credit payable to the LGA of a State is distributed in accordance with the terms stipulated by the House of Assembly of that State.)
Section 162 (9)
Any amount standing to the credit of the judiciary in the Federation Account shall be paid directly to the
National Judicial Councils for disbursement to the heads of courts established for the Federation and the States under section 6 of this Constitution.
(The amount of revenue/credit accruing to the Judiciary of the Federation is paid directly to the NJC from whence it shall be further distributed to the heads of Federal and State Courts.)
Section 162 (10)
For the purpose of subsection (1) of this section, “revenue” means any income or return accruing to or
derived by the Government of the Federation from any source and includes –
(This Section defines “revenue” as any income or return which the Federal government is to receive from any source provided below; )
Section 162 (10)(a)
any receipt, however described, arising from the operation of any law;
(Revenue generated as receipt from the operation of any law; )
Section 162 (10)(b)
any return, however described, arising from or in respect of any property held by the Government of the
Federation;
(Revenue generated from property held by the Federal Government; )
Section 162 (10)(c)
any return by way of interest on loans and dividends in respect of shares or interest held by the Government of the Federation in any company or statutory body.
(Revenue or returns generated by the Federal Government from interests on loans and dividends from shares in Companies or Statutory bodies the Federal Government is a part of.)
