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Governors’ Access To LG Funds



Recently, Nigeria Financial Intelligence Unit (NFIU) took some steps aimed at stopping state governments, banks and other financial institutions, public officers and, indeed, all stakeholders from tampering with funds allocated to local governments from the federation account.

Specifically, the NFIU issued a guideline, which prevents state governments from making withdrawals from local governments’ funds. Interestingly, the new guideline mandates financial institutions to distribute funds accruable to local governments among the councils and not for other purposes.

“With effect from June 1, any bank that allows any transaction from any local government account without monies first reaching a particular local government account will be sanctioned 100 per cent, locally and internationally. “In addition, a provision is also made to the effect that there shall be no cash withdrawal from any local government account for a cumulative amount exceeding N500, 000 per day,” NFIU said in a statement.

This, undoubtedly, is a bold step in the battle against corruption and the quest for local government autonomy. The latest move by the NFIU is, indeed, the needed impetus to address the unfortunate chaining of local governments and the misappropriation of their funds by state governments.

The 1999 constitution as amended explicitly provides for federal, state and local government as the three tiers of government, with each of them having clearly defined roles. Sadly, the state governors explore some lacuna in the constitution to literally collapse local government councils.

Through the joint account, state governors hijacked a sizeable part of funds allocated to the local councils consequent upon which that tier of government has been rendered unproductive.

Although the intendment of the joint account was good, over the years, the governors took steps to abuse it thereby starving council areas of funds needed for basic infrastructural development at the grassroots.

There is hardly any local government out of the 774 council areas across the country that can boast of any tangible project executed by officials at that level. Unarguably, there is a nexus between the inabilities of council areas to execute projects resulting in the near absence of viable economic activities at the local areas, and the raging insecurity currently ravaging the country.

To say the least, the inability of council areas to execute projects and the complete absence of economic activities in the local communities in the face of bourgeoning population has exacerbated crimes and led to heightening insecurity, which now reign supreme.

Unfortunately, the clamour for local government autonomy through constitutional amendments has been frustrated by the state governors through their lackeys at the State Houses of Assembly.

The move by NFIU is timely, necessary and must be supported by all well meaning Nigerians as it will eliminate or reduce to the barest minimum the worrisome level of corruption and the blatant abuse of local government funds.

Good enough, NFIU assured that a watch-list of banks that violate the directive will be sent to 160 countries where they will no longer be able to transact business.

Certainly, the move by NFIU is plausible and we urge the Central Bank of Nigeria (CBN), the anti-graft agencies and the CEOs of all banks and financial institutions to ensure strict implementation.

Initiatives such as these are necessary for the nation to succeed in its drive towards ending corruption and large scale stealing of public funds, which has assumed a terrifying status, especially at the local government level.

With the NFIU directives, it will no longer be easy to fritter government funds away as the cheques and electronic transfer requirement for expenditures above N500, 000 will leave a trail which should also show what payments were made for.

There is also the need to develop initiatives of this nature for the other levels of government with appropriate limits. It is only through the development of initiatives such as these that Nigeria can hope to deal with corruption decisively.

We are however worried that there may be some hurdles, like the constitutional obstacle embedded in section 162 (5), (6) and (8) of the 1999 Nigerian Constitution, that may hinder smooth implementation of the NFIU directives.

It is clear that the process envisioned by the above provisions is that all funds from the federation account meant for local governments must be allocated to the states for the benefit of the LGCs; paid into state Joint Local Government Account and distributed among the LGAs of the States on such terms and in such manner as may be prescribed by the respective State Houses of Assembly.

Taking cognisance of this fact, we urge relevant stakeholders to hurriedly engineer the process of an amendment to the constitution so as to end the sustained pilfering of council areas’ funds.



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