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Governors as Stumbling Block to LG Autonomy

Gov. Kayode Fayemi
Gov. Kayode Fayemi

BEVERLY HILLS, May 23, (THEWILL) – The desire for financial autonomy for the 774 local government areas across Nigeria once again came to the fore recently when 17 governors of the southern states rose from a meeting held in Asaba, the capital of Delta State, and demanded the restructuring of the country.

Most people that reacted to the governors’ demand also called on them to allow the LGAs under them to enjoy financial autonomy as a way of kick starting the restructuring they demanded.

It would be recalled that one issue that has attracted condemnation from critics and political analysts across the country is the way state governors stifle local government councils and manipulate their resources through the State/ Local Government Joint Accounts.

Observers see the governors using resources belonging to local government areas to run their states. This unholy financial wedlock  between the states and local government councils has rendered the latter incapable of performing their statutory roles of serving the grassroots.

Most local government councils are only able to pay salaries and nothing more, except those located in the urban areas that can generate tangible internally generated revenue.

In 2019, the Nigerian Financial Intelligence Unit stirred the hornet’s nest when it issued guidelines that barred state governors from interfering with the statutory allocations accruing to the councils from the Federation Account.

The guidelines titled, ‘NFIU enforcement and guidelines to reduce crime vulnerabilities created by cash withdrawal from local government funds throughout Nigeria’, took effect on June 1, 2019.

The NFIU’s directive, it was gathered, is aimed at enthroning financial transparency at the local government council level and freeing funds for development at the grassroots level.

The NFIU, therefore, imposed a daily cash transaction limit of N500,000 on all the 774 LGAs in the country. It also barred commercial banks and other financial institutions, public officers and other stakeholders from tampering with the statutory allocations to the LGAs.

The governors frowned at the guideline, which they see as an affront on the states’ control of the LGAs. They vehemently opposed it. Acting under the aegis of the Nigeria Governors Forum, the governors had at the height of the controversy generated by the guideline and approached President Muhammadu Buhari to complain that the NFIU was acting beyond its mandate with the new directive .

The forum, in a letter to the President dated May 15, 2019, argued that the NFIU Act 2018 did not give the body the powers that it tried to exercise in the guideline, saying that, it was acting in excess of its powers and in doing so, showed complete disregard for the 1999 Constitution.

The governors further averred that local government councils were not financial institutions but creations of the constitution and they wondered where the NFIU derived its authority from.

To the governors, the local government councils are not reporting entities and therefore not under the NFIU in the manner contemplated by its so-called guideline.

The letter read “In principle, the NFIU should concentrate on its core mandate of anti-money laundering activities and combating financing terrorism as prescribed in the Act establishing it.

“It should desist from encroaching on or even breaching constitutional provisions. The NFIU is the Nigerian arm of the Global Financial Intelligence Units. It was once domiciled within the EFCC, but now, for the purpose of institutional location, it is domiciled in the Central Bank of Nigeria.

“The NFIU should comply with those standards on combating money laundering and financing of terrorism and its proliferation as stipulated, not dabble into matters that are both constitutional and beyond NFIU purview”.

While the state governors kicked against the NFIU directive, many Nigerians were particularly happy. They believed that the Intervention by the NFIU would make the third tier of government and the closest to the people at the grassroots level have enough money to carry out its desired functions and programmes.

The National Union of Local Government Employees was particularly happy about the development and supported the NFIU.

Individuals and groups backing the NFIU believe the guideline would help to check the reckless spending of local government funds.

Speaking with THEWILL, an Osun State-based lawyer, Barrister Gbenga Akano, described the governors’ demand for restructuring as a cheery development that would lead to financial autonomy for the local government councils.

“True federalism will ensure fiscal federalism and devolution of powers to the federating units in the country.

Akano said that if state governors were ready to embrace restructuring should first demonstrate it by allowing local government councils to breath the air of freedom.

“Before now, local government councils were grappling with peanuts, with resultant negative development indicators. This narrative is going to change with the prospects of development getting brighter.

He said that if the governors could prove that their clamour for devolution  was genuine, it would translate into greater accountability and transparency in the management of local government funds.

“Nigerians will therefore not listen to any local government chairman who fails to perform. There will no longer be any excuse for failure from any chairman”, Akano said..

Many respondents to TheWill question as to whether the NFIU directive in 2019 was obeyed showed that nothing much has changed in the management of local council allocations.

It was gathered that while some states claim  to have totally complied with the directive, others claim partial compliance.

The local government council workers, who spoke with The Will, expressed their displeasure with the way that council allocations are being cornered by the governors at the State /Local Governments Joint Accounts Committee meeting every month.

A Senior accountant in one of the local government councils in Lagos State, who spoke to TheWill on the condition of anonymity, said the state had the worst case in the country.

“You and I know that only 20 Local Councils receive their budgetary allocations from Abuja. But when the money comes they will have to share with 37 Local Council Development Authorities. That is where manipulation begins. Some local government chairmen only go back to the council with only money to pay his workers.

“That is why the local government elections in the state are always one way. The presence of one local government chairman from the opposition party will create problems,” he said.

A resident of Ondo, Mr Jacob Agbe noted that the relevant sections of the Constitution must be amended to enable the local government councils to enjoy financial autonomy.

He said the NFIU guideline could not guarantee the independence of the councils because the governors were aware that the Constitution had not been amended to reflect the new development.

Will the restructuring championed by the governors of the southern states also bring forth a fresh air of freedom for local government councils? Only time will tell.