Editorial

NFIU: LGs financial autonomy, right step

 

When the creation of the Nigeria Financial Intelligence Unit, NFIU was being debated in the National Assembly in order to separate it from the Economic and Financial Crimes Commission, EFCC, the public did not quite pay attention much less notice what all that it was all about. It looked as though the legislature was cutting down on EFCC’s powers as part of the then on-going tension between the commission or the executive and the lawmakers for sundry reasons. Besides the NFIU as a unit in EFCC had not taken any major action to show it was distinct and can bite.
With its creation and it recent action to take steps aimed at stopping state governments, banks and other financial institutions, public officers and all stakeholders from tampering with funds allocated to Local Governments from the federation account, Nigerians now have another opinion of the agency. Nigerians have complained bitterly over the stranglehold that state governments have on council funds (especially). 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.
The guideline reads: “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 appears to be sweet music in the ears of councils around the country and by all accounts a beautiful way to energize Local Government autonomy.
Questions have been asked about the constitutionality of this cause, however, the 1999 constitution (as amended) clearly 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 development at the grassroots.
While it is difficult to remove states from getting involved in councils, but it is concerning that they only get involved when it is time to hijack council funds. Why can’t states get involved in collecting council taxes and rates then remit to the councils while collecting their own administrative charges. Why can’t states simply act like the Federal Government who sits with states every month to share what accrued to the federation account? If state governors are for development they should be upfront about council funds not the present situation where they warehouse everything and then resort to giving handouts to council bosses who in turn eat what is left.
We believe that states have the right to enshrined in the constitution to control LGs; but not to hijack their funds. This present situation was not like this in 1999. The complete hijack of council funds took awhile. And with the hijack, the political process at that level became a joke. LG officials are now like extended house helps to governors to be played anyhow anytime. 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.
We can even argue that the complete absence of economic activities at the local level may have exacerbated the worrying crime situation in the country. It is therefore in our interest for governors to support this initiative, let us see if it can work. However in implementing the guideline, care must be taken not to contravene the law. 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.

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