Nseobong Okon-Ekong, James Sowole, Hammed Shittu, Seriki Adinoyi and Emmanuel Addeh write on the ripples over the federal government directive that funds meant for local governments should be disbursed by them directly
One of the major items in the proposed amendment of the Constitution of Federal Republic of Nigeria 1999 as amended is the proposal for local government autonomy, particularly the issue of fiscal autonomy for local governments, allowing fund allocated to the 774 councils in the country, go directly into their accounts. This will abrogate the current situation that permits the third tier of government to run a joint account with the state governments. Often, this situation leaves the local governments at the mercy of state governors.
In the current practice, each state of the federation maintains a State Local Government Joint Account into which all moneys allocated to local governments in a particular state are remitted and from which state government distributes to councils.
This practice some people argue, has turned local government into workers’ salaries paying organ as states release money only for payment of salaries while councils have to apply to state governors and government for any other money they want use for any project in their areas.
The practice has therefore, affected adversely the role of community and grassroots development that local government, which is the closest to the people ought to perform.
Many people see the operation of State Local Government Joint Account as one of the reasons that encourages states not to conduct local government election. This is because any appointee of any state government can be removed anytime he or she does anything contrary to the wishes of the governor.
When opportunity came therefore, for the amendment of the constitution in such a way that will give local government autonomy, it was vigorously pursued at the National Assembly. However, for an issue like that to get through, the approval of the two third of 36 State Houses of Assembly.
It was at this stage that the matter got stuck before preparation for the 2019 national elections took precedent over every other matter of general importance.
It therefore became interesting when the Federal Government recently took a decision that many people believed would rescue local government from misappropriation of their monies by state governments, which just gives them mainly fund to pay salaries.
The Federal Government had therefore opened a new topic for debate with the directive.
Since announcement of the directive that allocation to 774 local governments from the Federal Account Allocation and Fiscal Committee (FAAC) should go directly to councils from June this year, various stakeholders including former chairmen of councils have been reacting on the matter.
In Ondo State, a former Chairman of Akure South Local Government, Mr Afolabi Akinbowale, described the Federal Government’s directive as a welcome development.
Akinbowale, was the Chairman between 1999 and 2002, the Chairman of the Association of Local Government Chairmen of Nigeria (ALGON), Ondo State chapter and National Vice Chairman of the association in Nigeria.
The former chairman, was in office when funds were remitted directly into the account of local governments.
Akinbowale said the current practice does not make local government accountable to the people because they are mostly appointed by state governors, who can remove them anytime.
He said, “During our time, we got our money directly and people were asking us questions about their monies. We were accountable to the people that elected us. It is different from the current practice where governors appoint chairmen, collect their monies in the name of State Joint Local Government Account (JAC), give them money to pay salaries and misappropriate the rest. The case is even worst at a time when a governor uses the local government money to build markets and took control of the market simply because the state added little part of the cost of building such markets. It is the responsibility of the local government to build markets, collect rates and perform other functions that are spelt out in the constitution. But states have taken over all these functions and have rendered local government redundant and irresponsible. With this new directive, local governments will have money to build markets, maintain them and execute projects through which they can generate money. I congratulate the local government system for the new action of the federal government. I do not support the practice cripples the local governments simply because the state is the one controlling their money, which make many states not to conduct election into local governments. With the new directive, people can hold local government chairmen accountable for their actions and inactions unlike when the governor is the Alpha and Omega.”
In the view of Constitutional Lawyer and Human Rights Activist, Dr Tunji Abayomi, more fundamental actions have to be taken beyond the prevailing sentiments. He insisted that the NFIU directive contravenes the provisions of the Constitution of the Federal Republic of Nigeria 1999 as amended.
He said until the constitution is amended further to accommodate new provision, whatever is done by anybody or any government agency cannot stand.
Abayomi argued, “The first paragraph of the constitution states that the constitution is the supreme authority all over Nigeria. The provision of the constitution in Section 1 sub 5 is that any money accruing to the local government shall he paid to the state. So the Federal Government has no constitutional right to direct that money should be paid into the account of local government directly. What the constitution says therefore is that the amount due to local government councils in the federation account shall be allocated to the states for the benefit of their local government councils. It then provides that each state in Section 162 sub 6, that each state shall maintain a special account called State Joint Local Government Account to which all allocation to local government council for the local governments shall be paid. Any other account, for the payment of money to the local government instead of joint account provided for or created by Section 162 sub 6, will be inconsistent with the constitution and will amount to violation of the constitution and it will be wrongful. The Federal Government cannot surreptitiously or forcefully or use the strength of its position, do what the people have not constitutionally approved. Government, in democracy lives on the wishes of the people. If the Federal Government is unable to persuade the people and the legislative houses both at the federal and the state levels and are unable to amend the constitution to achieve the interest or objectives, it cannot unilaterally do it. It would amount to violation of the provision of the constitution.”
The legal practitioner also stated that the new directive also contravenes the provision of Section 7 of the constitution which places the funding and even existence of local government under the state House of Assembly.
“The problem is that regardless of interest of the federal government intention, it will amount to unlawful act and the violation of the constitution. The federal government cannot on the mark of goodwill take a decision that counteracts the provision of the constitution. It is not just about the goodwill it is about the good law. It is about the constitution and not the consensus of the federal government or even the state. That is why the whole essence of the provision of the constitution state clearly that the constitution shall be bidding on all authorities and laws. If I were the states, I will take the Federal Government to court for violation of the constitution,” he said.
For the president of the Nigeria Union of Local Government Employees, Ondo State, Comrade Bola Taiwo, the directive of the federal government is a partial autonomy for the local government system. He raised an interesting angle about local governments had nothing accruing to them from the federation account.
“The only thing is that at the previous time when we experienced this type of thing, some local governments do have zero allocation and that is why the issue of Joint Account Allocation Committee (JAAC) came in. But because most of the governors were tampering with local government money that is why the people are saying that it should be scrapped. If we should scrap JAAC, they must constitute a Caretaker Committee like a Technical Committee that will look into the allocation immediately the allocation get to the state before transferring to individual local governments so that any local that does not have money enough to pay its workers, can be taken of by other councils. Another issue is that teachers salaries, should be taken into consideration. Teachers salaries must be made first charge so that there would be no problem. The issue of paying the primary school teachers must not be exclusively for the local government. It is supposed to be a tripartite payment-the federal, the state and the local governments. The federal and state government- should contribute to the payment of primary school teachers. That must be taken into consideration. The third issue is that of sub -deduction to local government commission, pension board, local government loans board must be taken into consideration. If all these are not taken into consideration, the local government pension board will not function again, the loans board will not function, the training department of local government commission will also not function again. That is why we need this Technical Committee. The technical committee will meet immediately after FAAC, and discuss all the highlighted issues. If there is no JAAC, there must be technical committee so that most of these big local government will not have zero allocation. There must be a way of harmonising things together, if not, things will go other way,” Taiwo stated.
There have been stringent calls for the federal government run a true federation, where the federating units would maintain autonomy on certain matters, including on finances and policing among others. But so much power has been concentrated in the centre. Financial autonomy is at the core of a federal system of government, allowing the federating units to remain financially independent from the other, while remaining interdependent.
Nigeria’s current monthly revenue sharing formula states that the federal government takes the biggest share of 52.68 per cent from the federation account. The 36 states take 26.72 per cent, while the balance of 20.60 per cent is handed to the 774 local governments.
To find a way around the issue of developmental projects that will ensure that the impact of government is felt directly by the people at the grassroots, the federal government has used one of its agencies to achieve through the backdoor what it has been able to achieve by getting at least, 23 of the 36 of the state houses of assembly and the National Assembly to effect an amendment to the constitution. Through theNigerian Financial Intelligence Unit (NFIU), it has directed that effective from June 1, 2019 funds meant for the local governments can only be disbursed by the local governments.
The NFIU has banned banks, governors, financial institutions, public officers and other stakeholders from tampering with the statutory allocations of local governments beginning from next month.
According to the NFIU, “having realized through analysis that cash withdrawal and transactions of the State, Joint Local Government Accounts (SJLGA), poses biggest corruption, money laundering and security threats at the grassroots levels and to the entire financial system and the country as a whole, decided to uphold the full provisions of section 162 (6) (8)of the 1999 Nigerian Constitution as amended which designated state Joint Local Government Account into which shall be paid allocations to the local government councils of the state from the federation account and from the government of the state.
“The amount standing to the credit of local government councils of a state shall be distributed among the local government councils of that state and not for other purposes. “In addition, a provision is also made to the effect that there shall be no cash withdrawal from any local government for a cumulative amount exceeding N500,000:00 per day. Any other transaction must be done through valid cheques or electronic funds transfer. The complete guidelines have been released to the Governor of the Central Bank of Nigeria, the Chairman, Economic, and Financial Crimes Commission (EFCC), the Chairman, Independent Corrupt Practices Commission (ICPC) and Chief Executive Officers of all Banks and other financial institutions. Any state government that is willing to seek any expert economic advice in the unlikely event of these guidelines constituting an inconvenience to the management of the state can work with the NFIU and/or CBN.”
The constitution allows governors to receive monies from the center on behalf of the local governments and to decide what is disbursed to local governments thereafter.
The NFIU is the Nigerian arm of the global financial intelligence Units (FIUs), which is domiciled within the EFCC as an autonomous unit and operating in the African region. The NFIU seeks to comply with international standards on combating money laundering and financing of terrorism and proliferation. Its mission is to safeguard the Nigerian financial system through the provision of credible financial intelligence. Its Chief Executive, Mr. Modibbo HammanTukur is an expert on foreign intelligence exchange with over 20 years of experience. Mr Modibbo has a wealth of diversified professional experiences.
The importance of local government administration cannot be over emphasized in the socio-economic growth of any nation
Apart from the fact that, it is the closest arm of government to the people of the grassroots. It has become a foundation upon which achievements by the other levels of government be it state and federal can be measured. This is because many people live in the different communities that constitute the various 774 local governments in the country.
It is on this premise that government puts up programmes that can be delivered to the local government level especially in the area of education, health, rural roads, among others. This is to comply with world standard of Millennium Development Goals (MDGs) poised to reduce poverty, hunger and accelerate the socio-economic development and growth of the people of the grassroots.
It will be noted that, the desire to achieve these goals have been hampered with lack of financial autonomy in the country. Most of the local government activities are tied to the apron string of state governments and this has affected their desire to bring government closer to the people of the grassroots especially in the delivery of quality programmes to them.
It is worrisome that, some local governments cannot embark on any projects worth N500,000 without recourse to the order of its state government and this ugly situation has prevented them to provide needs and aspirations of the people of the local government level.
Most of the state governments in the country have coerced their state houses of assembly in the usurpation of monthly federal allocations that always come to the local government level through the enactment of joint allocation law.
However, various stakeholders at local government level have expressed concern over this ugly situation, a situation which they claim has led many young people from grassroots to leave for urban centres due to lack of development at the local government level.
This ugly trend in the financial autonomy to the local governments has affected their growth and this has continued to be a serious threat on the economic and infrastructural development of the local government councils across the country.
However, the recent reprieve to the local governments through the NFIU directive has excited many Nigerians especially the people at the grassroots in Kwara State. The consensus is that the era of misappropriation, corruption, money laundering and security threat to the grassroots would be a thing of the past.
A senator-elect from Kwara South senatorial district on the platform of the All Progressives Congress (APC), Mr. Oyelola Ashiru said, “this is what Nigerians have been clamouring for in the past few years now and in as much I say it is a good development, we have to be very careful about its implementation.”
According to him, “When we talk about the capacity to govern and capacity to spend public funds, I discovered that, the capacity is very low in many local government councils to the extent that in many local governments, what they do is the sharing of local government funds and in view of this we have to be very careful about this financial autonomy. The resources of Nigeria is so limited and much has to be done in these areas because local governments are the closest to the people of the grassroots and the quantum of money going to local government councils are very huge. We have to be very careful on how this money will be expended. We must ensure that the local government chairmen, speakers of legislative arm are answerable to the people of the grassroots. We must also ensure that these monies are not hijacked by few powerful individual at the local government councils. Checks and balances must be put in place concerning these perceived abnormalities. The other side that should be addressed is the constitutionality of it because it is obvious that the federating units in Nigeria are just the states and not the local governments. All these must be addressed and if it is possible a law has to be made, to make its operation legal. If all these are crossed and adopted, the financial autonomy to the local government is a good one and it will be a good thing for NFIU for putting up the project and I know Mr. President is aware of this too.”
In his submission, a former local government council chairman of Moro local government council area of the state, Alhaji Abdulraheem Adisa lauded the gesture saying that, “A new lease of life will now be available to the people of the grassroots”.
Adisa, a chieftain of Peoples Democratic Party (PDP) in the state said that, “it is a great welcome development in the political annals of Nigeria as full freedom would now come to the people of the grassroots across the nation.
“The past situation at the local government level was very devastating as they always have to go to the state before they can embark on any meaningful project for the development of the people at the grassroots.
“As a government that is the closest to the people, there must be chance to develop them without any hindrance. This is a place where you can’t close your doors, if they don’t have money, the people will come to you, if they want to do social functions like naming ceremonies, marriages, among others, they will knock on your doors. The local government is for the people, hence, there should be freedom to operate without any hindrance but this is not so in the past. The new reform of the NFIU is good.”
The PDP chieftain added, “with this new reform, much expected infrastructural development will come to the grassroots and the era of rural -urban migration would come to an end in the country.”
Adisa however said that, the ceiling of N500,000 that can be withdrawn from the local government council accounts daily would also put an end to any act of corruption in the system and would take the local government councils to a greater height.
The deputy coordinator, Field Operations Directorate, APC presidential campaign council, Kwara state, Mr. Kayode Oyin-Zubair in his reaction said that, “What NFIU has done will, in a way, guarantee a leg of the full autonomy we have been seeking for local government areas in Nigeria.
“Financial autonomy perhaps is the most important aspect of the hydra head problems confronting local government administration in the country”.
According to him, “President Muhammadu Buhari deserves some accolades in working out this leg, at least we can move from here to the next level in achieving a truly autonomous local government system in Nigeria.”
He said, “I have a reservation with the provision that allows for less than N500,000 withdrawal from the banks in a day. What if the council chairman decides to make such withdrawals five times in a week, he would have successfully drawn N2.5m?”
A Senior Advocate of Nigeria (SAN), Chief Lucius Nwosu, who also recently represented Niger Delta Governors and won a case at the Supreme Court over non-compliance with Section 16(1) of the Deep Offshore and Inland Basin Production Sharing Contracts Act, said the news should be received with a lot of caution.
He added that while the decision might be commendable, if not well handled, the federal government could turn local council chiefs against the governors since they now receive their funds directly from the centre.
He said: “If funds are to be paid directly to local governments, it’s some kind of welcome development, but it has its own shortcomings.
“You call yourself Federal Republic of Nigeria and this is broken into semi-autonomous regional governments, so some measure of autonomy is given to the state governments.
“If you take direct responsibility of funding these local governments from the centre, you are indirectly controlling the federating states through the centre and you can manipulate the non-compliance of councils by starving them of funds from the centre.
“But if they are coming statutorily, so that they can demand as of rights through their federating states from the FG without the centre having a right to seize or withhold, then that will be good.
“The practice has been that states or governors have made themselves demi-gods. When they are given these monies, they take the liberty to sack the chairmen and impose a sole administrator with the purpose of misappropriating the money and then act like a headmaster who’s sharing biscuits to his pupils.
“In a way and if well applied , it is sensible, but if it’s to force the loyalty of the LGA chairs to the presidency, then we are no longer running a federation, but a unitary system and that will be paving the way for an absolute dictatorship in the hands of the president”
According to him, when the council chairs are directly controlled from Abuja, they could also become too powerful and cause problems for the governors of their states.
“The LGA chair and his councillors can now rebel against their governors because after all, they are now getting their funds directly from the centre.
“Realising that the president controls the army, customs, police, DSS, navy and several others, they can decide to go further, they can deny the local government chair the right to travel out of the country or withhold security from him. So, it now becomes a means of control.
The senior lawyer argued that the governors could go to court if they feel that any part of the constitution has been breached.
“There is what you call corporate governance of these states. The way the governor’s borrow money without reference to the electorate, and the way they mortgage the state, the security votes have made them tin gods.
“But don’t be surprised that one day you wake up and there are no local governments. They will tell the governor go to hell and he becomes a toothless bulldog.
“So, checks and balances have to be put in place, such that we don’t create a monster. What the NFIU should do is to monitor the application of funds, but they cannot go beyond that point to ask for direct disbursement. It’s a two- way thing.
“But the governors can go to court if they feel any part of the constitution has been breached. They can enforce compliance to the constitution by telling the courts that the NFIU do not have such powers. But the matter is delicate and should be handled with care. You see governors now setting up and dissolving lg leadership all over the country.
“Rochas Okorocha has government Imo for eight years without local government chairmen. The whole thing is messed up. The Nigerian constitution requires a complete abolition and a renegotiation of the union,” he posited.
On his part, a foremost human and environmental rights activist in Bayelsa, Mr Morris Alagoa, lauded the initiative, but cautioned that even the councils’ bosses should be properly monitored.
“On the subject matter; I am convinced beyond reasonable doubts that it is one of the best things the present administration will bequeath to Nigerians, especially the grassroots.
“This is part of the autonomy some of us have been advocating in favour of the third tier of government.
“It is better coming at this time than never. I will join like minds to urge the Federal Government to ensure INEC also conducts local government elections in view of the fact that local governments are a creation of the Federal Government and allocations come from the centre too.
“This is to prevent the monopoly of state governors, acting as if local governments are their cocoa farms and dictating who should be caretaker chairmen.
“The caveat here, however, is that mechanism to check looting of the treasury at that level should also be in place. Public funds should be accounted for. The Federal Government should take seriously any allegations of misappropriation of funds by investigating, instead of local government chairmen becoming demigods and sending thugs and assassins to those who ask questions,” he opined.
Chairman of Civil Liberties Organisation (CLO), Chief Nengi James, in his comments, described the directive as a right step in the right direction.
“As someone who believes that the third tier of government must thrive, we want to support financial autonomy for LGAs. It’s a good step in right direction.
“Money going directly to the LGAs will bring development and take care of many problems bedevilling the councils.
“There have to put in place checks and balances in terms of how much is withdrawn and cheques to be given out. This is laudable. Transparency should be the watchword and I think that has been incorporated.
“It will checkmate reckless spending as transactions are now electronically monitored. The governors became too big to be monitored. So, the financial institutions are in a better position to check this recklessness.
This is what we have protested for a long time. We have always collaborated with NULGE to insist on this autonomy. It’s in the interest of Nigeria,” he maintained.
*Section 162(1) of the Constitution of the Federal Republic of Nigeria 1999 (the “Constitution”) provides for the establishment of a special account to be called “the Federation Account” into which all revenues collected by the Government of the Federation (except for personal income tax of personnel of the armed forces of the Federation, the Nigeria Police Force and the Ministry of Foreign Affairs and residents of the Federal Capital Territory) shall be paid. The funds collected in this account are required by Section 162(3) of the Constitution to be distributed among the Federal, State and Local Governments in the Federation who then utilize their share to meet their respective obligations
*Section 162(6), requires each State to maintain a special account to be called State Joint Local Government Account, into which shall be paid all allocation to the Local Government Council
*Nigeria has 774 local governments, carved out of the 36 states of the federation
*From June 1, 2019, state governments must stop spending from funds allocated to the local governments, according to the directive from the Nigerian Financial Intelligence Unit
* The guidelines stipulates that the joint account system currently in use would only serve the purpose of receipt of allocations from the federation account, but not for disbursement
*The new measures have been introduced by the current administration to restore LGA’s financial autonomy
*Attempts to amend the constitution requires approval by two-third of the state houses of assembly and since they are largely populated by appointees of the governors, the members can hardly go against the interest of the governor
*The NFIU directive contravenes the provisions of the Constitution of the Federal Republic of Nigeria 1999 as amended
*One of the reasons the joint account system came into operation was that some local governments got zero allocation from the federation, it therefore became necessary to pool monies from all local governments in a state and dispense them according to need
* Nigeria’s current monthly revenue sharing formula states that the federal government takes the biggest share of 52.68 per cent from the federation account. The 36 states take 26.72 per cent, while the balance of 20.60 per cent is handed to the 774 local governments
*The NFIU directive states that there shall be no cash withdrawal from any local government for a cumulative amount exceeding N500,000:00 per day