Financial autonomy for LGAs: A must for Nigeria’s development


One of the advantages of federalism as a system of government is its flare for healthy competition which results in political, economic and social development of a country.

A cursory look at federal structures all over the world, gives a reflection of quantum development hinged on innovation and competition. Federalism allows each region or unit within a polity to grow at its own pace. Not only that, it also recognizes the uniqueness in each of all the component units within a polity.

Our heroes past were wiser enough to have seen these benefits inherent in this system of government and adopted it for the overall interest of the nation. Even though, local government was not recognized by law as the third-tier of government, not until 1976, it was adopted that year following the recommendations of Udorji’s Commission, on the reform of local government.

It is on this note that we wish to commend the Nigerian Financial Intelligence Unit (NFIU) on the steps the Unit has taken to ensure financial autonomy for the local governments in the country.

We recall with gratitude that the Unit in May ,  announced that transactions on state and local governments joint accounts,  are only transitional accounts from where funds should go directly to the accounts of local governments.

The Unit also set a ceiling on cash withdrawals from local governments accounts to a maximum of N500,000 per day and directed  banks to ensure strict compliance by making sure that allocation of local governments goes straight to their accounts.

But why were the Governors of the 36 states in the country opposing such a noble idea that is in the best interest of Nigerians, particularly those in the rural communities? Is there something they are not telling Nigerians?

The Governors under the aegis of the Nigerian Governors Forum (NGF), had described the directive to banks by NFIU as unconstitutional and we ask why?.

The immediate past chairman of the NGF and former Governor of Zamfara State, Abdulaziz Yari, in a letter to President Muhammadu Buhari, on behalf of  the Governors, called it an attempt to ridicule the 1999 Constitution.

The governors said they extracted “copiously from the constitution” to draw the attention of the president to section (6) (a) and (b) “which confers on the States and National Assemblies the powers to make provisions for statutory allocation of public revenue to the local councils in the federation and within the states respectively.”

Similarly, the governors added, Section 162 (6) expressly “provides for the creation of the States Joint Local Government Account (SJLGA) into which shall be paid all allocations to the LGAs of the State from the Federation Account and from the government of the state.”

“In principle, the NFIU should concentrate on its core mandate of anti-money laundering, AML activities and combating financing terrorism, CTF as prescribed in the Act establishing it and should desist from encroaching on or even breaching constitutional provisions,” the statement quoted the governors as saying.

“The Nigerian Financial Intelligence Unit (NFIU) is the Nigerian arm of the global Financial Intelligence Units (FIUs) once domiciled within the EFCC but now for the purpose of institutional location domiciled in the Central Bank of Nigeria, CBN.

“This means the NFIU is only mandated to trace or track laundered money that finds its way into terrorism financing and report such to the nation’s security agencies. The NFIU should seek to comply with those standards on combating Money Laundering and Financing of Terrorism and its proliferation as stipulated and not dabble into matters that are both constitutional and beyond NFIU purview,” the governors stated.

However considering the fact that almost 70 per cent of Nigerians leave in rural areas and the challenges confronting people who leave there, in terms of infrastructural presence, we urge the Governors to see reason with NFIU and withdraw the pending suit before Justice John Tsoho of the Federal High Court, Abuja Division.

According to the Federal Ministry of Power, Works and Housing, the local governments are responsible for 66.7 per cent (129,580km) of all the roads in the country.

Besides in the education sector, it is the responsibility of the local governments in all the  states of the federation to pay the salaries of primary school teachers and maintain the schools while in agriculture, most of the agricultural produce come from the rural areas and in most of these areas, there are no good roads to the market in the urban centres.

This is why it is said that the local government is the pillar of a federating unit, because of its closeness to the people.

We believe that if the local governments in the country are adequately funded and are freed from the apron string of the Governors, which the NFIU directive seeks to achieve, they will do well and make life more meaningful for the rural dwellers.

Apart from the fact that they are closer to the people, they wield enormous responsibilities and for that reason, they need to be financially independent to function the way they are supposed to function.

The bulk of the responsibilities in governance lies with the local governments, which is why it has become expedient for them to be financially independent for speedy socio-economic growth and development of the country.

We encourage President Muhammadu Buhari and members of the National Assembly, to do the needful by supporting a review of the Local Government Act for better strengthening of the independence of the local governments in the country. That way, the accelerated development that the country desires will happen.


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