LG financial autonomy: FG, NFIU floor governors

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From Juliana Taiwo-Obalonye, Abuja

A Federal High Court sitting in Abuja presided over by Justice Inyang Ekwo, yesterday, delivered a judgment in favour of the Federal Government and Nigerian Financial Intelligence Unit (NFIU) on local governments joint accounts nationwide.

On May 6, 2019,  NFIU had issued guidelines to stimulate the reduction of crime vulnerabilities created by cash withdrawals from local government funds across the country, beginning from June 1, 2019.269874418 489648079194667 338320483690529681 N

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The guidelines, the agency said, include full enforcement of corresponding sanctions against violations. The guidelines limited the cumulative amount that could be withdrawn from a local government account to not more than N500,000 daily.

It also directed that any other transaction must be done through valid cheques or electronic funds transfer, among others. It said cash withdrawal and transactions from State Joint Local Government Accounts (SJLGA) “posed biggest corruption, money laundering and security threats at the grassroots and to entire financial system and the country.”

But state governments had dragged the AGF, NFIU and NULGE to court arguing that such directive was in breach of financial autonomy as enshrined in the Nigerian constitution.

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But Justice Ekwo dismissed the suit for lacking in merit. He held that upon studying the provisions of the NFIU’s guidelines, he was unable to see where the provisions thereof contradict or conflict the provision of Sections 7(1), (6) (a) and (b) of the constitution.

“I am also unable to see how the provisions of the 2nd defendant (NFIU)’s guidelines contradict or conflict with the provisions of Section 162(6) of the constitution which creates the ‘State Joint Local Government Account’ into which allocations to the local government councils of the state from the Federation Account and from the government of the state shall be paid,” he said.

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He said that the guidelines did not contradict Section 162(8) of the constitution which prescribed that the amount standing to the credit of the local government council of the state shall be distributed among the local government councils of that state on such terms and in such manner as may be prescribed by the House of Assembly of the state.

He said  the provisions of the 2nd defendant’s guidelines do not contradict or conflict with the provisions of the 4th Schedule to the 1999 Constitution which prescribes the functions of a local government council.

Reacting to the judgment, Director/CEO of NFIU, Modibbo Tukur said the judgment was good as the Federal Government is always ready to protect both states and local governments by making funds available for their governance responsibility.

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According to a statement by Chief Media Analyst, Ahmed Dikko, NFIU boss stressed that “from this judgment and from today all transactions on local government funds will be disclosed to ICPC and EFCC 100 per cent and will be reported continuously.”

He said  funds could be decided on by local councils which can be channelled to improving local security.

Chief Executive Officer ( CEO), Centre for the Promotion of Private Enterprises (CPPE), Muda Yusuf said it would enhance the capacity of the local governments to discharge their statutory responsibilities.

He said for a long time, many local governments  have failed in delivering their services in managing refuse, primary education, markets and quite a number of  functions allotted to them in the constitution.

“Local governments have been completely subservient to the state government, with the court ruling, I think it is a good development. But the concern that we have is that even with the court ruling, it is still possible that these local governments are still subdued by their political  godfathers because they could still get them to sit down and agree to continue  business as usual, especially if they are in the same party.

“You know the way the party structure works; party leaders determine the way it is going to be with or without court rulings, they still have a way of getting round all of these things. From what I can see,  I don’t think the governors are ready to let go   and the local government chairmen too don’t help matters.

“In terms of accountability, the local governments  are worse of because of the quality of people that are there. but that is not to diminish the importance of this autonomy.”

Also, Daniel Dickson -Okezie, chairman, SMEs Group of the Lagos Chamber of Commerce and Industry (LCCI), said the idea of federalism is that local governments should be autonomous, but lamented that this was not in practice in Nigeria.

“The states have always cornered the  revenues, giving the local government what it wants. It will be good if things are done the right way by following the process of federalism. The level of corruption at the federal level is high, even at the state and federal levels, as a matter of fact I do not know if that of the local governments are higher.

“The local government is nearer to the people, so we see much  and know much about them. The local government does not seem to be doing anything. With the ruling, they might still not do anything. They won’t do much. The state government controls them. The person that pays the piper detects the tune. What that means is that as long as the local is still being controlled to a great extent  by the state government there might not be any change. “