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NFIU vs State governors: What constitution says about financial autonomy for LGs

A faceoff seems to be brewing between the National Financial Intelligence Unit (NFIU) and state governors following a directive by the former that governors would no longer be allowed to access funds meant for local governments in their states.

The NFIU had set June 1, 2019, as the take-off date for the new regulation but the governors, under the aegis of the Nigerian Governors’ Forum (NGF) would have none of it, insisting that the NFIU was reaching beyond its authority.

Both the NFIU and the NGF are quoting sections of the Nigerian constitution to back their arguments for and against the new regulation.

In a statement on May 15, the NFIU said its directive to banks to ensure that governors no longer have access to LG funds was based on “its understanding of the 1999 constitution that no debit is allowed on any local government funds unless and until the funds are credited to and reach the bank accounts of a local government in any state of the federation”.

However, in a petition to President Muhammadu Buhari, Governor Abdulaziz Yari of Zamfara State, who is also the Chairman of the NGF, accused the NFIU of “stoking mischief and also deliberately seeking to cause disaffection, chaos and overheat the polity”, and urged the President to order the Unit to quit “encroaching on or even breaching constitutional provisions”.

What the constitution says about revenue allocation

Section 162 of the 1999 constitution prescribes how revenue should be distributed between the three tiers of government namely, the federal, state and local governments, as well as the judiciary.

Sub-sections three to eight of Section 162 read as follows:

(3) Any amount standing to the credit of the Federation Account shall be distributed among the Federal and State Governments and the Local Government Councils in each State on such terms and in such manner as may be prescribed by the National Assembly.

(4) Any amount standing to the credit of the States in the Federation Account shall be distributed among the States on such terms and in such manner as may be prescribed by the National Assembly.

(5) The amount standing to the credit of Local Government Councils in the Federation Account shall also be allocated to the State for the benefit of their Local Government Councils on such terms and in such manner as may be prescribed by the National Assembly.

(6) Each State shall maintain a special account to be called “State Joint Local Government Account” into which shall be paid all allocations to the Local Government Councils of the State from the Federation Account and from the Government of the State.

(7) Each State shall pay to Local Government Councils in its area of jurisdiction such proportion of its total revenue on such terms and in such manner as may be prescribed by the National Assembly.

(8) The amount standing to the credit of Local Government Councils of a 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.

It does appear, going from the sections of the constitution cited above, that state governments are in charge of local government funds and disburses to them according to the prescription of the state assemblies.

There is no particular clause in the National Financial Intelligence Unit Act (2018) that gave the Unit express authority to determine how states and the local governments under them manage their funds.

Arguments for and against the new guidelines

Spokesperson of the NFIU, Sani Tukur, in an interview last week, maintained that the NFIU has authority, based on its enabling Act, to issue the guidelines.

“Any bank that connives with governors or local government chairmen to breach the directives will face the necessary sanctions,” Tukur said

He also added that if an international fraud was committed using the joint state and local government account, international anti-graft agencies could sanction the financial institution in which the account was domiciled instead of sanctioning Nigeria as a country.

Tukur maintained that the NFIU was not advocating for the abolition of joint state and local government accounts. “That account has a constitutional backing,” Tukur said. “What we are pushing for is that the account should not be used by state governors for withdrawals and payments; it should be used for the distribution of funds to local government councils.”

The National Union of Local Government Employees (NULGE) also supports the move for LG autonomy. Ibrahim Khaleel, NULGE’s National President, said the NFIU directive was in order and did not contravene the constitution.

“The guideline issued by NFIU is to protect funds that are allocated from the federation account for the development of LGAs from unnecessary diversion and siphoning by governments of the state. If any state government is not comfortable with this guideline, it means the state government is tampering with funds meant for the LGAs because if it is not so, it will not have any reason to go against what the guideline is talking about,” Khaleel was quoted by ThePunch as saying.

However, the PDP Speakers’ Forum agrees with the NGF that the NFIU had no business interfering with how states disburse funds to the local governments under them.

“They (the NFIU) are meddlesome interlopers. They are going into an area they have no jurisdiction over and my advice is that the Federal Government and the National Assembly should focus more on creating a true constitutional autonomy for local government areas,” said John Gaul Lebo, a lawyer and the Speaker of the Cross River State House of Assembly. Lebo is also the chairman of the PDP Speakers’ Forum.

“NFIU is not the National Assembly and, therefore, cannot make laws. They cannot give a deadline on such matter because the constitution does not recognise NFIU for that,” Lebo told ThePunch.

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