The Federal Government recently tickled the advocates of power devolution when it declared that local governments would begin to receive their monthly allocations directly from the Federation Account with effect from next month. Perhaps, the new thinking is in line with President Muhammadu Buhari’s resolve to support the age-long agitation for a return to true federalism. In its real sense, a true federal arrangement presupposes the independence of local government administration.
Although the assurance has been received with cautious optimism, some stakeholders believe that with strong political will, the politics of state joint local government account would be a thing of the past. The creation of the joint account system was primarily meant to facilitate grassroots development through effective supervision of the distribution and management of revenue accruing to the local councils from the federation account.
However, over the years, council administrations have served as a drainpipe, as governors recklessly divert the funds available to them for development for other purposes.
The big question now is on the wiliness of the government to summon the necessary political will to implement the autonomy of local government as a way of promoting accountability, as well as ownership of the process option, which is now a new global trend. Currently, illegal diversion of council funds, as well as endemic corruption has made grassroots development a mirage. The present system is based on the relevant sections of the constitution, which allow the state to monitor finance of the local government. But worried by the abuse of the process, the Federal Government has moved to block the illegal withdrawal of monies belonging to the local councils by the state government.
This is sequel to the Nigerian Financial Intelligence Unit (NFIU), directive to all financial institutions, public servants and other stakeholders to comply with provisions of the new guidelines and ensure full enforcement of corresponding sanctions against violations from June 1, 2019. The NFIU said its investigation revealed that cash withdrawal and transactions of the State, Joint Local Government Accounts (SJLGA), promotes corruption, money laundering and also constitutes security threats not only at the grassroots level, but also to the entire financial system and the country as a whole.
The information was contained in a statement signed by Ahmed Dikko, NFIU acting chief media analyst.
The unit further explained that the new guidelines were backed by Section 162 (6) (8) of the 1999 Nigerian Constitution as amended which states: “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.
“As far as the NFIU is concerned the responsibility of the account as a collection account is fully reinstated.
“Therefore, it is no longer possible to allow the entire system to suffer the deliberate and expensive infractions or violations by public officials and/or private business interests.
“Henceforth, all erring individuals and companies will be allowed to face direct international and local targeted sanctions, in order not to allow any negative consequences to fall on the entire country.
“To be precise, with effect from 1st June 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, both locally and internationally.
According to the NFIU, the complete guideline to this effect has 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.
With the new development, hope now rises for local government autonomy. The big challenge, however, is how to facilitate the amendment of the constitution in line with the new guidelines. Many attempts to amend the constitution in the past had met a brick wall, as governors manipulated the state lawmakers empowered to amend the extant law.
This was what engaged the minds of the lawmakers in the Senate when the issue came up for discussion. Most of the senators were unanimous in urging the 36 state governments and the Federal Capital Territory (FCT) to fully implement the new Nigerian Financial Intelligence Unit’s guidelines for the promotion of good governance at the grassroots level. They also called on all financial institutions to support the implementation of the guidelines of NFIU with diligence and professionalism.
The Senate resolution was in response to the threats by international financial watchdogs to sanction Nigeria for alleged financial abuses. Part of the guidelines, according to the lawmakers, which would come into practice by June 1, will be to limit cash transactions in the accounts of local governments to a maximum withdrawal of N500, 000 per day. This is with a view to forestalling suspicious transactions for terrorism-prone areas. According to the Senate, adherence to the guidelines would check vices of terrorism, proliferation of small arms, kidnapping, ethnic violence, cattle rustling and provide credible intelligence for law enforcement and national security.
If the proposal is fully implemented, it will guarantee full autonomy of local government as the third tier of government. Some pundits have, however, expressed reservation on the workability of the proposal, afraid that the state governors would frustrate the initiative. Retired General Ishola Williams, speaking with Sunday Sun, noted that the Southwest and Southeast governors who have been in the forefront of agitation for restructuring of the country were merely pretending and paying a lip service to the proposal.
His words: “The governors of Southwest and Southeast are just pretending to be supporting restructuring. If they can accept restructuring now, it means the local government will be independent financially. At present, no governor will want restructuring, including the Southwest governors. I challenge them; they don’t want restructuring. If the local government can get their revenue directly from the Federation Account, who is going to take it from them? Amend the constitution and everything shall follow.”
One other major issue of concern is the capacity of the local government chairmen to effectively manage the finances of the local governments.
There is a strong argument that most managers of the local government currently lack the capacity to effectively manage the monthly allocations to local councils.
But the Senate President, Bukola Saraki, insisted on the need for the National Assembly to engage state governors to allow local government autonomy.
According to him, it is time for the country to try another system where LGAs will be independent of the state governments.
He said: “We all talk about the local government administration which has been an issue of great concern for some of us who have had the opportunity to be governors and later legislators. I think it is clear like everything else that a few bad eggs tend to give the whole system a bad name.
“I think that apart from all this, there must be a kind of interface between the National Assembly and governors to let them understand the need for funding and allowing the local governments to have their autonomy. I think it is important because it is clear that this is affecting the local government administration.”
Interestingly, the incoming Senate is going to be largely populated by past serving governors. Whether or not they will support the council autonomy the answer is in the womb of time.
For some stakeholders, the only way to fundamentally address the issue of power devolution to the councils is to do a restructuring of the country in line with the principle of genuine federalism.
A former Minister of Transport, Ebenezer Babatope, in an interview with Sunday Sun, said that true federalism is all about restructuring. “There is no way you can achieve true federalism or devolution without restructuring the country. Restructuring means proper definition of federal nature of our country’s existence, which will give hope to the common people.”
In order to demonstrate genuine commitment to true federalism, Babatope urged President Buhari to revisit the report of the 2014 national conference and implement its far reaching recommendations, saying that “the conference report which was set up by former President Goodluck Jonathan gives him all the things he needs to move this country forward. If he can do that, it will bring about a new political dimension and a new equation entirely.”
The challenge is for the 9th National Assembly to interface with the state houses of assembly to complete the process of amendment that would guarantee the autonomy of the local government.
Owing to lack of financial independence, there is general skepticism that the state lawmakers may not readily want to support the proposal for fear of the backlash of voting against the position of their respective governors.