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Policing state/LG joint accounts

Nigerian Financial Intelligence Unit (NFIU),
Nigerian Financial Intelligence Unit (NFIU),

An amendment of the operational guidelines of the Nigeria Fraud Intelligence Unit [NFIU] promises to curtail the misappropriation of Local Government funds by state governments under the aegis of the Joint Allocation Account, JAAC). This much abused system is largely to blame for the incapacitation of local governments all over the country and their inability to deliver on their mandate.

Expected to be operational by June 1 this year, the amendments constitute a review the extant provisions of JAAC which in its present state, vests simultaneous powers to both the state governments and respective local governments to operate the latter’s accounts, especially with respect to allocations from the Federation Account. This system has created wide room for governors to control the local government accounts, with attendant instances of systemic diversion of such funds by the governors and their agents, as well as mindless looting by unscrupulous officers in the system. In their abuse of the provisions of JAAC, governors even fail to make the mandatory contributions to JAAC from their Internally Generated Revenue (IGR). This situation is believed to be a major cog mitigating against the effectiveness of the local government system in the country.

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Accordingly, one of the expected amendments is to restrict the operations in respect of JAAC to the receipt of funds and not for disbursements. Another is to restrict the daily volume of cash transaction of each local government to N500,000. Yet another one is the mandatory registration and monitoring by NFIU of all transactions by local government councils through electronic payment module. To consolidate the reforms, the measures are intended to cover all aspects of transactions between local government councils and any other entity including individuals. Ultimately the measures have the potential of streamlining the flow of funds and tame the unrestricted access of state governors to such local government funds and enable the latter to deliver on the dividends of democracy to their constituents.

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President Muhammadu Buhari had on July 11, 2018 signed into law the NFIU Bill in line with the requirements of Recommendation 29 of the Financial Action Task Force Standards and Article 14 of the United Nations Convention Against Corruption. The new Act effectively separated NFIU from EFCC under which it had been operating hitherto. Being unfettered, NFIU is now set to address its main mission of receiving, analyzing and disseminating such intelligence to end users. This mandate draws it into fighting all financial crimes bordering on money laundering, terrorism financing and even the proliferation of arms. And given the state of affairs at the country’s local government system, NFIU seems the best suited facility for imposing fiscal sanity there.

Its focus on local government funds enjoys widespread endorsement against the backdrop of a relentless hemorrhage of funds at that tier of governance. Typically, local government funds are treated by many governors as pocket money which is disbursed at the whims and caprices of the state chief executive.

However, the initiative has not been without reservations in some quarters, with arguments ranging from the constitutionality of the reforms and the practicality of same. In one vein is the contention that JAAC as constituted enjoys Constitutional protection and will need an amendment of the Constitution to restructure it. In another vein is the fear of the effort that will be required to effect such reforms in the face of the compromised state of most local governments which exist as Care Taker Committees appointed by the state governors.

By their appointment as Caretaker Committees they remain unelected outfits operating in breach of the Constitution which provides for a system of elected local governments. As such they are effectively appendages of the state governors who would treat them as mere extensions of the state government apparatus. To effect the anticipated reforms would therefore require a significant adjustment to the NFIU Act.

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