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The NFIU guidelines on LG funds

Despite the huge billions in security votes which they use for whatever they like without accounting for the funds, state governors in Nigeria have since 2003 taken advantage of the state and local Government Joint account to shortchange the last tier of government.

The governors have over the years virtually monopolized access to funds in that supposed joint account. They dip their hands into the account and take monies belonging to the local government without accounting to anyone. They have in recent years graduated into not allowing elections take place at that level at all so that chairmen and councilors will not be too independent to resist their corrupt plot. What they do is appoint loyalists who are more often than not the least qualified in each local government and ward as chairmen and councilors respectively. These appointees are so flattered by the positions that they take whatever peanuts that gets to them just to pay salaries (most times, they don’t even pay) and pocket the rest. Meanwhile, the governors spend the rest of the funds on jamborees like hiring private jets for local and foreign travels, paying exorbitant overhead costs on their thousands of needless aides, painting and refurbishing Government Houses for their individual comfort and some other lustful adventures. These governors have by their actions not hidden their determination to kill the local government system and avoid any autonomy for that tier of government.

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A statistical analysis of how much the 774 local government areas have earned in the last few years vis-a-vis the excruciating poverty and general infrastructural decay in these places will leave tears in the eyes of every patriotic Nigerian. According to data from the office of the Accountant-General of the Federation, N14, 708, 838, 964, 375.70 (over 14.7 trillion naira) was allocated to the 774 local government areas between 2008 and 2018. The larger percentage of this allocation has been diverted by governors into the state account and misappropriated. This financial cruelty has not only stunted development at the local government levels, there is also nothing to show for all the monies collected in the states.

The data also revealed that the top five states with the highest amount of allocation to their local governments during the period reviewed included Kano, which  received the highest allocation amounting to N832.6 billion, Lagos – N829.6 billion, Katsina – N613.4 billion, Oyo– 569.6 billion, and Kaduna– N504.9 billion.

Attempts by successive federal government officials, media, civil society advocates, lawyers and other stakeholders to check the excesses and overbearing attitude of governors have fallen on deaf ears. Rather, the governors consolidated their hold, became more daring and more powerful in the control of local government resources.

It therefore became obvious that merely appealing to their conscience and threatening to seize local council allocations will not solve the problem. Something has to change; something drastic has to happen; someone in the form of a folk hero has to step up from somewhere, to do the needful.

The NFIU was created as a stand-alone agency, away from the control of its mother-agency, the EFCC by the National Assembly, in November, 2018. The bill was passed after a long period of high-level intrigues and back and forth as a lot of interested and influential figures from within and outside the anti-corruption circles didn’t want the dream to turn to reality for reasons they will have to explain to posterity. Following that breakthrough, the Egmont Group, a global body of 155 financial intelligence units across the world which facilitates the exchange of financial intelligence, expertise and capability, at its 25th plenary held in Sidney, Australia, in December 2018, therefore lifted the suspension of Nigeria. It had earlier suspended the country NFIU’s lack of independence.

As a follow-up, the new law passed by the National Assembly provided that the NFIU should be headed by a director/CEO while the agency would now be domiciled in the Central Bank of Nigeria. And when President Muhammadu Buhari appointed Modibbo Hamman Tukur as pioneer Director/CEO of the new agency, the lawmakers concurred within days and then a new positive chapter in Nigeria’s efforts to tackle graft and money laundering was opened.

Modibbo Hamman Tukur is a no-nonsense, shrewd financial intelligence expert who has made his mark among the very best financial crime experts in the world.

The NFIU had stirred the hornet nest in May this year by rolling out new guidelines to ensure direct allocation of funds to local governments from the Federation Account and ensure financial autonomy for the local government leadership. The new guidelines which took effect on June 1, 2019 barred governors from interfering with statutory allocations accruing to the local governments directly from the Federation Account.

The guidelines titled: ‘NFIU enforcement and guidelines to reduce crime vulnerabilities created by cash withdrawal from Local Government funds throughout Nigeria,’ imposed a daily N500, 000 cash transaction limit on all the 774 local governments. It also barred banks, financial institutions, public officers and other stakeholders from tampering with local government statutory allocations. The NFIU vowed to deal with individuals and firms abetting the diversion of the funds. It warned that defaulters will face international and local sanctions, such as likely blacklist of erring governors and the Chief Executive Officers of the affected banks; shutdown of any erring bank; and watch-list of violators in 160 countries where they cannot transact business or pay bills.

The agency said the guidelines are in accordance with its legitimate powers under the NFIU Act 2018 and that any violations of the guidelines would be sanctioned appropriately. The directive was sequel to findings which indicated that cash withdrawals and transactions of the State and Joint Local Government Accounts posed the biggest corruption, money laundering and security threats at grassroots level and to the entire financial system and the country as a whole.

The NFIU act mandates it to monitor ALL financial transactions in the country to check for money laundering, and terrorism financing or any potential security threats and so it must be able to provide regulations for how monies meant for long-suffering people at the grassroots are spent to avoid diversion into illegal activities.

These governors often rush to quote Section 162 of the 1999 Constitution especially subsection 6, which created the State Joint Account. The reason (the spirit and letters of that law) for that Account is to ensure that the money meant for the local government is properly accounted for and spent in a transparent manner. In their inexhaustible capacity for mischief, they often forget to quote subsection 7 of that Section which made it compulsory for the state governments to contribute their own share of revenue to that Account for the sake of the local government administration.

The launch of the new guidelines is however just the beginning of what should be a long journey towards saving the local government administration from the vice grip of executive bullies at the states and ultimately curing the cancer of corruption in Nigeria. What the President needs to do now is to send an executive bill to the National Assembly seeking the amendment of certain provisions of the constitution which give the governors power to dominate the local governments and include sections that will make it a criminal offence for them to touch local government funds. This will give the new fantastic set of NFIU guidelines the legal backing it may require to function effectively in the long run. Indeed, the best way to fight corruption is to strengthen the institutions and the laws to make it difficult for career kleptocrats to have access to the funds and that is what the NFIU is doing with these guidelines.

Abdulrahman is an Abuja-based journalist

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