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Right reason, wrong step

I have a great deal of sympathy for the latest step taken by the federal government to keep the state governors from helping themselves to…

I have a great deal of sympathy for the latest step taken by the federal government to keep the state governors from helping themselves to the local governments’ monthly statutory allocations from the federation account. The setting up of a new body, Nigerian Financial Intelligent Unit, NFIU, must be part of President Buhari’s promise at his inauguration in his first term on May 29, 2015. He said then that the federal government would not “fold its arms and close its eyes to what is going on in the states and local governments. Not least the operation of the local government joint account.”

Under the NFIU guidelines that came into effect from June this year, state governors, banks, other financial institutions, public officers and other relevant stake holders are barred from tampering with the statutory allocations to local governments from the federation account. Anyone who breaches the rules would be rewarded with some stiff penalties. Erring governors and the chief executives of banks could be blacklisted, thus making it impossible for them to transact financial businesses in and outside the country.

Some of the more intriguing provisions are these: the NFIU Act restores autonomy to the local government councils; it imposes a daily cash transaction of N500,000 on all the 774 local government councils; each local government is free to spend its fund without seeking the approval of the state governors.

This cannot be sweet music in the ear-bud clean ears of their excellencies. It is a critical development in the right of the local government councils to manage their financial affairs without the governors looking over their shoulders. Financial autonomy is the key to the possible success and relevance of the local government system as a third tier of government. Without it, the local governments become an embarrassment as the weakest link in our federal structure.

It is no news that the state governors generally abuse the state local government joint accounts. Under the law, the states are to pay additional ten per cent of their internally generated revenue to the local governments. This, apparently, is the meaning of joint account. The state governors do not meet this obligation to the local governments. Instead, they corner their allocations from the federation account and starve them of needed funds to function as governments, structured as they are to mimic the first and the second tiers of government. The first tier is headed by an executive president with executive powers; the second tier is headed by an executive governor with executive powers but the third tier is headed by an executive chairman without executive authorities. He is the boy-boy in the system.

It is easy to appreciate the primary purpose of the NFIU act and that is to rescue the local governments from being appendages of the state governments. This has never lacked supporters, present company not excepted. Poor or inadequate funding of the local governments is the bane of grass roots development in the country. None of the 774 local government councils is able to fully discharge its statutory responsibilities as a government. Attempts in the past to force the state governments to let go of their statutory allocations were frustrated by the governors and the law courts. The Obasanjo administration enacted a law to empower the auditor-general of the federation to periodically look into the accounts of the local governments and ensure that they received their statutory allocations and spent them in accordance with extant laws guiding such public expenditures.

The state governors chafed. Abia State challenged the law at the Supreme Court. The court struck down the law when it ruled that the federal government had no business in this matter and was, therefore, a busy body. You would think the law empowered the federal government to freely turn itself into an amebo. But the administration made it a policy to publish the allocations to each of the tiers of government. If we were a country that places premium on accountability, this would have been a chance for us to ask the governments to account for what they did with their monthly allocations.

The NFIU act raises the hope that this problem could be addressed to empower the local governments to function properly. But the autonomy bells are not about to ring in the 774 local governments areas. The problem of the local council funds cannot entirely be blamed on the avarice of the state governments. It is a constitutional problem that might be complicated by the NFIU act and the guidelines issuing from it. Section 162 (6) of the constitution empowers state governments to set up state local government joint accounts into which local government allocations from the federation account shall be paid. It was probably conceived as a distributive pool from which allocations to the local governments are to be disbursed to them. Section 162 (8) permits the state houses of assembly to legally determine the formula for disbursing the fund to the local governments. There is, therefore, no uniform distributive formula in the country because each state house of assembly enacted a law in this regard to address the peculiar needs of each state. However, the net result is that the local councils receive much less than their monthly allocations from the federation account. As I pointed out earlier the governors have managed to make the state local joint account a mono-account funded entirely by the local government allocations from the federation account.

Can new law remedy this? It seems to me that it faces an uncertain future as a corrective piece of legislation. It may most likely be tied up in the courts. Having failed to persuade the NFIU on the need for a mutually beneficial negotiation of its guidelines, the state governors resolved last week to challenge the act in its entirety in the court. If this happens and the case drags on, as almost all cases in the country do, then it may be unwise to toast to the assumed victory of the local councils.

I fear for the survival of the NFIU act in the courts on two grounds. One, it seems to me that the act tries to solve a constitutional problem through unconstitutional means. This is wrong. Despite the fact that we tend to behave as if this is a dictatorship, ours is still a constitutional government. New laws must respect the supremacy and sanctity of the constitution, whatever might be the exigencies.

The obstacle to local government funding is section 162 of the constitutions and all its subsections thereto. The NFIU act does not amend the section because it is incompetent to do so. If section 162 of the constitution is not amended, the state local government joint accounts are still valid in law and can still be operated in accordance with the extant laws guiding the allocations to local councils in each state. Don’t tell you don’t see some serious conflicts here between the act and the constitution.

Secondly, this being a federation, I think the federal government lacks the power to tell states and local governments how to spend their money. It is clearly wrong for the NFIU act to determine and peg the daily cash transactions of the local government councils. The allocations to the three tiers of government have no strings attached to them. It is as bad for the local councils to seek the permission of the state governors to spend their money as it is for them to replace those bosses with the NFIU. A law that compounds an existing problem cannot be a good law within the context of the constitutional charge to the national assembly. A law for the good governance of Nigeria must seek to enhance our constitutional government, not abridge it.

 

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