NFIU and local govt financial integrity -By Eze Onyekpere

Recent media reports indicate that the Nigerian Financial Intelligence Unit  has issued new guidelines meant to protect the financial integrity of expenditure, fight corruption and address money laundering challenges at the local government level. The spokesperson for the NFIU was reported as stating that with effect from June 1, any bank that allows any transaction from any local government account without the funds first reaching a particular local government account will be sanctioned locally and internationally. Also, there shall be no cash withdrawal from any local government account for a cumulative amount exceeding N500,000 per day; any other transaction must be done through valid cheques or electronic funds transfer.

Accordingly, the Joint Account System in place will only exist for the receipt of allocations but not disbursement, according to the guidelines. All financial transactions by local governments will be registered and monitored by the NFIU through e-payment module. The new guidelines have been applauded by various stakeholders, from the executive, legislature to the civil society. It seems to be a breath of fresh air into the rather dull and uninspiring campaign against official corruption in Nigeria. What are the implications of this new directive? Can it achieve its stated objectives? Are there any legal challenges and impediments that will militate against the implementation of the directive? So many questions begging for answers.

There are many issues involved in this directive. At the broad level, this directive is only addressing a part of the constitutional guarantee that Nigerians citizens should enjoy democratically elected and run local government councils. This is the essential guarantee of Section 7 of the Constitution of the Federal Republic of Nigeria 1999 as amended. This guarantee is furthered by the provision for State Electoral Commissions modelled after the Independent National Electoral Commission which is charged with organising local government elections. State legislatures are under obligation to make a law which further translates this democratic guarantee into action. It is a notorious fact that virtually all the local governments across all the states in Nigeria are run by caretakers appointed by the governors. These caretakers serve at the governors’ pleasure as they can be removed without reference to anyone.

In most instances, local government laws enacted by state Houses of Assembly contain ridiculous provisions which give powers to the state House of Assembly or the governor to suspend and or remove elected or appointed officials of local governments. The tenures are mostly limited to two years which give elected officials no elbow room to plan and implement any meaningful project within their lifespan.  In some instances, local government duties stated in Schedule 4 of the Constitution are taken over by the state as well as taking over the funding sources for these functions. This usurpation of powers, functions as well as revenue sources is also done under purportedly validly enacted laws.

When the governor decides to hold local government election, the result is usually predictable and could be announced many months before the date fixed for the election. The ruling party virtually wins all the seats and just allocates a few councillorship positions to the opposition party. Hardly will the opposition be returned as the winner of a chairmanship position. State electoral commissions are anything but independent as they represent the worst in the annals of electoral umpireship. They make no pretence of their mission as their members evidently morally challenged and reprehensible individuals who claim to have education. Further, by the ethically challenged political party system, the governor is the leader of the party at the state level and no one serves as a nominated representative to fly the flag of the party without his endorsement. Thus, all those who fly the flag of the party are his nominees.

Local governments are constitutionally expected to be run with two main arms of government – executive and legislature. However, local government budgets may be prepared at the local government level under guidelines given by the state government; they are defended before either the ministries of the local government and or the State House of Assembly. This relegates the legislative function of the councillors who constitute the legislative arm of the local government. And when money comes through the joint account, governors make the decision on what to release to the local governments while keeping, managing or mismanaging the remaining sums of money. Also, the little that is released to the local governments face the hurdle of state level approvals for major procurements. These hurdles are duly enshrined in state level laws and procurement policies and practices.

In essence, the local government system is totally emasculated by the state government. This raises the poser; how will the new directive cure this aforementioned mischief. The directive has nothing to do with producing the nominees who will fly the flag of the party when the governor decides to hold local government elections. The directive will have nothing to do with the fetish oaths administered by governors on such nominees to do their will. The directive will not annul the local government laws which allow the governors to appoint caretakers or dissolve elected council officials. This directive will also not annul laws and policies that have allowed state governments to take over local government functions as well as their sources of revenue. The directive will also not touch on the legality of procurement laws, policies and practices which are used to steal local government money. It will not touch the practice of state governments approving local government budget, etc.

The directive will only have relevance to reducing cash transactions as well as ensuring that local government money hit local government accounts after it has been allocated from the Federation Account and then shared at the state level. Monitoring local government accounts and ensuring e-payment can only be a postmortem. It will be more of a formal exercise of satisfying forms and processes rather than the substance of the expenditure.  Moreover, if the NFIU proposes any directive that seeks its approval before local government expenditure, the courts will not hesitate to declare such a directive unconstitutional.

We recall that in 2014, the National Assembly approved financial autonomy for local government but this was defeated by the politics of over-bearing state governors and docile state legislators. It is therefore the submission of this discourse that what is needed to guarantee transparency, accountability, reduce corruption to a minimum as well as curtail money laundering is a comprehensive reform of the local government and political party system in Nigeria. While the NFIU directive may ruffle a few feathers, it would not be able to curtail the ultimate corruption challenge which is beyond money laundering and crude stealing from the public coffers.

Local government autonomy is imperative, while new procurement and access to information laws that automatically penalise state officials in their private capacity when they mismanage state resources or abuse office has also become imperative.