LG Autonomy: NFIU sets the ball rolling amid endless constitutional amendment wait

The new regulation on local government funds issued by the Nigerian Financial Intelligence Unit (NFIU) has arguably kick-started the process of granting an independent status to local councils in Nigeria.

Although the 1999 Constitution recognises Local Government Areas (LGAs) as the third tier of government in the country, it only grants partial autonomy to the council areas.

The constitution grants the states the powers to oversee the affairs of the local councils. Section 162(6&7) also states that “each state shall maintain a special account to be called State Joint Local Government Account into which shall be paid all allocations to the local government councils of the state from the Federation Account and from the government of the state; and that each state shall pay to local government councils in its area of jurisdiction such proportion of its total revenue on such terms and in such manner as may be prescribed by the National Assembly.”

Latching on to these provisions of the constitution, the state governors across the country have since the restoration of democracy in 1999 treated the local councils as mere appendages of the state governments. They hold on to the monthly fiscal allocations to the various councils; they determine who occupies the position of chairman and to some extent councillors; they determine the projects to be executed by the councils.

Some of them run the councils by proxy using Caretaker Committees for as long as they want and appropriate funds meant for the councils while the workers go hungry due to non-payment of their salaries.

Several attempts by the National Assembly in the past to amend the constitution and severe the local councils from the apron strings of the states failed.

[FILES] Yakubu Dogara PHOTO: TWITTER/House of Representatives

But such disappointing tales are about to change with the recent NFIU directive to states, which would make the joint account system currently in use only exist for the purpose of receiving allocations from the federation account but not for disbursement. If the directive becomes effective from June 1, this year as stipulated by the Unit, the governors would most likely lose control of local council funds.

The directive also puts a daily cash transaction limit of N500,000 for each of the 774 LGAs in the country.

The NFIU spokesman, Ahmed Dikko, said 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 the grassroots levels and to the entire financial system and the country as a whole.”

Amid comments in some quarters that the directive amounts to a breach of the constitution, the NFIU issued a fresh statement last Wednesday clarifying its position while also reiterating that the June 1 take off date for the implementation of the directive remains sacrosanct.

It said: “The NFIU is using this second press statement on the above subject to reiterate its position that the June 1 effective date of the guidelines to all financial institutions and public officials on the local government funds stands.

“The Unit also maintains its understanding of the 1999 Constitution that no debit is allowed on any local government funds unless and until the funds are credited to and reach the bank accounts of a local government in any state of the federation.

[FILE PHOTO] Gov. Abdulaziz Yari of Zamfara

“We observed isolated comments to the contrary in the past few days which in our assessment only amounted to willful misinterpretation of the 1999 Constitution and therefore, of no consequences to the operations of the entire financial system.”

A lot of Nigerians, including rural dwellers, who are meant to benefit from the services of local councils, believe that the development is in their interest. What they say about the current system and their expectations from the new order that will come into force in the next 14 days is mind-boggling and reassuring.

Cross River Councils Now Run Like State Agencies
From Anietie Akpan, Calabar

In Cross River State, there was a semblance of local government administration between 1999 and 2002. The 18 local councils in the state and their elected officials then had the free hand to run their affairs. But they weren’t committed to the payment of workers’ salaries and owed several months of arrears. Also, the local councils executed few developmental projects.

The situation was so bad that when the then governor of the state, Donald Duke, won re-election in 2003, he sent a bill to the state House of Assembly for the establishment of a Joint Account between the state and councils. Since then, the state government took total control of council funds; the chairmen just signed out cheques for the governor to manage the funds.

The state government took over the payment of workers’ salaries. For projects, the councils draw their budgets and apply for funds for execution of projects subject to the approval of the governor. To ensure effective implementation, Duke went on to establish Project Monitoring and Evaluation team that was mandated to check what the councils were doing with funds released to them. Then, the councils managed to do few projects.

When Senator Liyel Imoke came in 2007, he continued with the system of joint account with the councils but set up the Rural Development Agency (RUDA) and the State Electrification Board.

The agency took care of rural roads and provision of electricity in the various councils. Then Director General of RUDA, Mr. Eko Atu, said it was as a result of the initiative by the Imoke-led government that led to massive infrastructural development in the rural areas.

However, since the Prof. Ben Ayade administration came on board in 2015, the situation has changed. For instance, there has been no council election since the last council chairmen and councilors elected under the Imoke administration left office in 2016.

Thus the state government under Ayade has been managing the council funds directly without elected council officials. The Guardian observed that apart from regular payment of salaries, development projects are almost zero in the councils.

The councils now merely exist in name. It was learnt that the state government releases a paltry sum of N200,000 to N300,000 to the councils to manage themselves.

Just few days to the governorship elections, Security Coordinators were appointed to act as council administrators. It was gathered that between N1 million and N2 million were released to them to operate.

Meanwhile, the state government recently introduced the “Quick Wins” initiative to execute projects in the councils, probably to justify the billions of council funds it controls. Such projects include rural water supply (boreholes), rural roads and electricity including solar lighting of select communities.

Overall, the local councils in Cross River are being run as a department or an agency of the state government for almost 19 years now.

No Signs Local Councils Exist In Imo, Say Residents
From Charles Ogugbuaja, Owerri

On assumption of office in 2011, the Imo State Governor, Rochas Okorocha, dissolved the elected chairmen and councillors of the 27 local government councils in the state. Since then, local government administration in the state became a shadow of itself, as the state government has been receiving allocations accruable to the councils.

Although the state organised a local council election about a year ago, with the ruling All Progressives Congress (APC), clinching about 98 per cent of all the council seats, The Guardian learnt that the state government is still receiving the monthly federal allocations of the councils and also decide how they are expended.

Meanwhile, facts indicate that there is little or no presence of projects in the rural areas. The much that has happened in the recent past is the construction of the Information Technology Centres (ICT) and grading of at least one kilometre of roads in the councils, which the governor ordered just before the council election. The state government also constructed 27 hospitals that are yet to be fully operational in the councils.

Many dwellers, traders, businessmen, tricycle and commercial motorcycle operators, among others, in the state complain that local councils had become lame despite the taxes they collect from the people.

A businessman based in Owerri West local council, Chief Onye Jiahu, said he was not happy with the development. His words: “Look at our local councils today. No activities; no good roads in the rural areas. They are unlike what we had in those good old days. And one will ask: Where are the allocations from the Federal Government going to? We are also taxed and we pay.”

For a commercial motorcycle operator, Jude Okechukwu, there are no signs of the existence of local councils in the state.

“We are not feeling anything. Everything you want, you are referred to the state capital, Owerri. No good roads,” he noted.

A former chairman of Ngor Okpala local council, Chief Enyinnaya Onuegbu, a lawyer, regretted the way the third tier of government was being handled. He called for autonomy that would totally liberate the councils from interference by the state governments. “The local government system needs autonomy now to operate,” noted.

In Rivers, LGs Pay Salaries Only
From Kelvin Ebiri, Port Harcourt
From time immemorial, the Government of Rivers State, for inexplicable reasons, has been opposed to the idea of local government autonomy. Last year, 27 out of 28 state legislatures voted against the Fourth Alteration, Number 5, which sought to permit local government councils to operate separate accounts.

Despite huge revenue allocation that has accrued to the 23 local councils in the state since 1999, there are very little on ground in terms of real infrastructural projects save for new council secretariat building, a few market stalls and in very rare cases roads.

Often times when local council chairmen are sworn into office in the state, they are charged to prioritise payment of workers’ salaries, focus of enhancing security and environmental sanitation and to create empowerment opportunities for different cadre of people.

Less emphasis is placed on other responsibilities such as provision of health care services, planning and building control, business and economic development, waste and environmental management, and human and community services.

Data obtained from the National Bureau of Statistics revealed that the 23 LGAs in the state received N3, 908, 240,283.87 in March 2019 allocation.

In Port Harcourt City council, which received a whopping sum of N260,665,275.43 out of this amount, the most visible project going now is the renovation of the council secretariat and Mile 3 motor park. Oyigbo, which received the least allocation of N142, 462, 697.56 has some of the worst internal roads in the state.

Though many believe that granting local councils financial autonomy might enhance service delivery at the rural level, they also warn that except state governors and other prominent politicians change the perception that local councils are their political fiefdoms, the desired effect of council autonomy would be defeated.

Former chairman of Bonny local council, Edward Pepple, told The Guardian that the bane of the third tier of government has been the opportunistic character of political gladiators in most states who fail to resist the temptation of covetousness.  
According to him, this class of individuals has also failed to separate politics from administration.

“Financial autonomy is good. Some of the state governments actually don’t release as much as they get from the federal allocation to the Local Government Areas (LGAs). They give to them what they think they need to dispense of whatever assignment they have given to them at the level.

Although in our time, we were lucky that didn’t happen to us because the then governor, Chibuike Amaechi, gave us access to having money that came to us. Even then in Akwa Ibom, some of our colleagues couldn’t have access to their money. When money comes in, the state government gave them like N40 million and then kept the rest. Meanwhile, they were supposed to receive like N80 or N120 million,” he said.

Beside federal allocation, Pepple explained that when he was sworn into office, he realised that the council’s internally generated revenue had been perpetually in red.

To address this, he first of all initiated the Bonny Revenue Bill, which after being passed into law, empowered him to enforce the collection of rent and levies due to the council. He explained that the law paid off as some of the roads his administration built were funded from internally generated revenue.

“Several years after I left, you cannot even see one road from that place. The same old system of collection of revenue by anybody has started,” he observed.

The former council boss, however, observed that money not coming directly from the federal allocation to the LGAs is not the only reason for their ineffectiveness. He stressed that conscientious effort must be made to monitor the quality, class and capacity of people at the councils both as chairmen and councilors.

“One of the major reason for ineffectiveness of the local governments is lack of capacity to deliver. People who themselves cannot understand what it means to handle people are made council chairmen by governors. If people with some level of credibility and capacity handle local government system, there is no council that will not deliver on one thing or the other,” he said.

He suggested that state governments should play the role of ensuring that all the elected council representatives are put through some kind of training to make them know the essence of budgeting and planning.

Another former LGA chairman under the incumbent administration in the state who pleaded anonymity told The Guardian that financial autonomy might not really bring about much desired development if those saddled with local administration are tethered to the apron strings of political godfathers who see the councils as their own political fiefdoms.

“The worst thing is that the people at the local level are not even interested in how their local government is being run. You see a cabal everywhere. For instance in my local government, some people came and said I should pay them some millions monthly; I refused. They said it is not civil servants that won election. I told them that one instruction given to me by the governor was to pay workers’ salaries; make the place safe and keep the place clean. We were owing over N300 million salary arrears and I was able to clear over 85 percent of that,” he explained.

He further explained that there was no reason local governments should not be allowed to operate independently for the purpose of rural development. “Local government is supposed to operate on their own in such a way that their policies and programmes should be tied to the immediate need of the local setting,” he added.

‘Joint Account With States Has Helped Lagos Councils’
By Daniel Anazia
In spite of the widely held view that the poor performance of local councils across the country is as a result of the partial autonomy they enjoy and the operation of a joint account with the states, a former chairman of Amuwo Odofin local council of Lagos State, Ayodele Adewale, has declared that those who hold such views don’t look at the real issue.

According to him, the problem is with local council administrators and not the system in place. “Are they accountable for the resources given? Can they mobilise the resource by blocking leakages for developmental purposes? These are the things we should look at critically. Thank God for whistle blowing and the fight against corruption. Now, we can see the stupendous wealth that people are keeping in the corner of the houses. If such wealth were ploughed into development, we wouldn’t be talking of these issues,” he said.

He explained that the joint account has helped to resolve a lot of issues, adding that there was a time in Lagos State when local government chairmen received allocations directly from Federal Government but were unable to pay staff salaries not to talk of paying pensions of retired local government employees.
   
“The joint account has helped in Lagos. The first line charge as agreed by local government authorities in the state is that primary school teachers’ salaries and pensions must be paid. That is why you cannot hear any outcry in Lagos that salaries are not being paid at the local government level. If you go into history, during the military era, there was a time these things were all over the place,” he stated.

Ayodele stressed that partial autonomy was not hurting local council administration in the state, saying: “While I served as a local government chairman, I was so autonomous that I was having foreign relations with different governments and some of them were coming directly to our local government. I was dealing directly with Consular General of the United States and the Deputy High Commission of the British Consulate in Lagos.”

But the Executive Chairman of Agege Local Government Area, Alhaji Ganiyu Kola Egunjobi, has urged the state assemblies to do what is right so that local councils could enjoy the full autonomy they deserve.

Edunjobi said: “No doubt, the 1999 Constitution bequeathed to us this problem of partial autonomy. It recognises the local government as the third tier of government but restricts its independence. Constitution as we all know is a work in progress.
    
“The 8th National Assembly has done its bit by passing the local government autonomy bill and President Muhammadu Buhari’s favourable disposition towards it is well documented.

All it requires to change the narrative is for two-third of the state assemblies to endorse it. If it comes into force, grassroots will witness tremendous developments in the area of infrastructures and human capital developments and the whole country would be better for it. Without fear of contradiction, there is no alternative to local government autonomy if we want to develop as a country. Local government is in fact a safety net for struggling families in the grassroots.”

Excitement In Benue Over NFIU Directive
From Joseph Wantu, Makurdi 
There is widespread excitement in Benue State over the Federal Government’s directive to states through the NFIU to steer clear of local council funds. Many residents said the implementation of the directive would fast-track infrastructural development in the rural communities of the 23 local councils in the state.

A former chairman for Konshisha Local Government Area of the state, Joseph Ahire, however, told The Guardian that he wouldn’t believe that local council autonomy has been achieved until the NFIU directive becomes effective.

Ahire said that if real autonomy were granted to local councils, the people at the grassroots would be better for it in terms of infrastructural development.  

“This is because in the rural areas, there is so much to do and most of the infrastructures do not require much money. Less than N1 million can construct a culvert that can provide a vital link that would enhance easy to evacuation of produce to markets,” he noted.

He said local councils in the state were not discharging their duties effectively but noted that it was a problem of the entire country. According to him, local councils in the state generate a lot of revenue from produce, licenses, and levies from shop owners, among others but has nothing to show for it because the revenue collectors divert most of the funds.

He said: “Corruption at various levels of governments has made Nigerians to believe that when you have access to public fund, you must take your cut, which is very unfortunate.

“Local council staff have observed how federal and state governments officials handle public funds and so decided to follow suit. State governments that have supervisory powers have compromised themselves and so lack the moral courage to effectively check local council staff.

“To me, the problem of poor handling of local council funds is actually a national challenge. The menace is everywhere especially at the federal level not to talk of states governments.”

A shop owner, Okieze Okana, said most traders were always unwilling to pay market levies charged by local councils because of lack of commensurate services by the councils.

Okana, however, urged local council administrators in the state to take the opportunity of the NFIU directive to impact on the wellbeing of the people living at the grassroots.

“Those of us operating our businesses at the grassroots will be encouraged to pay market taxes if we see proper utilisation of money accruing from our levies,” the trader noted.

We Don’t Get Value For Taxes Paid To LGAs, Lament Traders
By Maria Diamond (Lagos) and Tina Todo (Calabar)
Business owners in Lagos State have lamented the inefficiency of local councils in the state, declaring that they get zero value for the taxes and levies they pay to the councils.

A dry cleaner in Ilamoshe, Oke-Afa, Isolo area of the state, Olayinka Akingbala, said: “I pay N5, 500 annually to the Oshodi/Isolo local council for my shop.

However, the rate paid solely depends on what you sell. The council has different rates for different commodities. I suppose mine is one of the lowest because most shop owners I know pay a lot more depending on what you sell and the space of your shop. They multiply your regular shop rate according to the space you occupy and the value of the goods you sell.

“Do I get value for the tax I pay? No, because I can’t pinpoint what the council does to better my life or even my surroundings. The roads are bad. Why can’t they ensure that the streets are good? The rainy season is here now and the streets would always be flooded and messy because they are not tarred. So, I really don’t know what the council does with the money they collect from shops, kiosks, roadside traders, house owners and others,” he said.

A roadside petty trader also in Isolo area, Kafilat Ibrahim, said: “Local council people collect N200 on a daily basis from me for selling my wares. They say it’s local government road and so I must pay or I would not be allowed to sell. I always pay because failure would lead to taking my wares away to their office and I would have to bail them with N10, 000 or I forfeit it.

At other times, they come unannounced and take our goods away on the excuse that it’s illegal to sell on the same roadside they collect money from traders on a daily basis.

“The unfortunate thing is that there is no impact whatsoever. They are just after taking money form us; they give nothing back in return. I don’t know what they do with all the money because everything is still as bad as it used to be. If you ask me, I think the money goes to individual pockets.” 

Also in Calabar, Cross River State, traders told The Guardian that the local government councils have not impacted positively on their lives despite the multiple taxes collected on a daily and monthly basis.

They opined that lack of local government autonomy could be the reason for their inefficiency. While lamenting the poor state of roads, insecurity and lack of empowerment of the people, Kenneth Emin, a beer parlor owner, alleged that politicians divert local council funds in the state.

His words: “Politicians have hijacked everything to themselves. I don’t have dividend of the tax I pay. I think there should be a way that we benefit from our tax either directly or indirectly. There is no security for us; some amenities are supposed to be provided for us. There should be empowerment programmes for the people; free medical treatments and they should look into sanitising the environment. I know that the occupants of the areas should do some of the cleaning but government still owe us some responsibilities when it comes to that. They make so much money from what they generate from the taxes we pay. I think if they can allow local governments to be autonomous, most of these things will be taken care of.”

A computer operator in Calabar South, Itoro Uffi, also lamented that he pays multiple tax to government yet the security situation in the area is bad.

He said: “Sometimes, some group of persons will just come and claim to be tax officials and they don’t even have identity cards to show; that is the greatest challenge we shop owners face. In Calabar South, in terms of road infrastructure, the local government is not doing anything. We are not benefiting from the multiple taxes we pay and if we don’t pay, they will lock up our shops and at the end of the day you have to pay huge amount for them to clear you.”

In Abia, Local Councils Can’t Execute Projects Independently
From Gordi Udeajah, Umuahia
In Abia, the state and local governments operate a Joint Account. Decisions are taken every month after the receipt of federal allocations on how the money would be shared. This practice has made the local councils in the state not to have complete control of their finances as they are subjected to operate within the limits of what is approved for them by the state government.

According to a council chairman who spoke on the condition of anonymity, the implication is that local councils don’t have the capacity to undertake any project on their own. He explained that occasionally, the state government issued directives to the councils to undertake some projects like grading roads to definite lengths within defined time frames.

“So, there is nothing like local government autonomy in this state unlike what operated in the past when councils had effective executive and legislative arms that were independent of the state government,” he remarked.

A community leader who simply gave his name as Onwuka, told The Guardian that local councils in the state had become a caricature of what they ought to be constitutionally, hence their failure to carry out their statutory functions such as refuse disposal and rural roads maintenance, among others.

Also commenting on the issue, a political scientist, Dr Kamanu Onu, lamented that the state governments have usurped the mandate of the third tier of government.

“This has been worsened by the operation of Joint Accounts by the state and local governments and the preference of state governors to use appointed people to man the councils as transition government. By so doing, the governors indirectly control their funds.

“I recommend that the Federal Government should withhold the monthly allocations of local councils that are not run by elected officials. The constitution should be amended to grant full autonomy to the local governments,” he suggested.

Residents Say Local Government Autonomy Is Imperative In Oyo
From Rotimi Agboluaje, Ibadan 
The 33 local councils in Oyo State operate a joint account with the state government. They come together and share the monthly allocations from the Federation Account among themselves once the money is received.

Aside from statutory allocations from the Federation Account, other sources of revenue for the councils include rates, market fees, levies, tenement rates and others. 

Even though the councils are under the supervision of the Ministry of Local Government and Chieftaincy Affairs, The Guardian observed that the level of accountability is very low, which has led to some questions begging for answers.

Speaking with The Guardian, motorcyclists, tricycle riders, commercial drivers and traders, said there was nothing to show for the various taxes being collected from them by the councils.

“We pay different kinds of levies. We pay N50 daily to the local government, N500 yearly for hawking permit, N100 for NURTW daily and N500 yearly to Oyo State Task Force, among others. They are just collecting the money. We cannot see what they are using the money for. No impact. No infrastructure being built,” he said. 
 
James Andrew, who also rides motorcycle in Ibadan, corroborated his claims.  He said the local government just collects money from them without anything to show for it. “They are not using the money for anything”, he stated emphatically.
 
On his part, a commercial driver who does not want his name in print said taxi drivers pay N470 daily, out of which N50 goes to the local government. 
 
It was gathered that shop owners pay the relevant local council certain amounts of money yearly depending on the size of the shop. It was also gathered that the local government collects N500 on every trailer that comes to Bodija Market. 
 
Many are of the opinion that lack of autonomy has been the reason for the lack of accountability by the local government areas. They also pointed out that aside from stifling development, the situation has rendered the councils powerless and uncreative. 
 
The Chairman, House Committee on Local Government in the Oyo State House of Assembly, Hon. Bolaji Badmus, said it was imperative to grant autonomy to the councils.

Badmus said autonomy would make local governments administratively and financially independent of the state governments.
 
“Local government autonomy is part of the alteration the National Assembly brought to state assemblies. Oyo State House of Assembly was part of the assembly that passed the autonomy. It is a collective thing not personal.
 
“It is going to help the development of local government because the local government will be receiving their money directly, which will be used to carry out developmental projects,” he said.
 
On his part, a former chairman of Ibadan Southeast local government, Akeem Ademola Ige, said: “Local governments really need autonomy so that they will be able to stand on their own and have the financial power to operate at their own level.
 
“Local government is the third tier of government and closest to the grassroots. It is the government that the people feel most. If you want to feel development, you can easily feel it at the grassroots level. We have been agitating for this. I’m highly delighted that we have it. We need to give kudos to this administration.” 

In his reaction, a political analyst and lecturer at the Political Science Department, University of Ibadan, Dr. Steve Lafenwa, emphasised that local governments in the country deserve financial autonomy. 

“There is nothing like absolute autonomy. What most of us are clamouring for has to do with financial autonomy that would enable local governments to have access to their resources allocated by the Federal Government. 

Also, they should be free to collect taxes that are meant for them because if you go to the Fourth Schedule of the Constitution, the functions are there and some of the powers of local governments also stated. But what we have discovered is that most of the states have relied on Section 7 to intervene unduly in local government affairs. So, if they will do it and it will affect the people at the grassroots level, they have to grant them financial autonomy,” he stated.