BY JAMES KANYIP
On 06/05/2019, the Federal Government of Nigeria, through the newly inaugurated Nigeria Financial Intelligence Unit (NFIU) which was excised from the Economic and Financial Crimes Commission, set 1st June, 2019 as the take-off date of some new financial orders contained in a guideline entitled: “Guidelines To Reduce Vulnerabilities Created by Cash Withdrawals from LG Funds throughout Nigeria, Effective 1st June, 2019,”
Two (2) orders contained in the Guidelines, among others, have attracted my attention.
First, NFIU has ordered that all allocations accruable to Local Government Councils (LGCs) should go directly to their respective bank accounts. Second, there shall be no cash withdrawal from any LGC for a cumulative amount exceeding N500,000:00 per day; any other transaction must be done through valid cheques or electronic funds transfer.
The orders contained in the Guidelines are commendable as they are aimed at checking and controlling the excesses of some State Governors that have made it a pastime to pilfer the allocations meant for their LGCs thereby starving them financially. The orders will not only ensure financial autonomy to the LGCs, they will also ensure that LGCs are accountable and financially disciplined in their spendings and expenditures.
As commendable as these orders may seem, they have some hurdles that may hinder their smooth implementation.
The first is a constitutional hurdle embedded in section 162 (5), (6) and (8) of the 1999 Nigerian Constitution. The sub-sections provide:
“(5) The amount standing to the credit of Local Government Councils in the Federation Account shall also be allocated to the State for the benefit of their Local Government Councils on such terms and in such manner as may be prescribed by the National Assembly.
“(6) 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.
“(8) The amount standing to the credit of Local Government Councils of a State shall be distributed among the Local Government Councils of that State on such terms and in such manner as may be prescribed by the House of Assembly of the State.”
The process envisaged by the above provisions is that all funds or allocations from the Federation Account meant for the LGCs must, first, be allocated to the States for the benefit of the LGCs; second, the funds or allocations shall be paid into “State Joint Local Government Account”; and third, the funds or allocations shall be distributed among the LGCs of the States on such terms and in such manner as may be prescribed by the respective State Houses of Assembly.
The second is that most State Houses of Assembly have enacted Laws in their States stipulating financial regulations and the limits of daily and other expenditures of their respective LGCs by virtue of the power vested in them under section 162 (8) quoted above, and section 7 (1) and (6) (b) of the Constitution.
Section 7 (1) provides:
“The system of local government by democratically elected local government councils is under this Constitution guaranteed; and accordingly, the Government of every State shall, subject to section 8 of this Constitution, ensure their existence under a Law which provides for the establishment, structure, composition, finance and functions of such councils.”
Again, section 7 (6) (b) provides:
“Subject to the provisions of this Constitution –
“the House of Assembly of a State shall make provisions for statutory allocation of public revenue to local government councils within the State.”
To the best of my knowledge, the provisions of section 162 (5), (6) and (8) of the Constitution have not been amended or altered by the National Assembly. Also, the NFIU does not have the power and competence to amend, alter or abolish Laws passed by the State Houses of Assembly pertaining to financial regulations of their respective LGCs.
The implication of the foregoing is that the two (2) orders contained in the NFIU Guidelines are unconstitutional; and to that extent, they are null and void.
Kanyip is a Kaduna-based attorney and public commentator.