Nigerian Financial Intelligence Unit.

WITH a welter of new regulations, which are set for implementation any minute now, the Nigerian Financial Intelligence Unit has reopened the debate about the true essence of local government administration in the country.

In line with this, the NFIU has introduced fresh guidelines, which it claims are targeted at eradicating corruption, terrorism financing and the enthronement of good governance. On the surface, this is a laudable move, but it is steeped in political circumlocution and controversy, which is likely to render it superficial.

When implemented on June 1, the LGs will be automatically barred from daily cash withdrawals above N500,000; banks that conduct transactions on the LG accounts not funded with money will be penalised. As is now preferable, cash transactions are becoming outdated, this being the digital era. Bank transfers are faster, better and can be traced by the legal authorities for those whose aim is to finance terrorism. So discouraging huge cash transactions is a sensible step, but the other aspect is where the NFIU guidelines might come up stuck.

Currently, the LGs are eking it out at the mercy of their state governments. Section 7 of the 1999 Constitution places local government system under state government control. It states, “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.” And legally, Section 162 (5 and 6) stipulates that each state shall operate a “State Joint Local Government Account.” Herein lies the minefield: the state governments prescribe “the establishment, structure, composition, finance, functions” of councils and control their accounts. Through this lacuna, most of the governors have been manipulating it to suit their own whims. Although every month, funds are allocated, the LGAs can only access what a governor releases to them.

This is a gaping constitutional deficiency, which the NFIU guidelines cannot eradicate. At best, they might even worsen the situation because the financial regulator is putting the cart before the horse. Perhaps, that is why, in collaboration with the outgoing Eighth Senate, it has urged the governors to respect the new regulations. In truth, the governors hold all the aces for now, at least until the constitution says otherwise.

Actually, the drive by the NFIU to get the LGAs working and free of encumbrance cannot be wished away. Nevertheless, with this formula, this could turn out to be a mere dream. The major point at issue is the perception that the LGs deserve autonomy from the state governments because they are wrongly seen as the third tier of government. The Senate President, Bukola Saraki, stated at a recent plenary session that governors should grant autonomy to their LGAs. He is not alone in this quest. The Nigeria Labour Congress is also a vociferous campaigner for local council autonomy, aided by the bizarre constitutional provision that lists 774 LGAs therein.

All of these proponents, from the NFIU, the NLC and Senate seeking to make LGs federating units, are wide of the mark. Ideally, there are mainly two tiers of government in a federal state: the government at the centre, in this case the Federal Government, and the regions, provinces or states; in our case, the 36 states. Any other structure in a federal state is a local arrangement.

In this, the state governments have sole control over local council administration. This is what pitted the Lagos State Government against the Federal Government shortly after the inception of the Fourth Republic in 1999. For creating 37 Local Council Development Areas, the then President, Olusegun Obasanjo, seized the funds allocated to local councils in the state. The seizure pended until a Supreme Court intervention in 2004 that ruled that the LASG had the constitutional power to create the LCDAs, only that the law on it, after having been passed by the state House of Assembly, needed also to be passed by the National Assembly.

Why then is the NFIU recreating a logjam that had been settled by the highest judicatory authority in the land? If the motive is to enthrone good governance, it is a blatantly wrong approach. The 50 states in America have control over the LGAs in their domains, free of interference from the central government in Washington DC. The United States Census Bureau said that as of 2012, there were 89,004 LGAs in America, consisting of municipalities, counties, township governments and special purpose-LGs.

Similarly, under Switzerland’s 1848 federal constitution, the central government and the cantons (states) are the federating units. Consequently, the cantons define the powers of their communes (or councils), which are 2,300 in all. Therefore, no matter how well-intentioned the NFIU’s aims are, it should stop standing political logic on its head. Its new rules extend the frontiers of centralisation in a federal polity, provoking primordial tensions unnecessarily.

Nevertheless, corruption permeates the Nigerian polity, denying the citizens the basic benefits of governance. Without a solid strategy, the anti-corruption war is doomed. The NFIU, which was excised a while back from the Economic and Financial Crimes Commission after a bitter battle in the National Assembly, should devise holistic measures against rampant graft in conjunction with the other anti-corruption agencies. They should go after governors who hijack funds allocated for development in their states across party lines.

The National Assembly should do the right thing, which is to enthrone true federalism, thereby dissipating ethnic tensions. It should expunge the 774 LGs from the Constitution, vesting the power to create, fund and operate the LGs in the state governments.

Culled from Punch’s Editorial