The NFIU Policy and the Morality of Local Government Fiscal Autonomy in Nigeria

“The world is debating local solutions to global problems using the Sustainable Development Goals (SDGs) and Agenda2063 as a benchmark in accelerating inclusive development that foster economic growth” ~ Hamzat.

A modern State must be capable of providing socio-economic services; driving structural reforms and economic transformations; and mobilizing citizens for social change. Conversely, an underdeveloped state is characterized by (at least) the following dysfunctions: a hyper-centralization of authority and administrative decision-making; an over-dependent citizenry, incapable of vital engagements with political executives.

In Nigeria, this is the picture of the Federal Government in general, and Local (grassroots) Governments in particular. Public infrastructure is in disarray, widespread and extreme poverty, and deep social inequality are the order of the day. Specifically, health care, basic education, economic opportunities, social protection, etc. are poorly delivered and/or broken.

Since politics is local; solutions to broken politics are not unfamiliar principles. For instance, the world is debating local solutions to global problems using the Sustainable Development Goals (SDGs) and Agenda 2063 as benchmark in accelerating inclusive development that foster economic growth.

The 1999 constitution of the Federal Republic of Nigeria (FRN) recognizes 774 Local Government Areas (henceforth LGAs). Financially, the LGAs are supposed to generate internal revenue through property, capitation and general rating. However, statutory allocation from the Federal and State governments form the main support of the LGAs. Under the current sharing formula, the Federal Government takes the lion’s share – 52.68% from the Federation Account. The 36 states take 26.72% while the 774 LGAs make do with the remaining 20.60%.

For years, Federal and State Governments have maintained great influence and control over local governments, leaving room for embezzlement, mismanagement and financial leakages, denying Local Governments the chance to make significant development impact and bring governance closer to the people at the grassroots.

LGAs are entitled to a statutory allocation of national revenue for carrying out specific functions in response to local needs, but the Nigerian constitution gives the State governments power to handle issues hampering on governance at the local level. This has ultimately affected grassroots socio-economic development in the country.The grassroots communities in Nigeria face extreme poverty, unemployment, inadequate resources and low economic activities, which in turn has a ripple effect on the growth of the nation.

It is in efforts to break this cycle and ensure financial independence that the Nigerian Financial Intelligence Unit (NFIU)established the Guidelines of May 2019, barring financial institutions from allowing transactions from State Joint Local Government Accounts (SJLGA), and approving that funds be disbursed to Local Governments’ Accounts, strengthening the financial autonomy of the LGAs.

Generally, because of rabid politics, the legality of the new NFIU guidelines remains largely argumentative, nevertheless, the moral foundation of the policy must not be hastily sacrificed. What is democracy without dividends? What is development without inclusion? Grassroots populations remain the most marginalized segments of the Nigerian society, abandoned and neglected in most instances. Propositions for fiscal autonomy of LGAs possess the potential of a game-changer.

For the second time, after 1976 Local Government Reforms, a government and/or regime appears passionate and committed to rapid and inclusive rural development seen by her policy interventions, notably by the National Social Investment Programme (NSIP) and Fiscal Autonomy for LGAs.

For the country to develop, there must be a consciousness to foster growth at the grassroots through adequate representation, implementation of projects and equitable provision of resources and services. This policy will ensure that Nigeria’s commitments in attaining the Sustainable Development Goals at the sub-national level is accelerated.

Any person or government against Local Government autonomy is an enemy of democracy and is ultimately against the economic development of Nigeria. The NFIU guideline will help break the cycle of diverted funds to promote terrorist activities in fragile communities and also people can better hold LGA Chiefs accountable for local government development projects.

At this very point in our national life, one of the obligations we – patriotic citizens, owe those we have entrusted with political powers is constructive engagements. At one time, we rebuke bad public policies, at the other time we provide popular support for transformative reforms and public choices. Such is the spirit and the very essence of civic participation and democratic governance. For it is often said: precepts upon precepts, a house is built. God bless Nigeria!

Co-written by Ani, Nwachukwu Agwu