New NFIU regulations, wrong approach – TheNigerialawyer

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outdated, this being the digital era.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

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