NFIU’s Planned Regulation of LG Allocations: The Unanswered Questions

The announcement by the Nigerian Financial Intelligence Unit, NFIU, that from June 1, 2019, financial inflows to the 774 Local Government Councils in Nigeria from the monthly Federal Accounts Allocation Committee, FAAC, will be regulated henceforth, has understandably attracted huge debates on and off the conventional as well as social media platforms.

While key stakeholders like NULGE and sections of civil society organizations have warmly welcomed the planned regulation of Local Government Allocations by NFIU (which is an arm of the Global Financial Intelligence Units, FIUs) critical bodies such as Nigeria Governors’ Forum, NGF and Association of Local Governments of Nigeria, ALGON (an association of Local Government Chairmen) have maintained public silence on the new development.

It must be stated that apart from the domiciliary commercial banks, which the Central Bank of Nigeria, CBN and NFIU have some level of control over, the reform by NFIU as it affects local government allocations/general finances, requires the cooperation of Nigeria Governors’ Forum, NGF, ALGON and Nigeria Union of Teachers, NUT. Interestingly, known of the aforementioned associations have so far made public pronouncements on the development.

There are unanswered questions that could be agitating the minds of a broad spectrum of stakeholders across the 774 Local Government Councils in Nigeria on the new financial regulation.

The questions include, but not limited to the following: (1) From June 1, 2019 when NFIU regulation would take off, who takes responsibility for the payment of local government workers, political class in the local government, traditional rulers and pensioners in that category of workface? (2) How would primary school staff be paid their salaries? Because the current practice is such that salaries and emoluments of teaching as well as non-teaching staff of primary schools are deducted from source (LG share of federal allocations) by MDAs controlled by state governors. (3) Which institution will now be saddled with the task of paying civil/public servants in the council as well as primary school staff their pensions, including arrears? And (4) how would the funding of Local Government Service Commissions across the country be managed vis-à-vis appointment of personnel to administer the commissions?

While these questions linger in the minds of all concerned, it is also vitally important to note that the NFIU would have to up its financial tracking system, to be able to ascertain the monthly allocations to each of the 774 Local Government Councils as the funds land in the state and local governments’ joint accounts, which is clearly spelt out in 1999 constitution as amended. As the days go by, arguments for and against NFIU regulations will certainly heighten.

Editor-in-Chief

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