Summary: We explore the challenges that may arise from the recent financial autonomy that was granted the Local Government Areas in Nigeria and how to mitigate them.
Granting financial autonomy to the local government areas in Nigeria is expected to boost development and make the third-tier of government swiftly respond to demands of the people at the grassroots.
No wonder the recent Supreme Court judgement stopping state governors from tampering with local government funds was hailed by the majority of Nigerians. But a critical look at the financial freedom granted to the LGAs also comes with some disadvantages even though its advantages outweigh the demerits.
Here are some of the issues that Nigeria may start to experience as the financial autonomy of LGA is activated across Nigeria.
Financial rascality at the local level
The problem in Nigeria has always been financial prudence even when when local governments were getting tiny part of their allocation from the State-LGA Joint Account, some of chairmen, who won elections through questionable means still had the audacity to divert the little the received, which was not even enough for infrastructural development in the grassroots.
They either misappropriate the 20% or lesser they get from their state governors or divert it for personal use.
In November 2019, for instance, the Economic and Financial Crimes Commission (EFCC) arrested all the 16 LGA chairmen in Kwara for converting N4 billion loan to personal use.
Nigeria’s anti-graft agency revealed how they held a meeting and agreed to share N100, 000, 000 among themselves after they secured the N4 billion loan.
Not only that, they were also accused of diverting 10% of the revenue they generated internally for their personal use. It wasn;t an allegation, they confessed to the crime and pleaded with EFCC for time for them to refund the diverted money.
That’s just a glimpse of corruption among officials of local government, the recent financial autonomy may give them more access to billions of Naira for them to dubiously share at the end of the month if the right check and balances are not put in place.
Political tension at grassroots
The politicians that rig elections and cause bodily harm to their opponents do so because of the monetary gains that come from holding political offices, not really because of the love of people who vote them into offices.
What electorates have witnessed since 1999 has shown that they are more interested in allocations rather than what they want to offer.
Going by the current Federal Account Allocation Committee (FAAC) revenue-sharing formula, which allocates 52.68% to the federal government, 26.72% to states, and 20.60% to local government areas, Nigeria may witness aspirants for local government positions during elections becoming increasingly desperate due to the lucrative allocations that will fall under their purview.
According to data from the National Bureau of Statistics (NBS), the 774 LGAs received N1.42 trillion as allocations between January-May 2024. This figure showed that allocations to the LGAs rose from N963.9 billion recorded between January-May 2023, Sami Tunji of Nairametrics says in his analysis.
Like the way Nigerians have seen elections into state and federal offices deadly, they same desperation will most likely get to the council areas because of love for the allocations.
Abuse of office
Related to corruption among LGA senior officials is abuse. Granting full financial autonomy could mean access to financially abuse their office.
For instance, the EFCC revealed in 2015 how the former Chairman of Hong Local Government Area, Adamawa State, Ibrahim Buba Gayus, between a year in office (between December 2009-January 2010), used his office to collect agriculture loan to the tune of N50,000,000 on behalf of his staff, but only disturbed N10,000,000. He was accused of having pocketed the rest of the loan for his personal use.
Politicians employ various tactics to engage in financial malpractice across all levels of government. If they can exploit their positions with the limited resources available to them, granting full financial autonomy could potentially lead to corrupt local government officials devising more sophisticated ways to abuse their office.
Interference by FG and State
Payment of monthly allocations from the federal account directly into the accounts of local council accounts may put the faith of LGA chairmen into the hands of President (at the central) and State governor (at the state level) where the council areas are domiciled.
While the President may seek to leverage the LGA chairmen to advance his political objectives, state governors are inclined to demonstrate that they too possess the authority to create obstacles for any chairman who fails to adhere to the directives of the executive at the state level.
Creates room for ghost workers
There are communal relations at the local government areas across Nigeria, making it easy for family friends of senior officials to favour their communal relatives. As they warm up to start receiving allocations directly from the central, we may see some of them dubiously insert their family members into the local government payroll.
How to prevent the foreseeable issues:
For the financial independence to effectively bring about the desired benefits of democracy to the grassroots populace, the Nigerian Financial Intelligence Unit (NFIU) must fully activate its financial intelligence mechanisms to mitigate any potential financial misconduct by local government officials.
This is crucial to ensure that the financial autonomy granted does not inadvertently facilitate an increase in financial malpractices at the local government level.
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