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Nigerian Governors and the Misappropriation of Local Government Funds

The Nigeria Union of Local Government Employees (NULGE) recently raised an alarm that some governors were diverting local government funds, in violation of the guideline issued by the Nigerian Financial Intelligence Unit. This has led to almost zero development at the grassroots level of governance. 

The union said the actions of the governors were depriving the people of the benefits that they should ordinarily have access to, as it threatened to shut down the 774 councils in the country if their demands were not met within 30 days.

It is important to understand that Nigeria is a country with a federal system of government where there is a constitutional division of powers among the levels of government, that is, the central, state, and local governments. Local government is the third tier of government in the country. It is often referred to as the government at the grassroots level.

Development would not be meaningful if it does not affect rural dwellers. It is as a result of this that local government was created to ensure effective and efficient service delivery to the people at the grassroots level.

The creation of local governments in many countries stems from the need to facilitate development at the grassroots. The importance of local government among is a function of its ability to generate a sense of belonging, safety, and satisfaction among its populace.

In Nigeria’s socio-political context, with a multiplicity of cultures, diversity of languages, and differentiated needs and means, the importance of local government in ensuring unity and preserving peculiar diversities cannot be underestimated.

Despite the relevance of local government, some problems have faced it in the performance of its functions, especially in areas of service delivery at the grassroots. Since a large percentage of the population is mostly found at the grassroots level, the development of rural areas cannot be over-emphasised.

Thus, the development of rural areas impacts positively on per capita income and food production. Development of the grassroots has been the concern of every responsible and responsive government. Analysts thus state that rural development is the outcome of a series of quantitative and qualitative changes occurring among a given rural population and whose converging effects indicate, in time, a rise in the standard of living and favourable changes in the way of life of the people concerned.

In terms of the level of economic development, quality of life, access to opportunities, facilities and amenities, the standard of living, and general viability, the gap between the urban and rural areas in Nigeria is very wide. The rural areas are grossly neglected, as far as development projects and infrastructure are concerned.

Development in local government areas in Nigeria has been a mirage, as successive councils have grossly underperformed in almost all the areas of their mandate. Apart from the palpable mismanagement and misapplication of funds currently witnessed in most local governments in the country, the resources available, which otherwise should be used for development programmes at the grassroots, are being used to service bloated elected officials and unproductive bureaucracies.

It is believed in some quarters that the main reason for underdevelopment in the local government areas is not unconnected with state governors’ gross misappropriation of funds meant for local government councils. 

There has been controversy about the moral and constitutional rights of state governors to receive and manage Local Government Area (LGA) allocations from the Federal Accounts Allocation Committee (FAAC). The FAAC makes transfers of the statutory allocation of local governments to their respective state governments.

This is under the 1999 Constitution of Nigeria, which established FAAC and the Joint Allocation and Accounts Committee (JAAC) for the pooling and distribution of Local Government Revenue among state and local governments.

However, federal allocations to local governments, for the most part, are just additional revenue for the state governors, who then determine how to redistribute in terms of developmental projects across local governments.

It is clear, to the agitation of civil society, that the state governments are neither transparent nor accountable about the redistribution of FAAC to the municipal executives and legislators with statutory mandates. This is especially worrisome given that state governments always have a hand in local government allocations. 

Nearly all the 774 local government areas in the country get only a small fraction the exact amount distributed to them and many times accuse their state governors of misappropriating the funds received on their behalf while also interfering in the running of the affairs at the grassroots level.
This is contrary to Nigeria’s legal framework that makes it mandatory for the state governors to allocate 10 percent of their internally-generated revenue to the local councils.

Analysts have decried how state governments have taken over most local government functions merely to justify spending funds earmarked for councils in the Joint Revenue Account, and funds from the Federation Account do not reach the local level. This is largely because most resources are owned and managed by the Federal Government, and all states and local governments rely on allocations or shares from federal revenues.

Two other issues that consistently trouble the realisation of fiscal federalism are illegal custody and disbursement of federal collected revenue and the failure to act upon audit reports by prosecuting indicted federal officers who deal corruptly with the federation’s treasury.

Despite all the problems of local government governance in Nigeria, there are solutions that can help eliminate them and increase effectiveness in the local administration of the people. One of such solution is the amendment of the Constitution to stop interference in local government activities.

Of course, if the fourth schedule of the 1999 Constitution of the Federal Republic of Nigeria can be appropriately amended, then local governments in Nigeria will be more effective. This is because that part of the Constitution provides that the local government should have a joint account with the state.

In other words, federal allocation of revenue will get to the state government before it gets to the local government. With the required amendment, however, funds of the local government to go directly to that tier of government; state governments will not be able to touch the federal allocation of revenue to the local government. This will also significantly reduce the rate of corruption and underdevelopment in the country.

Recent reports indicated that the Nigerian Financial Intelligence Unit (NFIU) was set to go after banks that pay local government allocations to state governments. Though this sounds like a step in the right direction, the dilemma is in whether the NFIU can dictate how governments exercise their constitutional mandates of resource distribution.

It is important, therefore, for the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), working with state governments, to provide accessible, accurate, and descriptive details of monthly revenue distribution across the states and the 774 local governments of Nigeria.

The Auditor-General at the federal and state levels needs to beam the searchlight into revenue disbursements and spending across the country and ensure that audit reports are regularly published and made available to the public and the anti-corruption agencies.

Categories: Features