Written by All

Strengthening local government autonomy

When the Nigerian Financial Intelligence Unit, NFIU, issued new guidelines restricting withdrawals and financial expenditure of local governments, it undoubtedly initiated a process of restoring the declining relevance of the third tier of government.







In a liberating declaration, NFIU outlawed any transaction from a local government account from June 1, 2019, until the funds first reach the local government’s account, warning that banks through which such transactions are carried out would be sanctioned locally and internationally.

It also pegged withdrawal from any local government account at N500, 000 per day, while other transactions must be done through valid cheques or electronic funds transfer. As correctly deduced, the implication of NFIU’s declaration is the financial autonomy of local governments.

While the regulation did not shutdown the joint state and local government account, JSLGA, it noted that the account would only be used for the receipt of federal allocations and not financial disbursements as it was the practice entrenched by state governors.

Until now, no clear boundaries were set by any judicial interpretation or government regulation on the operation of the joint account since the 36 state governors conspired to set up the account in 2003.

Since 2003, when the joint state and local government account, JSLGA, was set up, local governments had been stripped of their financial autonomy and subsumed into mere appendages of state administrations.

On the excuse of checkmating financial recklessness among chairmen of local governments, governors exploited every means to gain control of their funds and treated them like vassals of a lost battle for resource control, as their federal allocations were disbursed at the imposing will of state governors.

At some point, the joint account became bargaining chips or an instrument to negotiate the loyalty of elected local government chairmen and counsellors. Allegations of governors tampering with local government funds were rife.

Thus, the novel objective of brining development closer to the grassroots which formed the nucleus of the local government reforms in 1976 had been crushingly defeated. To say the least, the joint state and local government account significantly hindered the 774 local governments from carrying out their constitutional obligation to Nigerians at the grassroots.

Against this backdrop, we unreservedly applaud the ingenuity of NFIU in restoring financial autonomy to the local governments and initiating measures to control outflows from their accounts. It is expected that this policy would bring an end to over a decade of agitations by the association of local governments of Nigeria, ALGON, and ordinary Nigerians, and pave the way for the return of development at the grassroots as well as strengthening of the fight against corruption at the local government level.


In the past, while the chief executive officers of the states flourished, rural Nigeria continued in the trajectory of underdevelopment, systematic exclusion and urban drift. Policies and programmes initiated by government at the centre to tackle these menaces lacked any significant spread and impact.

We therefore submit that given the enormity of developmental challenges in Nigeria, both multifaceted and widespread efforts are required to address them, and the 774 local governments in Nigeria readily offer a fitting platform. Any genuine effort to holistically develop the country must take into account local governments’ contribution at the base of the nation’s population.

It is therefore imperative for disbursing agencies to ensure strict compliance with the directive of NFIU; and state governments must concede certain obligations and political authority to the local governments, thereby decentralising their operations. 

While allegations of profligacy and larceny against chairmen of local governments were germane, there is need to put measures in place to check such financial misconducts and ensure that the country’s appropriation laws are adhered to at the Local government level.

Finally, effort by state authorities to fight corruption must be directed against corrupt individuals and not institutions employing them; lest we throw away the baby and the bath water.

















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