LOCAL GOVERNMENT STATUTORY ALLOCATION AND NATIONAL FINANCIAL INTELLIGENCE UNIT (NFIU)

Abstract

The 1976 Local Government Reforms set the path for the inclusion of local governments
into the revenue allocation formula in Nigeria. This inclusion into the revenue allocation
has thus strengthened the State/Local government financial relationship. The resultant
effect of this financial relationship between states and local governments has given birth
to State Joint Local Government Account (SJLGA).This study examines the flow of local
government statutory allocation into the State Joint Local Government Account and how
the new guidelines of the National Financial Intelligence Unit (NFIU) has affected the
financial relationships between states and local governments. The research is qualitative
in nature and data is derived from both primary and secondary sources. The theory of
fiscal federalism was used as the theoretical framework to explain the financial
relationship between the three tiers of government and the constitutional provision with
regards to the flow of funds and utilization. Findings of the study revealed that the
SJLGA, has been ineffective in providing adequate financial resources to the Local
governments as manifested in their consistent short-changing and denial of access to
their statutory entitlements. The pronouncement of the new guidelines by the National
Financial Intelligence Unit (NFIU)of May, 2019 on how the local government funds
should henceforth be utilized, has made the state governors to become jittery pointing to
the unconstitutionality of the proposal and their outright criticism and disapproval. The
study therefore recommended for the enforcement of the NFIU proposal if any
meaningful progress should be achieved at the local government level. This will ensure
financial independence to the local governments in Nigeria and as well facilitate
development in their respective communities. This is because, it is evident that the SJLGA
as practiced has not effectively enhances the capacity of local governments to deliver
services.