FAAC: How Cross River Government Deducts, Starves LGA’s Of Allocation

In Breaking News, Business & Economy, Crime, Reports

By Jonathan Ugbal

Documents obtained by CrossRiverWatch have revealed how the Cross River State Government starves its 18 Local Government Councils of funds.

The Local Governments are captured each month when the Federation Account Allocation Committee (FAAC) meets to share revenue generated from across the country in Abuja, the Federal Capital Territory.

And, claims that Governors of States have always micromanaged funds meant for Local Governments have continued despite directives from the Nigerian Financial Intelligence Unit (NFIU) to do otherwise.

The process, CrossRiverWatch gathered is designed in a way that heads of different MDA’s will likely take the fall if there is any probe.

This is how it is done.

The Commissioner for Local Government Affairs writes the Local Government informing them of the deductions to be made in line with the Cross River State Local Government Law of 2007.

These deductions which were few initially, have increased in number.

A letter notifying councils of deductions from the Ministry of Local Government Affairs

The Deductions…

For instance, a schedule of deductions in June 2020 listed 13 items while the one for September 2020 listed 14 items.

For June 2020, the deductions included: Rural Development Agency (9%), State Electrification Agency (5%), Joint Security Operation (2.5%), Local Government Service Commission (1%), Ministry of Local Government Affairs (1%), Joint Social Welfare (2.5%), Border Community Development (0.5%) and Sports Development (1%).

Others are: Environmental Management and Protection (2.5%), Oversight Function by the Cross River State House of Assembly (0.5%), Community and Social Development Agency (0.5%), Cross River University of Technology (1%) and Cross River State Infrastructure Fund (4%).

This means that for the month of June 2020, at least 31 percent of the total allocation meant for Local Governments was taken by the State.

Schedule Of Deductions For The Month of June 2020

Flat Rate Withdrawals…

From the NGN2.434 billion allocated to the 18 Local Governments, in June 2020 NGN826.56 million was deducted by the State.

In September, the Ministry of Humanity and Social Welfare was added to the list in documents sighted by CrossRiverWatch with no percentage included.

Schedule of deductions for the month of September 2020

The State tabulates the deductions based on the entire sum allocated to the 18 Local Governments and not based on what each Local Government receives.

So, despite Bakassi receiving NGN99million and Akamkpa receiving over NGN155million, both councils had the same deductions for the month of June; NGN45.920million.

The allocations for local councils in June 2020.
Source: NBS

What Does The Local Government Law Say?

The law is grey on some areas.

But, section 6 of the law which deals with allocation of revenue to Local Government reads;

“(1) Subject to the provisions of this Law, the House of Assembly shall make provisions for the allocation of public revenue to the Local Government and shall accordingly establish the Cross River State Joint Local Government Accounts Allocation Committee.

“(2) All monies accruing into the Joint Local Government Accounts Allocations Committee shall be disbursed as follows:

(a) A first charge for statutory deductions as follows;
(i) salaries of all staff in the local government service;
(ii) Rural Water Supply and Rehabilitation – 2.5%;
(iii) Primary Schools Rehabilitation Programme – 2.5%;
(iv) Primary Health Facilities Rehabilitation Programme – 2.5%;

(b) Equality of each local government – 50% of the balance;
(c) Land mass and terrain 10% of the balance;
(d) Population 30% of the balance; and
(e) Derivation – 10% of the balance.

But, sources in Government House Calabar and the Ministry of Local Government Affairs say this was thrown away as Chairmen and Chairpersons are often given peanuts to retired hefty sums.

What About The RUDA Law?

Part IV, Section 9 of Law No. 17 of 2007 which creates the Cross River Rural Development Agency states that:

“9. (1) The funds of the Agency shall consist of all sums as may be contributed to the Agency by the State and Local Governments i’n following ratio –
(a) 9% of the monthly allocation to all Local Government Councils in the State to be deducted in accordance with the Local Government Law and made up as follows –
Staff of the Agency.
(i) 2.5% for rural roads;
(ii) 2.5% for rural water supply;
(iii) 2.0% for rural health infrastructure;
(iv) 2.0% for educational infrastructure.

“(b) a monthly contribution from the State Government which shall not be less than one quarter of the aggregate monthly contribution of the Local Government Councils made in accordance with section 9(1)(a) above.”

But, the State is not keeping to Section 9b, sources said.

How Do They Funds Move?

Now, when the allocations hit the accounts and these deductions are made, the Heads of these MDAs are directed to withdraw in cash, the sums paid into their accounts and are taken to a person directed to receive them.

These people have changed since May 2015 while the heads of the MDAs keep three percent in order to retire the one withdrawn.

Same is applied to the Local Government councils heads on security votes. For this, out of the NGN5.2 million withdrawn, the Chairmen and Chairpersons keep NGN1million for themselves.

“The sum was increased from NGN2.5 million to NGN5.2 million to cater for the interests of the council bosses,” one source said.

And The Balance?

These sums are left in the accounts with the Chairmen and Chairpersons instructed not to touch a dime.

The balance, CrossRiverWatch gathered, currently runs into billions of Naira which the Governor normally directs withdrawal from time to time for projects and activities such as the airport project in Obudu and for the State’s response to COVID-19.

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