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NFIU: Councils get jumbo pay to meet budget targets


NFIU: Councils get jumbo pay to meet budget targets

–      First line charges reduced to three items

–      Direct labour projects under threat

–      11% tax now applies to contracts

–      EFCC to monitor local govt finances


–      No fears over funding of Lagos LCDAs

–      PMB takes credit for anti-corruption regime

–      Chairmen say direct funds will boost local devt

By Abolaji Adebayo


June 2019 will mark the red letter month in the history of local government administration in Nigeria with the implementation of the Nigerian Financial Intelligence Unit’s recommendation to pay federal allocation to local governments directly.

With the new system, more funds will be available to fund the lofty dreams of providing for the masses in the budgets of the councils recently passed by the councillors.

As a result, not less than 30 percent jumbo rise in allocations were received by local governments due to the NFIU‘s decision to scrap several first line charges from the federal fund.

Among the losers are first line charges for water supply, joint information dissemination projects and waste management.

First line charges which survived the guillotine of the funds tracker include the salaries of the local government workers, the pension contributions of the local government workers and the salaries of the teachers under the Local Government Education Authority.


With the guidelines rolled out by the NFIU, the era of direct labour contracts in local governments may be over as the agency is insisting that capital projects must comply with the mandatory tax of 11 percent on such contracts.

The 11 percent tax, which includes withholding tax of 5 percent and value added tax of 5 percent was mandated by section 19.2 (11) of the Lagos State Guidelines on Administrative Procedures for Local Governments issued in 2011.

This regulation will also enable the Economic and Financial Crimes Commission (EFCC) to monitor actual execution of contracts paid for by the local governments.

The direct allocation is in line with the anti-corruption programme of President Muhammadu Buhari to nip stealing of public funds in the bud and stop public perception of government offices as short cut to unearned wealth.

Echonews learnt that fears that the new regime may starve Local Council Development Areas of funds have been rested as the LGAs have traditionally funded the LCDAs in line with the laws and resolutions of the Lagos State House of Assembly.


It would be recalled that the LCDAs have not been recognised by the federal government hence, only the 774 LGs approved by the federal government get allocations.

The chairman of Isolo LCDA, Hon. Shamsudeen Olaleye told Echonews that the local government authorities have agreed to share the allocation based on the existing formula.

He said: “There is no cause for alarm. There is no problem concerning the sharing formula. Lagos State has a formula already which we are going to use. Now, we are receiving more than what we used to receive before.”

His words were endorsed by the chairman, Oshodi-Isolo LGA, Hon. Idris Bolaji Muse-Ariyoh who told Echonews that the sharing formula has never generated any acrimony between the LG and its LCDAs.

His words: “This new arrangement is just to make way for transparency and so far so good, we don’t have any issue. The sharing formula would be based on the existing one and we would not have issue with that, the LCDAs will not have any problem with the local government.


“This is also the time that the populace would have more dividends of democracy. The federal government is just trying to make sure that the third tier of government is more effective so that the welfare and the security of the people are well taken care of. And this is an avenue for us to double up whatever we have been doing before.

“As far as I am concerned, it is called financial autonomy which is a good thing. As far as we are concerned in Lagos, government has been well transparent from inception till the moment and I challenge any other person who can compare the Lagos development with any other in the country. So Lagos first and others follow. This will also keep Lagos ahead and make Lagos local governments more effective than ever.”

Speaking on how soon the LCDAs would get their June allocation, Ariyoh said: “The JAAC has met. Each LCDA would receive its allocation any time from now, latest by Tuesday next week (this week) as bank transfer may take some time.”

The chairman of Ejigbo LCDA, Hon. Monsurudeen Bello, also agreed with his counterparts confirming that all the three councils are united on continuing the current formula for sharing federal allocation.

He believes the people will be the greatest beneficiary as the local governments will be empowered to respond to their yearnings and increase the pace of development.