Osun Governor Forces Bank To Stop Direct Payment of Local Councils’ May Allocation

Osun State Governor, Gboyega Oyetola, has accused of stopping a Zenith bank branch in the state from crediting the accounts of the local governments with their May allocations from FAAC.

SaharaReporters gathered that the state government may have presented a note to the bank where the State Joint Local Government Account (SJLGA) funds for the state and local governments in the state are sent to by the CBN, compelling it not to transfer the monies.

The Nigeria Finance Intelligence Unit (NFIU) directed banks in May 2019 to pay local governments all monies accruing to them for the federation within 24 hours of receipt.

SaharaReporters gathered that the bank’s management was unwilling to allow the state government access to the funds, requesting a note from the governor before doing so. At the time this report was written, the accounts of the 30 LGA’s in the state had not been credited.

The source said, “They have been dragging this for two weeks. Zenith Bank said they won’t do anything against the NFIU policy. Five or six days ago, when the governor went to them, they said if the governor could give them a back-up note, they would go ahead. Whenever NFIU queries them, they would show them the governor’s note.”

The procedure adopted by the state and local governments, since the NFIU guideline came into effect, saw all 30 accounts credited the same day FAAC allocation was received.

A statutory withdrawal is subsequently made to a platform called Chams, which handles the payment of salaries for the month. This mode of operation was seemingly tweaked on Friday at a meeting that had the LGA chairmen in attendance.

Under this apparent change to the treatment of local government funds, which is in contrast with the NFIU guideline, the salaries of primary school teachers and local government staff have been delayed from the usual payment date of May 25-29.

“The latest pay date for teachers and local government staff is 29th or 30th. “This is ninth and nobody can explain to them why they haven’t received their salary yet,” the source said.

The commissioner of local government and chieftaincy affairs in the state, Adeleke Adebayo, told Sahara Reporters that the mandate for the payment of salaries was already with the bank. He, however, denied that there was any change to the procedure for handling LGA allocations.

“Since yesterday we’ve started paying them,” he said, reacting to the delay in the payment of salaries for teachers and LGA staff. The remuneration for staff under the state government for May had since been paid but the commissioner said, “The procedure is not the same thing.”

Rather than confirm if there had been a change in how LGA funds are disbursed, he said, “Let them make the payment first before you go ahead to insinuate.”

He added, “We have followed the same procedure, nothing has changed, the local governments will get their money.”

The Chief Press secretary to Oyetola, Ismail Omipidun, was unavailable for comments at the time the report was written.

The purported contravention of the NFIU directive by the Osun state government will erode the financial autonomy of the LGAs and reduce their ability to execute projects.

Some of the LGAs are also running at a deficit but the change in operating procedure could see them get more funds than financially healthy local governments if they are in urban areas.

SaharaReporters had, last year, exclusively revealed that the Osun State government shared funds from the SJLGA three times between February 2018 and June 2019. The Oyetola administration has openly said it is not in support of the NFIU directive in its current form.

At a local government development summit, the chief of staff to Mr Oyetola, Charles Akinola, who was representing the governor said, “Given its effectiveness, the JAAC – Joint account Allocation Committee system should be retained but modified by creating separate accounts for specific overheads after statutory deductions with a caveat that there shall be no cash withdrawals of more than N500,000, except for emergencies.”

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