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FG Bans State, Local Govts from Taking Loans Without FRC Approval

The Federal Government has issued a stern warning to state and local governments, cautioning them against obtaining loans from banks or financial institutions without securing a Certificate of Proof of Compliance from the Fiscal Responsibility Commission (FRC). Such unauthorized borrowing, the government emphasized, violates existing laws and could lead to severe legal repercussions.

The warning was delivered by Barrister Charles Chukwuemeka Abana, Director of Legal Services at the FRC, during a financial management workshop in Kaduna State. Representing the FRC’s Executive Chairman, Victor Muruako, Abana addressed 23 local government chairmen, stressing that the Fiscal Responsibility Act (2007) only permits borrowing for projects that create long-term value—such as infrastructure and human development—and not for routine operational expenses.

Abana also called out banks and financial institutions, warning that those who grant loans outside legal frameworks are equally culpable. Public officials who disregard these rules, he added, risk serious consequences, including legal action. He condemned the misuse of public funds without proper budgetary approval, labeling it “fiscal haram”—a term implying financial misconduct akin to religious prohibition. Such practices, he argued, erode public trust and hinder national progress.

"Every kobo spent must deliver value," Abana insisted. "Public resources must be planned, budgeted, properly allocated, and used only for projects that directly benefit citizens." He further admonished council leaders against diverting funds to political allies or inflating payrolls with unverified employees, stressing that all expenditures must align with approved budgets and tangible public benefits.

Transparency and Accountability as Key Priorities

Abana urged local government officials to adopt open and transparent governance, manage funds prudently, and consider the long-term impact of their financial decisions. He assured them of the FRC’s readiness to provide technical support in implementing robust fiscal responsibility laws at the grassroots level.

The workshop also featured remarks from Kaduna State Governor Uba Sani, who denounced the mismanagement and embezzlement of public funds. He reiterated his administration’s commitment to reforms, fiscal discipline, and accountable leadership, noting that public trust is earned only through proper stewardship of resources.

Sani Rabiu Bako, Chairman of the Kaduna State FRC, described the event as a critical step toward improving public financial management. He highlighted collaborations with anti-graft agencies like the EFCC, Code of Conduct Bureau, and Bureau of Public Procurement to promote value-for-money spending, transparency, and anti-corruption measures—particularly at the local level, where governance directly impacts communities.

"Strong financial systems lead to better infrastructure, cleaner environments, quality education, and sustainable growth," Bako noted. The workshop included sessions on ethical leadership, procurement best practices, and anti-corruption strategies, all aimed at ensuring efficient use of public funds across all tiers of government.