Federal Government Warns States, Councils Against Borrowing Without Clearance
The Federal Government, through the Fiscal Responsibility Commission, FRC, has cautioned state and local governments against obtaining loans from financial institutions without first securing a Certificate of Proof of Compliance from FRC.
The commission warned that any loan obtained without its clearance violates the law and carries serious legal consequences.
The warning was issued during a financial management workshop attended by 23 local government chairmen in Kaduna State. The event was organised by the Kaduna State Fiscal Responsibility Commission.
Speaking at the workshop, the Director of Legal Services, Investigation and Enforcement at the FRC, Charles Abana who represented the commission’s Executive Chairman, Victor Muruako emphasised that the Fiscal Responsibility Act of 2007 does not permit borrowing for routine or recurrent expenditure.
According to him, loans may only be obtained for projects with long-term value, such as infrastructure development and human capital investment.
In a statement issued by its Strategic Communications Officer, Bede Anyanwu, the FRC also condemned the practice of spending public funds outside approved budgets, describing it as “fiscal haram.”
The commission said such actions erode public trust and hinder sustainable development.
“Every kobo spent must deliver value for money. Public resources must be planned, budgeted for, properly appropriated and disbursed towards projects that positively impact the lives of the people,” the statement read.
The FRC further cautioned local government officials against the diversion of public funds to friends, political supporters, party loyalists, and the inclusion of unqualified or non-existent workers on government payrolls.
It stressed that all expenditure must strictly follow approved budgetary provisions and be tied to verifiable work and tangible benefits for citizens.
The commission also warned financial institutions particularly banks against granting loans to government entities in violation of the law, noting that public officers who flout fiscal regulations risk severe sanctions.
Local government chairmen were advised to embrace transparency, prudence, and accountability in managing public funds, while considering the long-term implications of their financial decisions on future generations.
The FRC reaffirmed its readiness to provide technical support to help local governments establish and enforce sound fiscal responsibility frameworks.
Governor Uba Sani of Kaduna State was commended for supporting reforms aimed at strengthening transparency and accountability in public finance management.
The governor, according to the statement, condemned the misuse and theft of public funds and urged all elected officials and political appointees to conduct themselves with integrity and openness.
He reiterated his administration’s commitment to fiscal discipline and responsible governance, noting that public trust can only be earned through the prudent and transparent use of public resources.
Earlier, the Executive Chairman of the Kaduna State Fiscal Responsibility Commission, Sani Bako, described the workshop as a critical step toward improving public financial management at the grassroots level.
Bako acknowledged the support of key institutions, including the Code of Conduct Bureau, the Economic and Financial Crimes Commission (EFCC), the Bureau of Public Procurement (BPP), and the Centre for Fiscal Transparency and Public Integrity.
He said effective public financial management remains essential for sustainable development, leading to improved infrastructure, cleaner communities, better schools, and overall economic growth.
Other agencies at the workshop, he added, presented papers on ethical leadership, procurement best practices, and anti-corruption measures, all aimed at ensuring prudent use of public funds across all levels of government.
