The Federal Government has issued a stern warning to state and local governments against borrowing from financial institutions without obtaining a Certificate of Proof of Compliance from the Fiscal Responsibility Commission (FRC).
It stressed that loans accessed without the mandatory FRC certificate are not only unlawful but also carry serious legal consequences for both public officers and lending institutions.
The warning was delivered during a financial management workshop attended by the 23 local government chairmen in Kaduna. The event was organised by the Kaduna State Fiscal Responsibility Commission.
Speaking at the workshop, the FRC Director of Legal Services, Investigation and Enforcement, Charles Abana, who represented the Executive Chairman, Victor Muruako, said the Fiscal Responsibility Act of 2007 does not permit governments to borrow for routine or recurrent expenditure.
According to the commission, loans should only be obtained for projects with long-term value, such as infrastructure development and human capital investment, rather than for day-to-day running costs.
In a statement issued by the FRC’s Strategic Communication Officer, Bede Anyanwu, the commission also condemned the practice of spending public funds without budgetary approval, describing it as “fiscal haram” that erodes public trust and hampers development.
“Every kobo spent must have value for money. Public resources must be planned, budgeted for, properly appropriated and disbursed towards the execution of projects that positively impact the lives of the people,” the statement read.
The commission further cautioned local government leaders against diverting public funds to friends, political supporters or party loyalists, as well as placing unqualified or non-existent workers on government payrolls.
It emphasised that all public spending must strictly align with budgetary approvals and be tied to measurable work and tangible benefits for citizens.
Financial institutions, particularly banks, were also warned against granting loans in violation of existing laws, noting that public officers who flout the Fiscal Responsibility Act risk facing severe sanctions.
The FRC urged council chairmen to run transparent and accountable administrations, manage public funds prudently and consider the long-term impact of their financial decisions on future generations.
The commission reaffirmed its readiness to provide technical support to local governments in establishing effective fiscal responsibility frameworks aimed at strengthening financial discipline.
Governor Uba Sani was commended for backing reforms that promote transparency and accountability. The governor, according to the statement, condemned the misuse and theft of public funds and urged elected officials and political appointees to act with integrity in the discharge of their duties.
He reiterated his administration’s commitment to financial discipline and responsible leadership, noting that public trust can only be earned through the prudent and transparent management of public resources.
Earlier, the Executive Chairman of the Kaduna State Fiscal Responsibility Commission, Sani Bako, described the workshop as a critical step towards improving public financial management at the grassroots level.
Bako acknowledged the support of agencies including the Code of Conduct Bureau, Economic and Financial Crimes Commission (EFCC), Bureau of Public Procurement, and the Centre for Fiscal Transparency and Public Integrity, stressing that sound financial management is essential for sustainable development.
He added that effective use of public funds translates into improved infrastructure, cleaner communities, better schools and overall economic growth.
