From Victor Osula, Abuja
The Federal Government has issued a stern warning to state and local governments against securing loans from financial institutions without obtaining a Certificate of Proof of Compliance from the Fiscal Responsibility Commission (FRC), stating that such borrowing is illegal and carries severe legal consequences.
The warning was delivered during a financial management workshop for the 23 local government chairmen in Kaduna State, aimed at promoting transparency, accountability, and prudent financial management at the grassroots level.
Speaking at the event on Tuesday, February 3, 2026, Charles Abana, the Director of Legal Services, Investigation, and Enforcement at the FRC—representing Executive Chairman Victor Muruako—emphasized that the Fiscal Responsibility Act (FRA) of 2007 strictly forbids states and local governments from borrowing for recurrent or day-to-day expenses.
Abana noted that borrowing must be restricted to projects with long-term value, such as infrastructure development and human capital investment.
In a statement issued by the commission’s Strategic Communication Officer, Bede Anyanwu, the FRC described the misuse of public funds outside approved budgets as “fiscal haram,” warning that it erodes public trust and hampers national development.
The commission cautioned local officials against diverting public funds to associates, political supporters, or unverified personnel, stressing that all expenditures must align with approved budgets and deliver measurable public benefits.
Financial institutions, particularly commercial banks, were also warned against granting loans in violation of the FRA, as public officers who disregard these regulations risk prosecution and severe administrative sanctions.
The FRC urged council chairmen to adopt long-term accountability frameworks and offered technical support to help local governments strengthen their fiscal by-laws.
Governor Uba Sani, who was commended for supporting reforms that enhance transparency in Kaduna, condemned the embezzlement of public funds.
He called on public officials to demonstrate honesty, emphasizing that “public trust can only be sustained when government resources are managed efficiently and in the best interest of the people.”
Earlier, the Executive Chairman of the Kaduna State Fiscal Responsibility Commission, Sani Bako, described the workshop as a key step toward improving sub-national financial management.
He highlighted the participation of several agencies, including the Code of Conduct Bureau (CCB), the Economic and Financial Crimes Commission (EFCC), and the Bureau of Public Procurement (BPP), noting that ethical leadership and due process remain the backbone of sustainable economic growth.
