ABSTRACT
The 1967 Local
Government reform was undertaken to strengthen the local government system in
Nigeria. Several challenges has cropped up over the ears on the performance of
local government councils in the discharge of her assigned responsibility and
one of such is the challenge of effective utilization of the government revenue
in Nigeria. Local governement is the third level of governement and as well as
governement at the grassroot level. This I turn means that all the revenue of
the local governement which includes allocations from the federal and the state
gvernementand internally generated revenues are to be utilized at the grassroot
level but there are challenges on the effective utilization of these resources
which includes: corruption of the local government officials, improper
planning, political interferences and instability etc. This work intends to
analyze these challenges and as well profer solutions to these problems
individually. The policies of the federal and the state governement can prevent
proper utilisation of local government funds in so many ways and this piece of
work will explore some of these policies and recommend possiblesolutionsto them
as the case may be. The method of data used is primary data, method of analysis
used is simple as percentage formula.
CHAPTER ONE
INTRODUCION
1.1 Background
of the Study
Local government from inception in
the colonial era to the present time has played significant roles in the
socio-political and economic life of the colonial administration to a
recognised third tier of government in Nigeria. The local governement in
Nigeria has suffered a lot of negligence but the most pressing problem is the
non-utilization of the Internally Generating Revenue (IGR). The fund at times
is been misused, highjackedor diverted by the leaders therby rendering the
local government council bankrupt.
Under development has been a major
factor hindering third world countries in achieving sustainable development.
According to Rodney (1972), underdevelopment does not necessary mean absence of
development. It does not also mean that it is characterized by untransformed
economic, political and social structures. It is more or less a condition of
relatively low level of development, a situation in which the necessary
qualitative social transformation has not yet taken place. Achieving human development is linked to a
third world perspective of development which views it as freeing people from
obstacles that affect their ability to develop their own lives and communities.
Development therefore is empowerment. It is about local people taking control
of their own lives, expressing their own demands and finding their own
solutions to their problem. No wonder Arvind and Evereth (1989) refer to
development as a widely participatory process of directed social change in
society intended to bring about social and material advancement, including
greater freedom, equality and other valued qualities for the majority of the
people through their gaining greater control over their environment.
Development can only be said to be
effective if it is focused on human capital development and the introduction of
new ideas to foster social change. Rogers (1967) argued that development
involves among other things, a type of social change in which new ideas are
introduced into a social system in order to produce higher results or output
through more modern social organization”
Development cannot take place in the
absence of capital. Capital comes in form of revenue allocation or statutory
allocation from the federal and state government.
Before 1976, the insolvency of Nigerian
Local Governments was pervasive to the extent that every aspect of their
inadequacy was attributed to lack of finance. For instance even when Adebayo
Adedeji itemized the problem besetting local government in Nigeria in 1976 as
i.
Lack
of a comprehensive functional role
ii.
Inappropriate
structure
iii.
Low
quality of staff
iv.
Low
administrative efficiency and corruption
v.
Poor
performance or even total neglect of functions and
vi.
Inadequate
finances, he went further to state that the panacea to all the problems was
finance.
Therefore the first major attempt at
looking at the local government finance was in 1976, during the nationwide
local government reform. The reform measures and the 1979 constitution
identified reasonably adequate sources of revenue for the local government
among which was the mandatory statutory allocation from the both the federal
and state government.
Since 1976 till date the central and
state government have being transferring statutory allocation to the local
government. This funds are meant for the local people as stipulated in section
1 (f) of the fourth schedule of the 1999 constitution, which states in sum that
the local government shall be involved in the development of the state in so
far as the areas of authority of the council are affected. Statutory allocation
or revenue allocation therefore is supposed to be used for the development and
sustainability of our local governments.
1.2 Statement
of Problem
The relevance of the local government
council as the government at the grassroot level is measured by the quality of
service rendered to the rural dwellers. For the ciuncil to render meaningful
service in form of provision of basicamenities, construction and maintainance
or road, creation of employment opportunities for the citizens and pay staff
salaries as at when due, momey is undoubtedly requires. Without the
availability of revvenue, alocal government council will not only be incapable
of seving the people but will undoubtedly crmble.
It
therfore follow that for the local government to discharge its statuory
functions effectively, it should not only be adequately applied.
One of the fundamental problems in
local government financial administrations is the issue of utilization of
revenue available to the local government;
The problem of delay in payment of
federal and local government grants to the local authorites;
Another problem is that of ineffective
financial control and government both internally and externally;
The problem of accountability, financial
mismanagement and embezzlement of available funds in local government council;
Finally, the problemof corruption as stated by Oluwole (2000)
milltates against the utilization of local government revenue.
1.3 Research
Questions
This researchaddressed the following
questions:
1. What are the major sources of
revenuefor local governement?
2. What are the problems confronting
revenue utilization in the local governement?
3. How can inadequate generated revenue
pose a problem to effective utilization of local goovernment revenue?
4. How can these challenges facing the
effective utilization of local governement revenue be tackled?
1.4 Objective of the Study
The centrsal focus of the
study is to critically analyze the problem of effective utilization of revenue
available to Isuikwuato Local Government Area as a case study.
1.
The
study is meant to identify the major revenue sources available to local
goverenment.
2.
To
ascertain the problem that controls the council administration in utilising
revenue for their service.
3.
To
find out whether or not the revenue is adequate for the council expenditure.
4.
To
investigate the system of financial control in the local governement council.
1.5 Research Hypothesis
A
hypothesis is a theoretical conceptualizationor an idea regarding how
researcher thinks theresult of his study will look. It consists of a set
ofassumptions accepted previously as a basis ofinvestigation. It is a
proposition that is yet to be testedfor its validity. For the purpose of this
research study,three null hypotheses were formulated.
HO1:
There is no significant relationship
betweenstatutory allocation to Isuikwuato Local Government Area and
developmental effort.
HO2:
Allocation to Isuikwuato Local Government
Area account does not have significant effect on Local government development
projects.
HO3:
There is no significant relationship between internally generated revenue and
developmental project of Isuikwuato Local Government Area.
1.6 Significance
of the Study
The significance of human
endeavor is measured by its relevance to solving human problem. Therefore, the
significance of the study is measured by its relevance to solving the problem
of effective utilization of revenue available to local government in
Nigeria. The project will be of benefit to the Isuikwuato Local Government
administrative system, as it will expose to them potential sources of
generating revenue internally. It will equally help the council to strength its
financial base because this study would highlight some identified problem hampering
the utilization of revenue in the council. Thirdly, it will also be useful to
the indigenes of Isuikwuato Local Government Area to co-operate with local
government council administrator to enable them build a viable local government
by paying their taxes and rate promptly. Fourthly, the project with be useful
to various institution especially control university, for gaming greater
knowledge and understanding of the problems of effective utilization of revenue
available to local government. The project will be useful to the general
public, organization companies etc that may have interest in the project.
Finally, this study will also serve
as a guide to enable local governments utilizes the revenue allocated to them
to bring about meaningful development. The research will also aid further
researchers to use as reference materials and literature and finally the study
will provoke more research into the topic.
1.6 Scope
of the study
This is centered on revenue
allocation and development to local governments in Nigeria but due to the wide
or vast nature of Nigeria, the researcher now chose Isuikwuato Local Government
Area as a case study to deal with this particular problem in other local
government in Nigeria. The study is also centered on the sources of revenue
available to local government both the internal and external sources of
revenue.
1.7 Limitation
of the Study
Limitation (constraints) of the
study: in this effort of carrying out this research bathe researcher was faced
with the problem of time, finance and visitation of Isuikwuato Local Government
Area. The researcher being a student, found it difficult to get extent out of
the school premises and the time frame was so limited in carrying out the
research work. Also, the distribution and collection of the questionnaire to
the staff of Isuikwuato Local Government Area was not easy for the researcher
as the respondent were not always available.
The study was carried our under a lot
of constraint. The class work and financial constraint were limitations which
made it uneasy for the material to be reading available at the appropriate
time.
1.8 Definition of Terms
Local Government: Local Government political
subdivision of a state which is constituted by law and has substantial control
over local affairs including the power to impose taxes;
Finance: Money resources available to a person
private or public enterprises use in its maintenance and discharge of its
duties.
Revenue: The
funds available to the local government from different sources for the purpose
of meeting its expenditures. Revenue can also be said to be the money available
to an individual, the money you have in your pocket, companies and different
organizations needs revenue to carry out their functions effectively.