CHAPTER ONE
INTRODUCTION
1.1
Background to the Study
Local
government system as the third-tier of government derives adequate finances to
enable it cope with numerous developmental activities within its jurisdiction.
Revenue is the total amount of income that accrues to an organisation (public
or private) within a specified period of time. Revenue is necessary for the
effective functioning of government machinery as no government can survive
without adequate revenue (Akpa, 2008).
One
of the recurrent problems of the third-tier system in Nigeria is dwindling
revenue generation as characterised by annual budget deficits and insufficient
funds for meaningful growth and viable projects development. Local governments
are the nearest government to the people at the grass roots in Nigeria; they
are strategically located to play a vital role in nation development. Since
they are responsible for the governance of about 70 percent of the population
of Nigeria, they are in vantage position to articulate the needs of the majority
of Nigerians and formulate strategies for their realization (Adedokun, 2004).
Akpa,
(2004) opines that, most of the 774 local councils today depend heavily on the
statutory allocations for survival as no less than 80 percent of the total
revenue comes from this source. This is to say that, Internally Generated
Revenue (IGR) source contributes insignificantly to the total revenue pool
available to the council with exception of few urban councils.
According
to Auwalu (2008), the issue of revenue has a fortunate as well as unfortunate
issue. Fortunately, it is constitutionally enshrined. Unfortunately, the local
revenue available to local governments are either not effectively tapped or the
sources are not promising enough to warrant mobilizing these resources.
Akpa,
(2008) observed that, mostly un-diversification of revenue base via investment,
because of short-termist nature of our political leaders is another problem of
boosting revenue generation in the third-tier of government. The machinery put
in place for collection of revenue is inadequate, hence most of the government
moneys are not collected, also the dishonesty on the part of officers
collecting the revenue (Olatunji, Taiwo and Adewoye, 2009).
Anyafo,
(1996) in his study, suggested that, bye-laws are very important in providing
the enabling legal environment for proper revenue generation at the local
government level. The bye-laws on finance prescribe the items of revenue, the
amount and the mode of collection as the basis for incidence.
1.2
Statement of the Problem
Internally
Generated Revenue in local government council is inadequate to achieve the
objectives of self-reliance and structural transformation of the rural
environment. There are many revenue avenues, which are yet to be explored to
attain the desired level of revenue required by the councils. One of the
recurrent problems of the third-tier system in Nigeria is dwindling revenue
generation as characterised by annual budget deficits and insufficient funds
for meaningful growth and viable project development. The issue of revenue has
been a fortunate as well as an unfortunate issue. Fortunately, it is
constitutionally enshrined. Unfortunately, the local revenue available to local
government are not promising enough to warrant mobilising these resources.
It
is against this background that the researcher undertakes this onerous task to
examine the third-tier system in attempt to reviewing the various sources of
revenue available to the third-tier level to assist them support their
socio-economic advancements. Moreover, to review the problems that hinders the
third-tier system of government from accomplishing its set goals with the view
to proffering solution to these problems and recommend various ways tapping
maximally from the available sources.
1.3
Objectives Of The Study
The
specific objectives of this study are:
i.
To examine the various sources of internally generated
revenue available to the selected local governments.
ii.
To examine the machineries put in place by the selected
local governments to ensure adequate revenue generation.
iii.
To determine whether revenue administrators in the selected
local government are honest in discharging their responsibilities.
1.4
Research Questions
This research work is based on the following research
questions:
i.
What are the sources of revenue available to these local
governments internally?
ii.
Are there adequate machineries put in place by the selected
local governments for ensuring adequate revenue generation in their
jurisdiction?
iii.
Are those responsible for revenue collection in the selected
local government honest in discharging their duties?
1.5
Research Hypotheses
The
following research hypotheses has been raised to test the research questions
statistically from the responses obtained from respondents to determine whether
to accept or reject the null hypotheses formulated. The hypotheses are stated
in the null form as shown below:
Ho1: The selected local government do not have
adequate sources of revenue internally to tap from.
Ho2: Adequate machineries for enduring revenue generation
do not exist in the selected local governments
Ho3: Revenue administrators in the selected local
governments are not honest in discharging their duties.
1.6
Significance Of The Study
The
research work is aimed at reviewing sources of revenue of the third-tier of
government. Also, to examine strategies for effective revenue generation at the
third-tier of government. Therefore the study will be of great importance to
administrators, Heads of department (Revenue) and those assigned with the
responsibility of revenue collection at the third-tier of government.
Stakeholders in the administration, politicians and others, that have concern
over the affairs of local government will also benefit from the study. The
study will also equip the researchers in this area.
1.7
Scope of the Study
It will be of more important to carry the research work on
the entire 774 local governments in the country. But due to some limitations in
the instruments used by the researcher, Benue state is chosen out of Nigeria
and in Benue State, the three (Ushongo, Kwande and Gboko) local government
areas are finally selected as study area.