CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
Local government is the third tier of
government in Nigeria. The Local government system was entrenched in the 1979
constitution via part 11, section 7, sub section (1) ..5
However,
the origin of Local government councils in Nigeria was empowered through the
1976 local government reform. When President Olusegun Obasanjo was the then
Military Head of state, which terminated in 1979. This is to say that 1979 and
1989 Federal Republic of Nigeria constitution recognized local government as
the third tier of government and its function and role written in black and
white. In the past dispensation of the 5th republic, to the present
Government, the former President Olusegun Obasanjo was not pleased with the way
and manner in which the local governments were administered and consequently
alleged financial reckless amongst local government chairmen. That gave rise to
a 28 men technical committee set up to determine the tenor and texture of local
government reform. This committee was inaugurated by president Obasanjo and the
ETSU at NUPE, Achaji Umane Ndayoko the head/chairman; its terms to reference
include the following.
1. To review the performance of local councils within the past years
and consider the desirability or otherwise of retaining them as the third tier
of government. In that regard consider, among other option the adoption of a
modified version of pre 1976 local government systems of Nigeria.
2. To examine the problems
of inefficiency and high cost of government, with a view to reducing costs and
wastages in the three tiers of governments.
3. Examine the high cost of
electioneering campaign in the country and consider among other options, the
desirability of whether political parties, rather than individual’s office
seekers should canvass for votes in elections.
4. Consider any other
matters, which in the opinion of technical committees are germane to the goal
of efficient structure of government in Nigeria.
In anticipation of the technical
committee to determine the tenor and texture of reform of the councils, the
People’s Democratic Part (PDP) caucus suspended indefinitely the June 12, 2003,
Local Council Election pending the outcome of the 28-man Technical Committee
inaugurated in June 2003.
The 5th republic government
commenced without the democratic elected local government chairmen. But rather,
an appointed caretaker committee was set up by the state government
administration pending the conduct of such election. Other reasons deduced by
the government over the indefinite suspension of the local poll was to have
time to harmonized about 500 newly created councils since 1999, so that the
National Assembly shall make provisions for allocation of revenue to the
councils as prescribed by section 7(6) of the constitution.
However, this proposal emphasis on the
sources of revenue and Expenditure pattern of Local government councils in
Nigeria. (A study of Ethiope East local government council of Delta State.) It
was noted that within the period of 2000-2007, President Olusegun Obasanjo did
not really believed so much on the integrity, transparency and accountability
of the local government councils in Nigeria especially during his regime as the
4th and 5th republican President from May 29, 1999- may
29, 2007, the President have in so many cases alleged mismanagement of
resources and unjustifiable expenditure by the third tier of government which
most often gave rise to zero allocation. This implies that the intently
generated revenue (IGR) of the third tier of government been grossly inadequate
to enable the council perform its statutory role efficiently.
1.2 STATEMENT OF PROBLEM
Despite the importance of sources of revenue and
expenditure pattern of Local government Councils in Nigeria. The councils have
not been abiding by the laid down regulations contained in the 1999
constitution of Nigeria. The officers associated with managing the resources
are said to creating unnecessary problems in the performance of their duties.
Most revenue collected is not receipted and unqualified personnel’s are engaged
in the services of collection and recording of revenue unbehalf of the local
government authorities in Nigeria. The research problem is to highlight the
inefficiencies and loopholes associated with the sources of revenue and
expenditure pattern of Local Government Councils in Nigeria. In addition,
financial irregularities and other economic crimes are said to be part of the
set back of local government councils in Nigeria.
1.3 OBJECTIVES OF THE
STUDY
The objectives of the study are to reasonably
ascertain the following:
1. To evaluate the sources of
revenue and expenditure pattern of local
government councils in Nigeria.
2. To carry out a comparative
study of such pattern and to see if there is any variance amongst other local
government councils.
3. To determines how effective is the financial control of local
government councils and to know the state of its internal control measures.
4. To identity other areas of
assistance in which help is required and to know if the finance and accounts
records are kept appropriately.
1.4
RESEARCH QUESTIONS
The following research
questions were formulated:
1. Has the expenditure of the sources of revenue available to Ethiope
East local government produced a positive or negative impact?
2. Are you aware
that the survival of local government councils in Nigeria is in
doubt without the constitutional provision of revenue source?
3. In what way are the
internal control measures related to the council’s efficient management of its
resources/funds?
4. By what means Ethiope
East local government planned its revenue and expenditure?
1.5 STATEMENT OF HYPOTHESIS
HYPOTHESIS I
Ho: There is positive impact on effective expenditure of revenue
available to Ethiope East Local Government Council.
Hi: There is negative impact on effective expenditure of revenue
available to Ethiope East Local Government Council.
HYPOTHESIS II
Ho:
The survival of local government councils in Nigeria is in doubt without
the constitutional provision of revenue sources.
Hi: The survival of local government
councils in Nigeria is not in doubt without the constitutional provision of
revenue sources.
HYPOTHESIS III
Ho: There is a
relationship between internal control measures and efficient management of
resources/funds
Hi: There is no
relationship between internal control measures and efficient management of
resources/funds
HYPOTHESIS IV
Ho: Budgetary
instrument is very vital to local government councils in Nigeria.
Hi: Budgetary instrument is not very vital to local government
councils in Nigeria.
1.6
SIGNIFICANCE OF THE STUDY
The significance of this study is numerous and
very important both to government, corporate bodies and individuals.
1. This study will reveal the
importance and significance of local government councils as the third tier of
government in Nigeria.
2. It will show the available
sources of revenue and expenditure pattern and possible areas of expanding the
scope and operation of local government councils.
3. It will access the internal
control measures and determine how effective the financial control in the
public sector is.
4. The study will highlight on
the importance of budgetary with adherence of the financial strategy to local
government councils effective operation.
1.7
SCOPE AND LIMITATION
This proposal intends to critically
analyze the sources of revenue and expenditure pattern of local government
councils in Nigeria. (A study of Ethiope East Local Government Council of Delta
State). In pursuance of this venture, some selected local governments councils
were visited within the south - south region of Nigeria. Below were some of the
constraints encountered.
1. RESPONDENTS
ATTITUDE
Very few
respondents gave me audience in this regard. Most of the staff approached was
not co-operative in giving their view as required by the structured
questionnaire. Perhaps, the past clamor by the National house of assembly to
restructure/scrap the local government councils in Nigeria compounded the case
of free and unbiased response as long as local government issues are concern.
2. TIME
The time allocated to this proposal was
inadequate. Most institutions were on strike and the possibilities of using
their libraries were not available.
3. FINANCE
There is no doubt that finance was a major constraint.
Lately the removal of petroleum subsidy gave rise to increase in transportation
fare and subsequent economic activities such as high cost of photocopying
relevant materials.
1.8 DEFINITION
OF TERMS
Below are some of the itemized definitions
of terms which will aid the user to apprehend some terminologies without
ambiguity or being biased in line with the context of this research topic.
Audit alarm
committee
This means a committee set up under a section of the law to prevent
irregular and illegal payments in the local government.
Federation
Accounts
This
is the accounts to which is paid all revenue collected by the government of the
federation except the proceeds of the personal income tax in respect of
residents of the federal capital territory (FCT) and arm forces in Nigeria.
Internal auditor
This
refers to an officer of the local government charged with the responsibility of
conduction internal audit of the management of the finance of a local
government council.
Revenue
collectors
This
means person duly authorized to collect revenue and other monies payable to the
local government council.
Non – statutory
allocation
Non-statutory allocations are allocations not supported by legislation
like grants
Local government
Refers
to a local government council establishment under a section of the law or
constitution of the country
Treasure
This
means the head of local government finance and supplies department.
Vote
A vote
is the limit of authorized expenditure expressed in monetary terms.
Revenue Earning Book
This is
the only means by which a local government council can officially acknowledges
the receipt of monies paid to it and the expression include carbon receipt
books, metal and plastic dishes and license forms.