PROBLEMS AND PROSPECTS OF REVENUE GENERATION IN KOGI STATE LOCAL GOVERNMENT AREAS

PROBLEMS AND PROSPECTS OF REVENUE GENERATION IN KOGI STATE LOCAL GOVERNMENT AREAS

(A CASE STUDY OF LOKOJA LOCAL GOVERNMENT AREA)

ABSTRACT

The importance of revenue generation by local government areas cannot be over emphasized. This is because Local Government Areas carry out the various developmental projects as well as providing social amenities to the people through revenue. But of recent, the drastic reduction of fund at the disposal of Local Government Area made it difficult for them to carryout their major function. His shortage of fund from the basis for this project work which is centred on the problem and prospects of revenue generation in Kogi State Local Government Area choosing Lokoja as my case study. Chapter one of this project work look at the background as well as the problems associated with the generation of such revenue, of general problem (hypothesis). Chapter two of this project work dwell on literature review i.e, reviewing the related books consulted in the course of writing this project work. Chapter three ideals with research methodology, during the research work, the researcher used personal interview, documentation and questionnaire method for sourcing information. It is important to note that both the Junior and Senior Staff of the local government were interview, one hundred and fifty questionnaire were administered but only hundred were fill and returned to he researcher. Chapter four, talks on data analysis and presentation. It is very vital to analyze data collected, during the course of this project work to enable the researcher test his hypothesis, these hypothesis are: Ho: That revenue generation cannot bring development to the local government level. Hi: That revenue generation can bring about development to the local government level. Ho: Internally generated revenue if well harnessed cannot be of great contribution to the local government in the state. Hi: Internally generated revenue it well harnessed can be of great contribution to the local government in the state. After through analysis of data collected, it was established revenue generation could bring about development in local government level, it will harnessed. Thereby accepting the positive hypothesis. Chapter five bealt with summary conclusion and recommendation of this project work.

CHAPTER ONE

1.1 INTRODUCTION

Before the coming of European to African continent, there has been system of revenue generation, which has existed within the various villages and communities according to laid-down principles and cultural ways and regulations governing the generation of revenue. This system is usually guided by the community heads within the community set up or entrust to the clan leaders as it may be delegated.

It is understood that the term “revenue” was referred to as tribute being gathered or given from various clan heads that made up the community within a particular environment or geographical demarcation that normally make up a political location.

As already mentioned, during the pre-colonial days the leaders of communities generated their tributes in order to enhance the mode of administration whereby the proceeds collected will serve as a sources use in catering for the welfare of the citizens through stabilization functions.

As time went on western civilization started to crop into the content of Africa with the western ideology of administration introduced to Africa. This introduction gave way to the partition of Africa among Britain i.e colonialism, during this era the colonial master introduce the payment of tax as a means of generating “revenue” for the running of the government and other administrative and economic purpose.

1.2 BACKGROUND OF THE STUDY

The importance of finance and its efficient management in the activities of an local government is of utmost importance this is summed up in the words of Nwanko by saying “finance and it good management are the bed rock of any successful provision of social and welfare services at the third tier level of government. Availability of adequate fund, coupled with efficient financial management constitute the require catalyst necessary for timely execution and completion of special welfare project at the third tier level of government in Nigeria. Meanwhile, Local Government, like any other institution of government, has its own structure, functions and responsibilities. These include financial structure that helps the local government to maintain its system and also to carry out its responsibilities to the people.

Therefore, just as finance is central to other institutions the same thing applies to local governments areas in Kogi State.

It is in the light of the above that this research work attempts to shed light on the financial structure of local government areas in Kogi State. This would include. The source of local government revenue, problems and prospects of revenue generation in local government areas of Kogi State.

The federal government control the better parts of Nigeria resources say Okolie and Eze in their words the sharing of the national revenue is done by the apex government which determine what goes to the state and local government. This form of relationship is unequal as the federal government always allocates to itself more money than it does to other tier. This is the more reason why local government areas should try and generate their own revenue for their usage and this research work will give an insight on the way problem and prospect, in generating revenue and as well as overcoming the problems.

 1.3  STATEMENT OF THE PROBLEM

For any local government to excel in its primary function of providing essential service to the people of her locality there is no doubt that she needs a sustainable revenue generation, this, various, local governments in Kogi State have tried to achieve. However, the performance of many local government in Kogi State is Vis-à-vis their income generation is not exception in this respect. Observation across local government areas in Kogi State show the local government areas have not live up to expectation in providing social amenities and essential service to the people. Linked to this is the internal revenue generation of the local governments in Kogi State which is not properly co-ordinated. It is for this reason that this research is being proposed or deigned to address the following:

• What are the sources of revenue generation in local government areas of Kogi State.
• Why is revenue generation in Kogi State Local Government Areas is poor.
• How can revenue generation be improved in Local Government areas of Kogi State.

1.4 SIGNIFICANCE OF THE STUDY

This study is very important because, it will serve as an invaluable material for Lokoja Local Government to identify their various sources of revenue generation. Scholars and student with similar research could also use findings of the study for comparative analysis or for furthering their research work.

The study could also enable local government to tackle their numerous problems that hinder smooth generation of revenue.

1.5 PURPOSE OF THE STUDY

This study is to:

1.     Determine, the effort of Lokoja Local Government venue generation.

2.     Investigate, the various sources of revenue to local government.

3.     To explain the problem involved in each source of revenue

4.     Proffer possible solutions to the problems base on findings and factual analysis.

5.     Discover the proper and wrong practice in revenue generation1.6

1.6 RESEARCH HYPOTHESIS

The research will test the following hypothesis as follows:

HO: That revenue generation cannot bring about development in the local government level.

HI: That revenue generation can bring about development at the local government level.

HO: Internally generated revenue if harnessed cannot be of great contribution to local government areas in the state.

HI: Internally generated revenue it harnessed can be of great contribution to local governments areas in the state.

1.7 SCOPE OR DELIMITATION OF THE STUDY

This research topic is supposed to be a general topic not only for Lokoja local government but due to inadequate resources in accessing other local government in Kogi State to get needed fact about their source of income this research is thus restricted to Lokoja Local Government.

Even at state and federal level, they have their various source of income, their peculiar prospects and problems, so the research will be restricted to the problems and prospects of revenue generation in the afore-mentioned local government areas.

 1.8 LIMITATION AND CONSTRAINTS

Lokoja Local Government is the one of the widest and highly populated local government area in Kogi State. This has caused some transportation problems in reaching some of the districts, the mobile park, the market and some other places where the needed data could be collected.

But due to the fact that they are scattered all over the districts, the researcher could not go round the areas.

There are also some vital information which many think is secret or kept under secrecy and were not made available for this research work because those information were not released to the researcher.

The unco-operating attitudes of some local government officers and staffs did not in any way help matter as they often find one excuses or the other to avoid question. They do not want to entertain any question.

1.9 DEFINITION OF TERMS

1.     Revenue: This is an income, the total annual income of the local, state and federal government within a particular period of time.

2.     Tax: A tax can be defined as a compulsory levy or contribution imposed by the government on individuals, cooperate bodies as well as goods and services.

3.     Tax evasion: This is an act perpetrated by a tax-payer by seeking to reduce his/her tax liability through illegal means.

4.     Tax avoidance: This on the other hand is an effort on the part of the tax payer to take advantage of legal loopholes so as to reduce his/her liability. Tax avoidance is an illegal act.

5.     Tax-payers: These are the person, company or cooperate bodies which are expected by law to pay tax.

6.     Rating system: This involves government giving out it’s assets from time to time base on the annual rent and allocation of the building.

7.     Grants: This is one of the main source of local government revenue, this could be income from government and international bodies like the world Bank, the United Nation Development project (UNDP) and so on.

8.     Rents and Royalities: This refers to money paid by mining companies for land on which mining activities are carried out.

9.     Subsidies: This is another way by which the federal government fund the local governments i.e through reducing and lowering rent of housing and other capital intensive property for local government area.

10.                        Recurrent Expenditure: This is the money spends on day to day activities of the government like, repairs, payment of salaries, wages and interest on public debts.

11.                        Capital expenditure: This is the money spend on durable project by government on yearly base. Like medical and health facilities, Roads market etc.

12.                        Licenses: This is the right giving to a person, showing he is legally qualify to own a bicycle, cars, and all non mechanical devices.

13.                        Statutory allocation: This is the money given to the local government as a share of either specific items or the totality of national drives revenue.

Local Government: This is the government at the grassroots level, the lower level of government in unitary political setup and lowest level of government in a federal system of government.