THE IMPACT OF REVENUE ALLOCATION ON LOCAL GOVERNMENT PERFORMANCE

THE IMPACT OF REVENUE ALLOCATION ON LOCAL GOVERNMENT PERFORMANCE

(A CASE STUDY OF OFU LOCAL GOVERNMENT AREA)

CHAPTER ONE

INTRODUCTION

 

1.0   BACKGROUND OF THE STUDY

Revenue allocation is one of the very crucial issue in heterogeneous political entity like Nigeria and especially when there is uneven distribution of natural resources (Aiyede 2004), as a matter of fact, revenue allocation has generated a lot of controversy in Nigeria than any other issues of government.

Most time tension has always characterized the process of distributing the states resources because various criteria where proposal had adopted, there is hardly any without advantages, but most contentious issues is the weight to be attached to the criteria that would be acceptable to the generality of Nigerians.

Resources do not naturally spread in even proportion on the plant, while some areas there are abundantly blessed with a particular resources; other places are endowed with another resources while other places have no resources.

In Nigeria to co-exist as a nation, all the segment must have fair share of the revenue generated from those resources.

However, the reality of a wider geo-political power governing differently endowed entities under a unit means that there will be subjections of all resources wider the single authority of a central government.

An equitable way must be found to distribute the resources without marginalizing any section of the federal system where each federating unit is expected to have reasonable to the available centrally collected resources (Toluhi, 2009).

There is no gain saying the fact that in Nigeria, the degree of decentralization of expenditure is higher than the degree of decentralization of revenue among the three tiers of governments.

According to Akindele (2002), the present formular for revenue has favoured the federal and state governments while the local government is at disadvantage in terms of what come to them on monthly basis as their allocation, hence, local government expenditure has constantly surpassed the potential for revenue occurring to it thereby causing a great gulf between their need and fiscal capacity.

Since independent, almost all the constitution making process has sought information on what principle to utilize for fair distribution of revenue, yet no one seems to have favoured the local governments.

Since this problem has persisted, how the issue of revenue that is coming to the local government has impacted in its development is the pre-occupation of this research work using Ofu local government as a case study.

1.1   STATEMENT OF THE PROBLEM

Local government are created to take development closer to the people, because transformation of the local government will spread up the transformation of the country.

Although, the agitation for more funds to the local government is still ongoing, how the review of revenue allocation formula will be is not yet known.

The following research problems are to be addressed in the course of this work.

• Local government allocation comes through the state government account that means the local government is not financially independent.
• The federal and state always temper with allocation meant for the local government.
• Local government have political god fathers which the chairman gives some illegal percentage to on monthly basis from the federation account or allocation
• The present revenue allocation formula has practically not favoured the local governments.
• The federal government seems to have wielded too much power over the formula used in sharing ‘’National Cake’’ which revenue allocation.

1.2   RESEARCH QUESTION

Research questions have to be formulated to probe into certain areas to bring out facts and figures for the realization of the aim of this work. Therefore, the following research questions are formulated.

• What is the philosophy behind the formula they are using in revenue allocation
• What are the factor that impedes revenue allocation formula in favour of the local government?
• Is there prospects that revenue allocation will favour the local government in the due course

1.3   OBJECTIVES OF THE STUDY

This research work is not just a mere academic exercise but is geared towards actualizing the following objectives:

1. To examine how the politics involved in revenue allocation has affected local government as the third tiers of government
2. To assess the performance of the local government in view of the revenue accrued
3. Examine the effort of government in ensuring that the teething problems of revenue allocation is resolved.
4. To examine some internal problem in the local government that hampers their development.
5. To recommend necessary measures that will help in maintaining equilibrium in the distribution of revenue among the three tiers of government.

1.4   SIGNIFICANCE OF THE STUDY

This study is significant in diverse ways most especially in the following areas:

1. This study helps the readers to gain deep insight into the politics surrounding revenue allocation in Nigeria.
2. It will encourage the federal government to close rank with the state and local government in revenue sharing agitation.
3. The policy makers will find research work valuable to make policy in revenue allocation matters.
4. The recommendations of this research work will certainly be an impetus that provoke further research into the politics or revenue allocation in Nigeria.

1.5   SCOPE AND LIMITATIONS OF THE STUDY

The issue of revenue allocation is very fatal to the economic and political development of Nigeria. But is narrowed down to the local government. In this project work would not delue into comparing the allocation of revenue to any other local governments with the one in discuss, rather it concentrates on what the Ofu local government gets and how it has helped in their development from 2009 till date.

However, research of this magnitude may not devoid to hindrance (limitations). Some limitations encountered are explained thus:.

Data in relation to what comes to the local government in terms of revenue allocation so that the researcher can compare it with the actual development on ground were not fully available.

Time was another impediment, attending lectures and assignments made the researcher too occupied to concentrate on project work

Also, the expiration of tenure of the council chairman made it difficult to access some useful material.

Some staff are reshuffled and those on the new seats were not able to give accurate figure of what has been coming to them as allocation before their taking over.

Lastly, this research work has a time frame, which must be met.

Rushing to ensure that necessary ingredients are embedded in the research made researcher to ignore some sources that would have been improved.

Not withstanding, the data and information generated from the various sources is enough to finish this work to the best of the knowledge of the researcher.

1.6   DEFINITION OF TERMS

Some terms were used which the researcher may not be familiar with such words or terms are hereby defined:

REVENUE ALLOCATION: According to Toluhi (2000) revenue allocation is the process of sharing the revenue accruing to a nation among the different constituent units or tiers of government.

LOCAL GOVERNMENT: Local government according to Toluhi (2010) is a units of governments below the central, regional or state government established by law to exercise political authority through a representative council.

INTER-GOVERNMENTAL RELATIONS: Is a system of transactions (behavior patterns) among managers of hierarchically structured levels of government in statement in state. Olugbenga (1980) in Nwosu (2003).

INTERNALLY GENERATED REVENUE: This is the type of revenue that is generated by the local government within that same local government.

DEVELOPMENT: According to Todaro and Smith (2002) in Onje (2010) is the process of improving the quality all human life. These qualities include raising people living level of food, medical services, and education etc.

RESOURCES: A country’s means of supporting itself as represented by its minerals, land and other assets.

1.7   ORGANIZATION OF WORK

This project work is on the impact of revenue allocation on the local government performance in Kogi State with a particular reference to Ofu local government area of Kogi State and is divided into five chapters.

Chapter one is the introductory part that gives the general background information of the topic in discourse the statement of the problem, the objectives of the study, the significance of the study, scope and limitations of the study as well as the definition of terms were all embedded there in.

Chapter two reviews the relevant literature, thought this is the view of the earlier writers on the sub topics were brought to bare.

Chapter three discussed the methodology use in carrying out the research work. Research design, research population, sampling size and techniques, method of data collection, instruments of data analysis, limitations of methodology as well as method of data analysis.

Chapter four discusses data presentation and analysis and analyze that the data generated through the use of questionnaire, eventually, the finding were extensively discussed.

Chapter five is the last chapter which includes summary, of the work done, conclusion made and necessary recommendations were made for equilibrium to be maintained in the impact of politics of revenue allocation in Nigeria.

REFERENCES

Aiyede R. (2004)       Inter-Governmental Relations: Strengthening of the Nigeria Federation. University of Ibadan Press.

Akindele, T.A. (2002), Federation and Political Restructuring in Nigeria. Ibadan Spectrum Books Limited.

Nwosu W.C. (2003), Critical Assessment of State Local Government Relations in Nigeria and Imo State Case Studies in Ofuebe C.(ed) Strand in Nigeria Development and Administration. Enugu Fume Printing and Publishing Company.

Onje C.O. (2010), AND Insight into Management of Development; Lokoja JHL Nigeria Limited.

Toluhi J.O. (2010) Local Government Administration: A Nigeria and Imperative Perspectives: Ilorin Victory Publication.