THE IMPACT OF REVENUE GENERATION IN LOCAL GOVERNMENT ADMINISTRATION IN NIGERIA

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THE IMPACT OF REVENUE GENERATION IN LOCAL GOVERNMENT ADMINISTRATION IN NIGERIA

(A CASE STUDY OF TOTO LOCAL GOVERNMENT OF NASARAWA STATE)

CHAPTER ONE

INTRODUCTION

1.1     Background of the Study

Local government is recognized by the 1999 constitution of the Federal Republic of Nigeria as the third tier of government within the tripartite federal structure of governance in Nigeria, with the state and federal government as the super ordinate government. The government in Nigeria which exists at tripartite arrangement (federal, state and local government) plays complimentary roles to each other to meet the needs of the people which include infrastructural facilities (Okpata 2004).

Furthermore, local government is seen as a public sector organization, the third tier government with assigned functions and responsibilities, administrative structure and financial management both for maintaining itself and rendering it’s statutory assigned functions to it’s citizens (Uguru 2011). Local government authorities as a third tier of government in Nigeria are very important in the execution of both central and component government policies and programmes. It is the nearest government that deals with the problems of the masses of the country, especially the grassroots.

One area which has remained neglected over time by the local governments in Nigeria is revenue generation. The usual practice in this country (Nigeria) is that political parties and individual candidates often make promises to the electorate during electioneering campaigns without being explicit on how they intend to finance such programmes. In line with this practice, candidates seeking political offices often promise vote-catching programmes with scarcely any attention to the question of funding (Fajobi, 2010). The result is that ordinary citizens may witness very little government activities and the impact of the government will be felt in almost all sphere. This may lead to disappointment. It is quite obvious that very little thought, if any, is given to how funds were to be generated to implement the various programmes promised to the electorates.

Local governments across the country are particularly guilty in this respect. Chairmen complain of their inability to meet their wage bills with the current level of the local government finances. Chief executive often tries without success to slash the wages of their workers while others may resort to staff retrenchment in order to save money to implement programmes.

Fajobi (2010) argued that the acute dearth of fund currently facing the local government could be squarely attributed to lack of creativity on the part of the local government in seeking alternative sources to complement the allocation from the Federation Account. Most local governments are suffering from hang-over of overdependence on the centre for assistance, a norm during the military governance. They are yet to break away from the practice of relying almost entirely on extension from the Federal Government. The federal government, in turn also depends entirely on revenue from oil and its apportionment of the lion’s share of the Federation Account to itself. Local government will continue to be one of the prime institutional movers of development in Nigeria and their importance and impact on the daily life of citizens cannot be over-emphasized. People are intimately affected by the activities of local government on a day to-day basis and Nigeria, in particular, local governments, have historically provided services of importance to citizens, literally from cradle to grave. The standard of living of Nigerians either in rural or urban areas are inevitably affected by local government activities through the provision or non provision of basic services such as water supply, roads, health and educational services etc. Local governments also remain the focal point of promotion of development and cultural revival through community development projects and mobilization of human and material resources for developments. It is on the basis on the foregoing that this study will be focused on the impact of revenue generation in local government administration in Nigeria: a case study of Toto Local Government of Nasarawa State.

1.2     Statement of the Problem

Obviously, the internally generated revenue in Nigeria Local Government is far below expectation. It has become imperative to diversify areas of revenue generation especially with the dwindling federation allocation which has been the major sources of revenue to the local government. Since inadequate revenue remains one of the devastating challenges hindering effective local government administration in the country, it then necessitated the general outcry by the administrators (chairmen) of local government for a change in Revenue Allocation Formula or strategies for improving revenue generation in the development of their respective local government areas.

Again, the problem of seeing local governments as a mere appendage to the state and federal government financially has beclouded the patriotic and entrepreneurship psyches of local government administrators, hence most local government tilted financially to the federal government for monthly statutory allocation from the federation account. This problem of economic and financial overdependence of the local government in Nigeria is devastating, uncalled for and against the motives for the creation of local government as the third tier. Furthermore, the inability of the local administrators to use in-sourcing techniques for funds to finance the council through internally generated revenue is a thorn in the flesh of meeting up their constitutional responsibilities such as the provision and maintenance of social services (education and health care) payment of the worker’s salary and so have given rise to whether to scrap or restructure local government systems in Nigeria. It is in line with the above problematic scenario that this research is motivated to carry out an empirical analysis on the impact of revenue generation in local government administration in Nigeria with particular reference to Toto local government area of Nasarawa state.

1.3     Objectives of the Study

The broad objective of this study is to examine the impact of revenue generation in local government administration in Nigeria: A case study of Toto Local Government Area of Nasarawa State. Hence; the following specific objectives will be actualized:

1. To identify the source of revenue for local government administration in Nigeria.
2. To ascertain the various challenges surrounding revenue generation for development in Toto Local Government of Nasarawa State.
3. To evaluate the impact of revenue generation on the development of Toto Local Government Area of Nasarawa State.

1.4     Research Questions

In line with the objectives of the study, the following research questions will pilot the study:

1. What are the various source of revenue for local government administration in Nigeria?
2. What are the challenges of revenue generation for development in Toto Local Government of Nasarawa State?
3. What are the impact of revenue generation on the development of Toto Local Government Area of Nasarawa State.

1.5     Significance of the Study

The primary importance of this study is that it examine the impact of revenue generation in local government administration in Nigeria with particular references to Toto Local government of Nasarawa State. This will in essence be of great significance to local government administrators, students of public administration and other related departments, other researchers, the state and federal government as strategy can be replicated.

1.6     Scope of the Study

The focus of this study is to examine the impact of revenue generation in Local Government Administration in Nigeria with particular reference to Toto Local Government Area of Nasarawa State.

1.7 Limitations of the Study

This research admits its short-comings or limitations. It is a mark of intellectual honesty to admit that limitations did exist in a research undertaking and to give an account of the way they have been manifested and taken care of. This will enable future investigators to have an idea of what militating factors to look out for and possibly to take care of them. The basic limitations of the study are: financial inadequacies, time factor, the uncooperative attitude of some respondents and scanty resource materials on the subject under investigation.

Finance: Limitation of financial resources, coupled with other pressing personal demands militated against the researcher’s efforts to cover a wider geographical area. The researcher had to spend so much to download materials from the internet. This was however ameliorated through parental assistance and the adoption of cost saving techniques during the course of the study.

Time Factor: Time lag was also a major constraint because the research was carried out within a given time-frame. This work was carried out in an environment where the researcher had to battle with lectures, assignments, class work and sourcing for materials for the study. However, the researcher made tremendous efforts to cover adequate issues in order to give value to the findings of the study.

Uncooperative Attitude of Some Respondents: In the course of carrying out this study, some respondents were reluctant to accept and fill their questionnaire. However, the researcher discovered that their main purpose for being reluctant was because of fear of private information disclosure. The researcher however convinced them that every information will be treated with the highest level of privacy.

Scanty Resources Materials: One of the major hindrances of the study was scanty materials on the strategies of increasing and improving revenue generation for development. Very few journals, government and newspapers publications exist. Hence, the researcher resorted to the available publications and content analysis in order to beef up the content of the work.

1.8     Operational Definition of Terms

Local Government: This is defined as Government at the local level exercised through representative council established by law to exercise specific powers within defined areas.

Revenue: In the context of this study, revenue is defined as the fund required by the government to finance its activities.

Strategy: In this study, this is defined as a systematic proposed way to achieve a particular aim or objective.

Development: This is defined as the multidimensional expansion in the economic, political and behavioral attitudes of a particular community, state or country.

Internally Generated Revenue: This refers to the revenue or money collected by the local government from its internal sources (within the Local Government Area). The internal sources of revenue comprise many major and miscellaneous items aggregated to provide the required fund for financing the enormous functions ascribed to local government as third tier of government.