Assessment Of Revenue Generation And Service Delivery

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Assessment Of Revenue Generation And Service Delivery


Abstract


Every local government in Nigeria desires quality service delivery as it is pertinent to the sustainability of grassroots development. The fundamental factor in achieving quality services, are adequate and reliable of the revenue sources as well as quality human resources that will serve as instrument for formulation and implementation of local government financial resources. This study assessed revenue generation and service delivery in Nigeria, a study of Abuja Municipal and Abaji Area Councils of Federal Capital Territory from 2008 -2013; arising as a result of low service delivery in Abaji specifically in health care and environmental sanitation services. The objective of the study is to make comparative assessment of actual revenue generated by the two area councils and how the revenue sources have affected service delivery. For methodology of the study, questionnaires were administered to sample beneficiaries; oral interviews for selected Heads of Department (Account, Health and Sanitation) and non-participative observation were used to collect primary data.

The secondary data were collected through published academic journals, council‟s document (quantitative data), published and unpublished masters thesis. However, the study found that Abuja Municipal and Abaji area councils have disparity in revenue sources, qualitative and quantitative service delivery as a result of level and access to fund generation in Abuja Municipal. Consequently, the study recommended among others that; in achieving level of funding for quality service delivery in Abaji area council as expected by the beneficiaries, the Federal Capital Territory Administration (FCTA) should increase the statutory allocation of Abaji area council, to enable the council improve on its socio-economic service delivery for encouraging taxpayer and attract other investors for commercial purposes. This will also serve as an avenue of boosting the IGR and increase quality and quantity service delivery in Abaji area council of Federal capital Territory.


Chapter One


Introduction

1.1 Background to the Study

In 1954, Nigeria adopted the Federal System of Government, which essentially shared the responsibility for service delivery among the three levels of government in an intergovernmental public arrangement. Basic government services such as agriculture support and irrigation, rural roads, health service, sanitary activities and primary education among others, were placed in the hands of lower level government, which then enables the community to be participative members of the society. The ability or capacity of local government to deliver sustainable public services depend on the level to which authority, functions, and financial resources are transferred or given to them vis a vis the scope and weight of their responsibilities. This is referred to as decentralization of authority for public services. The process of decentralizing authority, involves the process of deconcentration and devolution of services.

“Decentralization” is the transfer of authority and responsibility for public services, from the central government to intermediate and local governments or quasi-independent government organizations. The process of decentralization involves, within an appropriate legal framework of political, administrative and fiscal decentralization. Besides, the three components (political, administrative and fiscal decentralization) vary from unitary system of government to federal system of government. Consequently, when administrative decentralization is predominant, the situation has a bias towards deconcentration, or when all the three components are present, we have a state of devolution (Berlin 2009:26).

Deconcentration, is the redistribution of decision making authority, finances and management of responsibilities among administrative agencies of the central government. To those in the Regions, Provinces or Local Government, are under supervision of the central government. Whereas, devolution is the transfer of functions, authority and responsibility for services to Regions/local government to elect her representative, raise funds and have independent authority to make investment decision. This is to say, when governments devolve functions, they transfer authority for decision-making, finance, and management to quasi-autonomous units of local government. In a devolved system of government, local governments have clear and legally recognized geographical boundaries over which they exercise authority and within which they perform pubic functions.

The types of decentralization through the process of deconcentration or devolution represent, different ways of organizing the public sector service delivery. However, the effectiveness of local government in providing public services does not depend on either deconcentration or devolved forms of decentralization per se, but rather on the degree of internal control and/or autonomy enjoyed by the local government authority. But devolution is embedded in the overall political culture of the country and a good understanding of the system in operation, helps to also understand the flow of funds in discharging public services. In a unitary system of government, having strong desire for centralization tends to run decentralization by deconcentration. Countries like France, England and China etc. Contrary to this, Federal system of government provides decentralization by devolution system. In such system, levels of government are supposed to facilitate the functions, finances and development oriented local governments. Examples of countries with federal system of government includes among others, United State of America, Germany and Nigeria. The governments that practice devolution are more likely to discharge public responsibilities than those governments practicing deconcentration. Because, deconcentration is often considered as being the centralizing of public services.

The Constitution of the Federal government of Nigeria, decentralizes public services among three tiers of government. For the Local governments tier, their public functions are set out in the Fourth Schedule of the 1999 Constitution. This system empowers local government to elect their chairmen, raise financial resources and have independent authority to make investment decisions Thus, the Model Financial Memoranda of (2009:81-85) entails sources of revenue to cope with the local governments‟ responsibility and demand of the people. The Financial Memoranda stipulates the generation and proper management of funds so as to achieve the responsibility of local government in terms of service delivery to the people.

In spite of decentralization by devolution of functions, local governments in developing countries specifically in Nigeria are faced with obstacles to enhance public service delivery to citizens. The political and fiscal decentralization of local government autonomy in Nigeria is a myth not a reality of decentralization by devolution structure in the views of (Usman2008, Agba 2013 and Odoh 2014). The challenge of local government devolution has been an obstacle, to sustainable public services expected from Abuja Municipal Area Council (AMAC) and Abaji Area Council such as: rural roads, health services, sanitary activities and primary basic education etc.


1.2 Statement of the Research Problem

The provision of public services by the government, through the process of decentralization is a necessity for community development. Moreover, the necessity for good health and conducive environment is a resource for everyday life of citizen. This is often influenced by the state of environment and health services provided. Section 20 of 1999 Constitution of the Federal Republic of Nigeria provides for quality health and environment as a fundamental right of all Nigerian citizens. “The State shall protect and improve the environment and safeguard the water, air and land, forest and wild life of Nigeria”. Also, in the Fourth Schedule of the same Constitution, there are functions of local government council among which is the provision of health service and environmental sanitation.
Regrettably, the rural population is seriously underserved when compared with their urban counterpart. Federal Capital Territory (FCT) is a planned city, developed by International Planning Associates (IPA), a consortium of three American firms. The effort is to make FCT one of the most attractive capital territories in the world, through improvement of infrastructure and provision of quality social services to the inhabitants (www.fcda.gov.ng). The environment that engenders good health is being hampered by lack of effective sanitation system such as poor drainages, inadequate refuse disposal and open defecation. Currently, the city is faced with myriad of challenges characterized by unhygienic conditions. Garki village remains one of the unpleasant areas in the Federal Capital Territory (FCT) despite its proximity to some highbrow areas like Asokoro, Garki 2, Area 3 and Area 11. A first time visitor to the village would be welcomed by offensive odour oozing out of gutters, make-shift toilets and other outlets that have suffered prolonged neglect by sanitary authorities (National Mirror Newspaper, February 15, 2013:10).

Services in Abuja Municipal Area Council (AMAC), an urban area, and in Abaji Area Council, a rural area, are incomparable. Observation from the road networks, health services, electrification and pipe born water, sanitary activities, primary education and other socio-economic activities are in low ebb compared to that of the urban centres environment. However, the 2006 population census of AMAC stood at (776,298), while Abaji had over (46,600). With such a sizable population in Abaji Area Council, it is expected to be served with quality services more than any other area council within the Federal Capital Territory from the accruing sources of revenue to the council (internal and external sources of revenue). But this is contrary to what is obtaining in reality and has affected the well-being of the community. Any community with poor service delivery, no doubt affects the socio-economic development of the community, increase rural-urban migration and a reduction of the municipal internally generated revenue (IGR). Thus, understanding the factors responsible for the variations in service delivery between AMAC and Abaji Area Council of Federal Capital Territory becomes imperative. Therefore, this research attempts to provide answers to the following pertinent questions.


1.3 Research Questions

  1. What is the level of funding and how does it affect the quality of service delivery in Abuja Municipal and Abaji Area Councils of Nigeria‟s Federal Capital Territory?
  2. What are the sources of revenue and how has that affected the quality of service delivery in Abuja Municipal and Abaji Area Councils of Federal Capital Territory?
  3. What are the obstacles to effective revenue generation and service delivery in Abuja Municipal and Abaji Area Councils of Federal Capital Territory?
  4. What can be done to improve revenue generation and service delivery in Abuja Municipal and Abaji Area Councils of Federal Capital Territory?

1.4 Objectives of the Study

The main objective of this study is to make a comparative assessment of impact of revenue generation and service delivery in Abuja Municipal and Abaji Area Council of Federal Capital Territory.

Specific objectives of this study to:

  1. Examine level of funding and how it has affected the quality of service delivery in Abuja Municipal and Abaji Area Councils of Nigeria‟s Federal Capital Territory.
  2. Determine the sources of revenue generation and its effect on the quality of service delivery in Abuja Municipal and Abaji Area Councils of Federal Capital Territory.
  3. Identify the obstacles to effective revenue generation and service delivery in Abuja Municipal and Abaji Area Council of Federal Capital Territory.
  4. To determine and recommend ways for improving revenue generation and service delivery in Abuja Municipal and Abaji Area Councils.

1.5 Research Hypotheses

  1. H0: There is no significant relationship between the level of funding and quality of service delivery in Abuja Municipal and Abaji Area Councils of Federal Capital Territory.
    H1: There is a significant relationship between the level of funding and quality of service delivery in Abuja Municipal and Abaji Area Councils of Federal Capital Territory.
  2. H20: There is no significant relationship between the sources and quality of service delivery between Abuja Municipal and Abaji Area Councils of Federal Capital Territory.
    H21: There is a significant relationship between the sources and quality of service delivery between Abuja Municipal and Abaji Area Councils of Federal Capital Territory.

1.6 Significance of the Study

The study is significant because adequate/quality service delivery is an engine life of a viable local government, to meet the needs of the community. It also allows the community people to be productive members of the society by paying their taxes and supporting governmental projects. In essence, availability and quality services delivery to the people enhances the ability for socio-economic development, check rural-urban migration and ensure integration of council areas into national development.

A careful study of this research is a solution to the obstacles of revenue generation and service delivery in Nigerian local government specifically, in Abuja Municipal and Abaji Area Councils of Federal Capital Territory of Nigeria. Many authors have written on local government and its role in rural/urban development (Ajaegbu 2000, Ibrahim 2011 and Muhammed 2012). Others concentrated on general problems affecting local government services (Abdulraheem 2012 and Agba 2013). Some limited their studies to issues on rural development and problems affecting local government in Nigeria (Akindele 2002 and Pavini 2009). But very few focused on issues of revenue generation and service delivery (Usman 2008, Akwara 2013 and Odoh 2014).

This study is significant as it focused on revenue sources and level of funding in relation to service delivery in Abuja Municipal and Abaji Area Councils of Federal Capital Territory, Nigeria. This is the knowledge-gap that the study intends to cover.


1.7 Scope and Limitations of the Study

Abuja Municipal Area Council (AMAC), an urban area and Abaji Area Council, a rural area of Federal Capital Territory of Nigeria are chosen as the scope of study for this research. This is to make a comparative study of revenue generation and service delivery between urban and rural area councils. The justification for the timeframe 2008-2013, was as a result of increases in Nigeria local government revenue to enhance local government services. To what extent has the revenue sources affected service delivery in AMAC and Abaji area councils?

Specifically, the study examined internal and external sources of revenue generation and aspects of the services delivery such as: Primary Health Care (PHC) and environmental sanitation services of both municipals. The researcher decided to use the two area councils for this study because physically, the pace and level of positive transformation in Abuja Municipal is high to compare with any other area council within the Federal Capital Territory. Moreover, limitation of the study was having access to secondary data in Abaji area council, interview with the chairmen of AMAC and Abaji Area Councils and financial constraint to carry out the study. 10


1.8 Definition of Concepts

The definition of key words in this study is very important for further understanding of the variables stated in the hypotheses. These definitions are conceptualized and operationalized as what the researcher meant in this study.
Revenue Sources: Operationally, revenue sources are all monetary receipt accruing to local government from statutory allocation, grant-in-aid, loan from government or financial institutions, and internal generated sources within a specific period of time. Revenue serves as the livewire for any institutions/organization including local government administration to survive.

Adenugba and Chike (2013:6) define revenue sources as the funds required by the government to finance its activities. These funds are generated from different sources such as taxes, borrowing, fines, fees and statutory etc. Therefore, revenue sources are the total amount of income that accrues to organization (public or private) within a specific period of time.

Level of Funding:

It is the sufficiency, availability and sustainability of financial resources provided by the federal and state governments, in the provision of local government services such as; health care, rural roads, boreholes, electricity etc that are satisfactory or acceptable by the community.

Service Delivery:

It is the constitutional responsibility of local government to the people in providing the following services; primary health care, quality education, environmental sanitation, rural electrification, pipe borne water, rural roads, economic and social services etc. The provision of these services to the community helps to enhance the living standard of the people; based on the context of this study health care and environmental sanitation services are given below:

Health Care:

Is an organised provision of medical care to individual or a community. According to Remeset al., (1991:54) health care is an act of taking preventive or necessary medical procedures to improve a person‟s well-being. This may be done with surgery, the administering of medicine, or other alternative in a person’s lifestyle. These services are typically offered through a health care system made up of hospitals and physicians.

Environmental Sanitation:

Operationally, environmental sanitation is the functional unit of health care facility. It has the responsibility for laundry liquid and solid waste control, safe disposal of garbage, general maintenance of safety and housekeeping of the environment.

Quality Services:

This is the difference between people’s expectation and actual services provided by the local government councils. In every service provision there are expected standard, falling below the standard will be regarded as low quality services.

Area Council:

It is equivalent to local government areas in other parts of the state in Nigeria, saddled with the provision of community needs at the grassroot level. It is called Area Council in Abuja being the Federal Capital of Nigeria (Abuja Municipal Area Council and Abaji Area Council). 12


Chapter Five


Summary, Conclusion and Recommendation

5.1 Introduction

It is important to reiterate that the objective of this study was to assess the revenue generation and service delivery in Abuja Municipal Area Council.

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given.

In this chapter, certain recommendations are made which in the opinion of the researcher are drawn from the findings of the study.


5.2 Summary

This study was set out to assess revenue generation and service delivery in Abuja Municipal Area Council and Abaji Area Council of Federal Capital Territory, Nigeria. Seeing variation in health care and environmental sanitation services provided by the councils, Abaji area council a rural area services are at low ebb when compared with Abuja Municipal Area Council (AMAC) an urban centre. The study tries to understand factors responsible for this variation either level of funding or the council’s revenue sources are responsible for the differences. In achieving this objective, the study assessed sources of revenue generation i.e. external and the viability of internal revenue stated in financial memoranda for local government finances and how it has affected health care and environmental sanitation services, specifically in AMAC and Abaji Area Councils from 2008 – 2013. For aiding the research study, literature on revenue sources and service delivery are reviewed, empirical studies of the relationship between the three tiers of governments (Federal, State and Local Government) revenue sources specifically local government in provisions of the constitutional responsibilities stated in the Fourth Schedule of 1999 Constitution of Federal Republic of Nigeria was also reviewed. Thus, the research is guided by theoretical framework of the theories of local government by Gboyega (1987).

The research methodology, for this study was collected from primary and secondary sources of data with the used of questionnaires, interviews, academic journals and articles, published and unpublished masters‟ theses. Abuja Municipal Area Council and Abaji Area Council are clustered into three communities due to the large population size of the councils for questionnaire administration. Interviewed was also purposively conducted with selected heads of department to comprehend the responses of questionnaire to sample respondents of the study and observation of the selected services. Subsequently, the data was presented and analysed to enable the researcher test for hypothetical statement using chi-square statistical tools. However, the first hypothesis testing reviewed there is a significant relationship between the level of funding and quality service delivery, the second hypothesis also reviewed there is a significant relationship between the revenue sources and quality service delivery in AMAC and Abaji Area Council. On this ground, the major findings, summary, conclusion and recommendations of the study were drawn.


5.3 Conclusion

Nigeria operating federal system of government brought about the establishment of lower tiers of government to address public service delivery. The ability or capacity of local government to deliver sustainable public services depends on the level to which authority, functions, and financial resources are transferred or given to them vis a vis the scope and weight of their responsibilities. No doubt, finance is a prerequisite for the fulfilment of any organizational objectives, in line with the financial management as an aspect of administrative functions of planning and controlling the resources in providing public services as expected from government to the people.
From the two hypotheses, we accepted the alternate hypothesis stating there is a significant relationship between level of funding and revenue sources, in provision of quality service delivery between Abuja Municipal and Abaji area councils using the chi-square statistical tool.

Going by the statutory allocation and internally generated revenue of the two area councils in comparison, Abuja Municipal area council sources shows a wide discrepancy and the IGR are more viable to the rate at which the residents respond to taxes/levies and other charges in providing quality health cares and environmental services than Abaji area council where the residents are more disposed to the IGR.

Subsequently, Abuja Municipal Area Council statutory allocation percentage is greater than Abaji area council with the following percentages 63.74%, 77.49%, 42.42% and 65.12% respectively. In respect to the IGR, the percentages are 13.26%, 8.73%, 2.64% and 2.33% respectively.

Moreover, this is also in agreement with some literature reviewed perspectives of (Usman and Erunke 2012, Angahar 2013, Felix and Okonette 2013) the issue of inadequate funds in financing local government services, has remained endemic with all local government councils in the country. Since the 1976 constitution delineated a three tiered federal structure in which each tier, particularly the federal and state government has considerable jurisdiction to raise funds internally and also has large percentage from the federation account. The overview of local government revenue structure indicates that they heavily depend on statutory allocation for their survival since the internal revenue sources left within local government jurisdiction are insignificant to cope with their responsibilities as earlier stated in the Fourth Schedule of the 1999 Constitution of Nigeria. The revenue sources of the two area councils (AMAC and Abaji), reviewed a wide disparity in statutory allocation being the main source of funding council‟s service delivery to compared with the estimated statutory allocation.

In conclusion based on the data obtained, the researcher are therefore agree with the hypothesis testing using chi-square statistical tool of analysis, that there is a significant relationship between the level of funding and quality of service delivery for the first hypothesis, and there is a significant relationship between the revenue sources and quality of service delivery for the second hypothesis in Abuja Municipal and Abaji Area councils of Federal Capital Territory, Nigeria.


5.4 Recommendations

  1. In order to ensure adequacy of funding and quality service delivery, the study recommend that Federal Capital Territory Administration (FCDA) should improve the revenue base of Abaji area council, which has wide disparity in statutory allocation and IGR compared with Abuja Municipal Area Council (AMAC), by increasing its statutory allocation, to enable the area council offer quality service delivery. Also, the funds should be release on time to meet challenges of social service delivery to the resident of Abaji area council.
  2. Improving on adequate revenue generation of AMAC and Abaji Area councils has significant relationship on budgetary allocation to health and environmental sanitation department of both councils in the provision of quality service delivery. The study therefore recommend that AMAC and Abaji area councils should not depend so much on statutory allocation as their main source of revenue but create and explore other avenue of revenue sources (internally) as guided by the Model Financial Memoranda of (2009).
  3. To increase the funding of health care and environmental sanitation departments in AMAC and Abaji area councils is a function of its statutory and IGR funds. Since the councils has no control over the statutory allocation but subjected to National Assembly prescription. The study recommends that Abaji area council should improve on its socio-economic service delivery like health centres, public conveniences, maintenance of the environment and entertainment centres for relaxation etc. This will encourage taxpayers and tremendously increase the council IGR, and the multiplier effect can invariably increase population size and attract other investors for commercial purposes, as well as increase quality and quantity of service delivery.
  4. Improving revenue generation and service delivery in AMAC and Abaji area councils. The study recommends among the following for boosting the Internally Generated Revenue (IGR) sources. Commercial undertakings like ultra-modern markets (wuse, Utako, Garki and other central markets) located in AMAC should be left under the control and custody of AMAC rather than being taken over by the FCDA as found out from the study. Besides, both area councils (AMAC and Abaji) should construct more modern markets, shops and shopping centres at affordable prices for all categories of people residing in AMAC and Abaji. In addition, the FCDA can give area councils financial aid (loan) to start up. This will gradually improve the IGR base especially Abaji area council. Also, service delivery can be decentralised by encouraging private sector participation or public-private partnership venturing.

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