Challenges Of Effective Utilization Of Local Government Revenue In Nigeria (A Case Study Of Uyo LGA)

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Challenges Of Effective Utilization Of Local Government Revenue In Nigeria (A Case Study Of Uyo LGA)


Revenue generation is the nucleus and the path to modern development. Thus, this study was to assess the challenges of revenue generation and utilization in Local Government Areas. This is because local government as the third tier of government and the closest to the people especially in the rural areas needed revenue to provide basic social amenities to the people. But it is unfortunate to note that the local government management have not lived up to expectation especially to provide basic social amenities to the rural people. Thus, the objective of the research was to analyze the extent to which low revenue generation had affected the development of those areas. The researcher used primary and secondary methods of data collection to generate the needed data. The data obtained through questionnaire was presented in tables and expressed in simple percentages. The following were some of the findings which included slow development of the areas, lack of basic social amenities to the rural people and lack of revenue to maintain the existing infrastructures. The researcher therefore recommended that the local government should provide basic amenities of high quality. By doing so, the people’s interest would be geared towards giving their maximum support to the local government which would lead to the development of the rural area.

Chapter One


1.1 Background of the Study

Nigeria as a sovereign nation operates a federal system of government i.e the federal government, state government and the local government councils.

Onwo (1992) Observed that each level of the three tiers of government derive its powers not from the magnanimity of the central government but from the constitution; each level of government has defined responsibilities assigned to it by the constitution. The implication of this is that the three segments of governments are mutually interrelated in a unified effort to make life worth – while for the masses.

Uyo local government area was created out of Awgu local government in October 1996 by the late head of state General Sani Abacha. As one of the new local government councils, it is facing a very serious crisis of development since its creation. Some problems facing the council include: insufficient office accommodation, staff quarters and office infrastructures. These problems seem to be insurmountable.

Indigenes of the local government are desirous of enjoying modern facilities, improved means of transportation, such as good road network and mass transit transport services. These desires are in line with stated objectives of the local government such as construction and maintenance of roads, provision of health services such as maternity homes, health centers, sanitization, provision of primary education and many others – as sponsored by the federal military government. The federation (Nigeria) years book of 1983, outlined the aims of the local government system in the country. According to that document, one of the cardinal aims of the local government system is to make appropriate services and development activities, responses to local wishes and needs by delegating authority to local representative bodies.

The citizens expect the council to excel in developmental activities. They would like to please the community or communities in the local government area through the provision of functional feeder roads and public utilizations.

The council administration in the other hand complains of inadequate finance to meet up with the numerous responsibilities yearning for attention. According to the guidelines for local government reforms or 1976, “it must be recognized that if meaningful local government is to be expected in Nigeria, much larger financial resources are needed” they also complain that staff salaries alone drain a high percentage of the monthly allocation. Financial experts postulates that money is at the center of developmental projects. Acquisition and proper accountability of funs are the pivot upon revolves. Adedeji (1979) capped it all when he declared that the success or failure and the effectiveness and ineffectiveness of local government depend on the financial resources available to the individual local government and the way these resources are utilized.

From the foregoing, it seems that an empirical study into the revenue base of the local government system at this harsh economic period is not only useful but very vital.

It is therefore against this background that this project work is being undertaken with a view to discovering the problems of Effective Utilization of Revenue Available to Local Governments with particular reference to Uyo local government area of Akwa ibom state.

1.2 Statement of the Problem

The relevance of the local government councils as the government at the grassroot level is measured by the quality and quantity services rendered to the rural dwellers.

For the council to render meaningful services, in form of provision of basic amenities, construction and maintenance of roads, creation of employment opportunities for the citizens and pay staff salaries as and when due, money is undoubtedly required.

Without the availability of revenue, a local government council will not only be incapable of serving the people but will undoubtedly crumble. It therefore, follows that for the local government to discharge its statutory functions effectively, it should not only be adequately funded but such fund should be efficiently applied.

One of the fundamental problems in local government financial administration is the issue of Effective Utilization of Revenue Available to the Local Government. Uyo local government council may have tits unique problems that militate against its financial administration.

The problem of delay in payment of federal/state government grants to the local authorities.

The problems of accountability in the local government council.

Another problem is that of ineffective financial control and management both internally and externally.

Fifthly, the problem of financial mismanagement and embezzlement of available funds in local government council.

Finally, the problem of corruption as stated by Oluwale (2000) militate against the utilization of local government revenue.

1.3 Purpose of the Study

The central focus of the study is to critically analyze the problems of effective utilization of revenue available to Uyo local government area as a case study.

  1. The study is meant to identity the major revenue sources available to local government .
  2. To ascertain the problems that confront the council’s administration in utilizing revenue for their services.
  3. To find out whether or not the revenue is adequate for the council’s expenditure.
  4. To investigate the system of financial control in the local government council.

1.4 Significance of the Study

The significance of any human endeavour is measured by its relevance to solving human problems. Therefore, the significance of the study is measure by its relevance to solving the problems of effective utilization of revenue available to local governments in Nigeria.

The project will be of benefit, first and foremost to the Uyo Local Government administration, as it will expose to them potential sources of generating of revenue internally.

Secondarily, it will help the council to strengthen its financial bases as this study would highlight some identified problem hampering the utilization of revenue in the council.

Thirdly, it will also be useful to the indigenes of Uyo local government to co-operate with local council administrators to enable them build a viable local government by paying their taxes and rates promptly.

Fourthly, the project will be useful to various institutions especially Caritas University, for gaining greater knowledge and understanding of the problems of effective utilization of revenue available to local government.

Finally, the project will be useful to the general public, organizations, companies etc that may have interest in the project.

1.5 Limitations of the Study

i. Delimitations (scope) of the study:

This is centered on the problems of effective utilization of revenue available to local government in Nigeria but due to the wide or vast nature of Nigeria, the researcher now chose Uyo local government as a case study to deal with this particular problems in other local government in Nigeria.

The study is also centered on the sources of revenue available to local government both the internal and external sources of revenue.

ii. Limitations (constraints) of the study:

In the effort of carrying out this research bathe researcher was faced with the problem of time, finance and visitation of Uyo Local Government, the case study of the research work.

The researcher being a student, found it difficult to get exeat out of the school premises and the time frame given was so limited in carrying out the research work. Also, the distribution and collection of the questionnaire to the staff of Uyo Local Government was not easy for the researcher as the respondents were not always available.

The study was carried out under a lot of constraints. The class work and financial constraints were other limitations which made it uneasy for the materials to be ready available at the appropriate time.

1.6 Research Questions

In the effort of carrying out this research, the following questions were formulated:

  1. Are you aware of the constitutional provision of revenue sources to the tiers of government in Nigeria?
  2. By what means has Uyo Local government planned the expenditure of available revenue?
  3. What systems of financial control measures are used by council administrators?
  4. Has the utilization of the Revenue Available to Uyo Local Government produced positive or negative effects?

1.7 Definition of Terms

Some concepts and terms required proper explanation or definition to enhance our understanding of the theme where necessary opinions of scholars will be cited to illustrate the terms.


The Ancient Greeks defined democracy as a government of the people, by the people and for the people. This political arrangement allowed every adult male citizen to participate in government activities.

Dare (1981) Postulated that modern democracy is a system of government which gives to individual maximum freedom and periodical opportunities to choose their leader and programmes. Multiple party-systems are a vital characteristic of a democratic government.


The term pragmatism is derived from the Greek from which practical action arise. It could simply be referred to as philosophy or practical consequences or result orientedness. In our context, it is used to describe political programmes aimed at betternece living standard of the masses.

Rural Development

Rural development is a strategy designed to improve the socio-economic life of the rural dwellers. It involves extending the benefits of development to the less privileged in the society. When applied to local government councils as a third tier of government, in the county, it means conscious efforts by the government, to carry government programmes to the village level. In so doing, deliberate actions are initiated to improve the rural population.


Owing to the fact that local government provides local services like sanitation, education, transportation etc to the people of the area, it is logical that it is accountable to the local people within its area of jurisdiction.

This principle of accountability is better ensured by making local government or local government bodies elective institutions. If they function below expectation, they may be criticized by the people or voted out during the next elections.

Absence of local accountability may make them indifferent and insensitive to the need, feelings and aspirations of the local people.

Chapter Five

5.0 Summary of Finding, Recommendation and Conclusion

In this chapter, the research presents the summary findings based on the analysis of the data collected, base on the result of findings, recommendations are made which leads to conclusion.

5.1 Summary of Findings

The researcher discovered that the impact of revenue generation on the development of the local government areas could be rated below average which has resulted to slow development of the rural areas.

The researcher also found out that the revenue generation within Uyo Local Government area was grossly inadequate for the provision of modern social amenities.

Due to low revenue generated to provide basic social amenities, such as accessible road, schools, portable pipe-bore water, electricity among others it was impossible for rural people to sell the agricultural crops, drink portable water, pay school fees. Thus the poverty is very high.

The researcher also discovered that due to low revenue generation to provide basic social amenities especially in the rural areas. There was exodus of rural dewellers to the urban centres.

Included in the researchers findings was that the major method to be adopted by the local government in order to improve revenue generation base should be the enlightenment of the citizens on the need and important of regular payment of taxes.

5.2 Recommendations

Based on the findings, the following recommendations have been made.

The efforts of local government should not only be directed toward the revenue yielding alone but also to the provision of social amenities such as basic health facilities, accessible roads, town halls, electricity and water supply which will help to improve the socio-economic of life of the rural people.

These facilities provided by Uyo Local Government should be of high quality by doing this; the people’s interest will be geared towards giving their maximum support to the government which will lead to the development of the area.

There should be constant campaign and awareness programmewithin Uyo Local Government to enlighten the rural peoples on the benefits of prompt payment of taxes to the government as when due, it will go a long way in improving the revenue generation.

The local government should embark on the establishment of small scale industries which will provide employment opportunities for the youths in the rural area to tackle the problem of rural-urban migration.

There should be improvement and development with agricultural sector, such improvement will encourage participation of the rural people within Uyo Local Government which will improve their standard of living of the people.

5.3 Conclusion

In the research, it is clear that low revenue generation by local government in Nigeria have affected the spread of development to all the nooks and crannies of the country. Thus local government councils and their management should strategically plan on proper measures to generate revenue as to meet with their functions as provided by the constitution of the country.

This will enhance their financial ability to implement their constitutional functions or responsibilities to the rural peoples.

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