E-Government And Internally Generated Revenues In Nigeria

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E-Government And Internally Generated Revenues In Nigeria


Over the years, internally generated revenue in Nigeria has been plagued with several limiting factors such as weak administrative lapses and weak administrative facilities like the evidence of manually compiled database of tax payers. e-government was however identified as a solution to addressing most of the limiting issues of internally generated revenue. The study examines the effect of e-government on internally generated revenue in local governments, lagos. The Technology acceptance Model(TAM by Davis, 1989) was used to underpin the study. The study adopted survey research design, where both primary and secondary data were used. The primary source of data were questionnaires and interviews while secondary data was obtained from “local governments Guage”: A quarterly publication of local governments, Handbook of local governments among others. Quantitative data was analyzed using frequency counts and percentages, while chi-square was used to test the hypotheses. Data generated through interview was analyzed qualitatively. The study established that there are adequate e-government infrastructures in local governments, lagos. The study also revealed that ICT capacity of staff of local governments is adequate as all 70 staff of local governments have been trained on basic ICT skills. From findings of the study, we therefore concluded that ICT has enhanced performance in revenue administration by reducing human error and processing times, providing readily accessible data for tax officers and facilitating better decision making by tax authorities. Hence the study recommended among others that local governments should ensure an improved ICT infrastructure which includes completion of the fibre-optic network project, because without a robust ICT infrastructure, the modernization project would not be achieveable.

Chapter One


1.1 Background of the Study

The last three decades have witnessed unprecedented global transformation occasioned by a chain of innovations and paradigm shifts like liberalization, privatization etc, with enhanced Information and Communication Technologies (ICT) serving as the major catalysing factor (Achimugu et al, 2013).

The emergence of information communication technologies has brought a lot of changes to the way things are done in the world over. These changes are across the spectrum; the way private companies do business, the way universities do things, the way governments provide services to their citizens and the way they interact with stakeholders at large (Nkwe, 2012).

The world over, there has been a paradigm shift where governments have realized the importance of Electronic Government (otherwise known as e-government) as a strong tool for public-sector reform in search of excellence. Governments have understood and appreciated the contribution of e-government to the government agenda in contrast to the traditional paper-and-file approaches often adopted in managing businesses. The Republic of Uganda, for instance, has a strong belief that ICT has the potential not only to revolutionize the way government operates, but also to enhance the relationship between government to business (G2B), government to government (G2G) and within government to citizen (G2C).

It is in keeping with this line of thought that (UNPAN, 2005) observes that almost all governments in the world have embraced one form of e-government or another (Ifinedo, 2008). Is however of the opinion that a majority of African countries are just beginning to understand the importance of such a concept in governance. Hence, a very poor e-government ranking. Nigeria has an e-government index ranking of 0.243 as against the world average of 0.414, meaning it is yet to be positioned to harness the limitless opportunities available in e-government to reinvent governance at all levels (Achimugu et al., 2013).

E-governance, which is a paradigm shift over the traditional approaches in Public Administration, means rendering of government services and information to the public using electronic means. This new paradigm has brought about a revolution in the quality of service delivered to the citizens. It has ushered in transparency in the governing process; saving of time due to provision of services through single window; simplification of procedures; better office and record management; reduction in corruption; and improved attitude, behaviour and job handling capacity of the dealing personnel in the developed countries (Monga, cited in Nkwe, 2012).

Revenue generation in Nigeria has been one of the topical issues in recent times especially with the drastically and phenomenal shift from agriculture to crude oil exportation. The occasional dwindle in the price of crude oil and the various predictions of the running out of oil wells in Nigeria in the near future time has rekindled government interest in agriculture and other non-oil sources of revenue to the country and its constituent states with their local government areas to reconsider their internal revenue generation (Nnanseh and Akpan, 2013).

The emphasis has always been on how to boost internally generated revenues (IGR) so as to be less reliance on oil and other statutory allocations to states and the local government areas. Besides, it has been a popular believes that a state with strong internally generated revenue can cater for the social and infrastructural needs of its citizens (Nnanseh and Akpan, 2013).

Whether in fact the use of e-government affects internally generated revenues as well as transparency and accountability in states and local government administrations in Nigeria positively or negatively in practice, is an empirical question that remains open. The undertaking of this study will therefore explore the effect of E-government on Internally Generated Revenues with a special reference to Egbe/Idimu Local Council Development Area (LCGA).

1.2 Statement of the Problem

Despite the popularity, potency, and precision of e-government, it is yet to be adopted and explored in Nigerian governance system. A visit to the government departments in Nigeria is a nightmare; it is characterized by a lot of paper work, long queues, bureaucracy, cramped spaces and a lot of frustrations. With the growing demands of citizens and changing global rules and regulations, the Nigerian government as a matter of necessity must explore a transparent and accountable medium to deliver its statutory mandate to its citizens at the right time and quality.

The link between e-government implementations and internally generated revenues (IGR) is generating some interesting debates. Many scholars have argued that e-government is still a new phenomenon. That it is still very much unclear and complex how it can boost revenue for states and local councils. On the other side of the swing, analysts and political watchers counter-argued that e-government has spin-off effects, and that the more ICTs are used for government businesses, the greater the impact on revenues, transparency and accountability (Nkwe, 2012; Kaaya, 2011; Bellamy and Taylor, 1998; Ebrahim et al., 2003).

The reliance on statutory allocation to perform basic functions by states in Nigeria is total. Many states rely almost exclusively on this handout from the federation account as basic operations cannot go on without the monthly allocations. This has partly helped government officials to pay little attention to growing the economic base that would help them to become independent (Agu, cited in Oseni, 2013). He went further to note e-government is yet to be incorporated in IGR planning and collection approaches. Officials rely mainly on physical visitation, memos and letters to notify tax payers. The taxes collected are mainly in cash thereby creating opportunities for embezzlement. These shortcomings often lead to multiple payments of tax and harassments.

At the local government level, internally generated revenue is the primary source of local government sustenance. But the capacity of local governments to generate revenue internally is one very crucial consideration for the creation of a local council. Local governments now face more challenges in terms of struggling to be less dependent on the center and the state for financial resources hence the need for them to place, as a matter of urgency, a topmost priority on their internal generation efforts.

The current structure for IGR across boards lack the capacity for revenue base data collection and analysis; lack register of revenue customers and information system; poor collection and analysis of performance data, lack performance evaluation against targets; poor method (being cash-based only) of generation; poor internal control and financial reporting; lack transparent accounting; lack a documented action plan for improving its collections; poor internal organizational arrangement for revenue generation among others (Eze, Omole, Onyinka and Okonji, cited in Nnanseh and Akpan, 2013). It is against this backdrop that this study aims to investigate the relationship between E-government and Internally Generated Revenues with a special reference to Egbe/Idimu Local Council Development Area (LCGA).

1.3 Objectives of the Study:

The main objective of this study is to examine the connection between e-government and internally generated revenues. Other specific aims are;

  1. To determine the link between the adoption of e-government and internally generated revenues for local governments in Lagos State.
  2. To find out the effect of e-government and accountability in taxes and levies collection.
  3. To explore the effect of ICT adoption on enhancing states’ internally generated revenues in Nigeria.
  4. To investigate the nexus between e-government and corrupt practices in the Nigerian public sector.
  5. To find out if e-government can foster efficient service delivery in governance.

1.4 Research Questions:

To achieve the stated objective the study will be guided by the following research questions;

  1. Does e-government has any effect on internally generated revenues for local governments in Lagos State?
  2. Will the adoption of ICT promotes accountability in taxes and levies collection and administration?
  3. Can e-government reduce corrupt practices in the Nigerian public sector?

1.5 Research Hypotheses:

The under mentioned hypotheses will be subjected to statistical test in the course of the study;

Hypothesis 1:
  • Ho: There is no significant relationship between e-government and internally generated revenues for local governments in Lagos State.
  • Hi: There is a significant relationship between e-government and internally generated revenues for local governments in Lagos State.
Hypothesis 2:
  • Ho: ICT adoption has no significant effect on accountability in taxes and levies collection.
  • Hi: ICT adoption has a significant effect on accountability in taxes and levies collection.
Hypothesis 3:
  • Ho: There is no significant relationship between e-government and corruption in the Nigerian public sector.
  • Hi: There is a significant relationship between e-government and corruption in the Nigerian public sector.

1.6 Significance of the Study

Many studies have been conducted to explore the challenges of adaptation and implementation of ICT in public sectors, especially in the developing countries. For example, a study carried out by Chatama (2013) on the impact of ICT on Taxation: a case of large taxpayer department of Nigeria Revenue Authority. The study was limited to the administration of tax in Nigeria and they focused on how the use of ICT modernized tax administration procedures at Large tax payer department in Nigeria. Likewise the study by Abiola & Asiweh (2012), on the Impact of E-government on Government Revenue in a Developing Economy. The study looked at tax administration in a general perspective as it affects developing countries as a whole and did not suggest practical solutions for Nigeria to strengthen its tax enforcement machinery, therefore, the study has no clear practical implications for tax practitioners in Nigeria.

The findings of this research is also expected to be useful to the researchers, academicians and students, interested readers and other institutions in making further research in the area of the use of ICT in tax administration. In addition, it would serve as a source of reference by making contribution to the knowledge and understanding of the concept, nature and characteristics of ICT and Tax administration.

1.7 Scope and Limitation of the Study

This study examines the effect of information and communication technology on tax administration in local governments in lagos. It is clear that local governments in has uniform structures and programs in all the 36 states of Nigeria but this work focused on local governments in lagos Plateau. This choice is based on the fact that local governments lagos is a major revenue collecting branch of the agency and is ranking the biggest business hub in the entire North East Region. According to local governments classification, Plateau state office was placed under the North East region in order to further boost revenue collection in that geographical area. The period of study covered between 2010 and 2015. The period was selected because according to the Federal Inland Revenue Service handbook on “Taxation Reform in Democratic Nigeria”, in 2010, local governments obtained approval from the Federal Executive Council for the full implementation of Integrated Tax Administration System (ITAS) using ICT which enabled local governments to procure, install and implement the complete automation of tax processes. The period was selected also because it was matured enough to study a programme that came into being four years earlier.
Also, according to the Federal Inland Revenue handbook on “Taxation Reform in Democratic Nigeria” the first step towards restructuring local governments in was to make tax administration a function of Information and Communication Technology. ICT was also identified as a solution to addressing most the challenges of tax administration in local governments, lagos.

However, the study is done only on one organization, Federal Inland Revenue service and is limited to the activities of local governments in lagos, Plateau state, thus, the study might lack the general applicability in other public organizations. Also, considering the size of local governments in in Nigeria as a geographical area, a population sample of relevant groups from Plateau state were used to generalize findings.

1.8 Definition of Key Concepts

Information and Communication Technology (ICT):

Mary and Cox (2007)defines ICT as electronic and computerized devices associated with human interactive materials that enable the user to use them for wider range of service delivery and in addition to personal use. ICT involves the use of electronic devices such as web portals, internet, inters witch, telnet and telecommunication for sending and receiving messages and used for tax administration.

ICT Infrastructures:

Perrison and Sunders (2006) defines ICT infrastructure as everything that supports the flow and processing of information in an organization, including hardware, livewire, software, data and network components. ICT infrastructure refers to the composite hardware, software, network resources and services required for the existence, operation and management of an enterprise IT environment. It allows the organization to deliver IT solutions and services to its employees, partners and/or customers and is usually internal to an organization and deployed within owned facilities.

ICT Capacity:

According to Matachi, (2006), the term capacity refers to the skills, knowledge, relationships, values and attitudes among many other attributes such as health and awareness that enable countries, organizations, groups and individuals to carry out functions and achieve their development objectives over time. Therefore, ICT capacity is said to refer to ICT skills, knowledge, relationships, values and attitudes that enable an individual or an organization carry out ICT functions and achieve their development objectives over time.

ICT Adoption:

According to Yusuf 2005, ICT adoption is the presentation and distribution of instructional content through web environment or systems offering an integrated range of tools (stand-alone computer instruction, CD ROM amongst others) to support learning and communication.

Chapter Five

Summary, Conclusion and Recommendations

5.1 Summary

The literature and empirical studies related to this study were critically reviewed. The concepts of Information and communication technology, ICT Infrastructures, Corruption, ICT utilization and Tax administration were reviewed. According to the views of Mary and Cox (2007), ICT are electronic and computerized devices associated with human interactive materials that enable the user to use them for wider range of service delivery and in addition to personal use. In the views of Ogbonna 2010, tax administration consists of the tax authorities and the organs of tax administration that are charged with the responsibility of implementing the tax laws in accordance with the set guidelines. Other scholarly works were reviewed. Empirical study of various research works was done and attempts were made to fill the existing gaps identified. The theory adopted for this study is the Technology Acceptance Model by Davis (1989).According to this model, technology adoption is a function of a variety of factors including Relative advantage and Ease of use. The research design used for this investigation is survey/descriptive research as contained in which information was obtained from a sample of respondents. This research strategy is considered necessary because of its ability to view comprehensively and in detail the major questions raised in the study. The total population for the study is 2510. The stratified random sample technique; probability sample was used and data were generated from both primary and secondary sources for this study. Data was analyzed using the Chi square via the use of Statistical Package for Social Sciences (SPSS) version 21.

Also an overview of the modernization project by local governments in was made. The Integrated Tax Administration (ITAS) was discussed. The implementation of ITAS is aimed at re-engineering and automating local governments‟s core tax processes through the use of technology which ultimately simplifies taxpayer compliance and increases revenue generation. Some modules of ITAS such as Project FACT and the Joint Tax Board Tax Identification Number were discussed. In Chapter five data collected via the use of questionnaires and interviews were presented, analyzed, processed and interpreted and also issues of tax administration in Nigeria

Findings of the study reveal that the availability of ICT infrastructure for quality service delivery of tax administration in local governments in is adequate but the network connectivity is a major challenge, Corruption of some staff of local governments in terms of skills, relationships, values and knowledge is also adequate but corporate tax payer‟s do not utilize the ICT facilities available for tax administration.

Based on the findings of this research, we therefore conclude that the use of ICT in tax administration has increased the efficiency of tax administration as it makes tax payments to local governments easy, convenient and secure which enables individuals and corporate organisations remit their taxes, thereby reducing the rate of tax evasion. From our findings, we also conclude that the main objective of automation of Tax administration by the local governments in is to create an efficient government agency which harnessed modern technology to improve its overall processes and provide taxpayers a hitch-free, hassle-free and easy experience with the tax authority. It was considered pivotal that tax payment process be modernised using the various tools offered by modern technology. These modernized payment channels will not only ease the payment of tax for the taxpayer but would also reduce incidences of tax evasion, tax avoidance and enhance the monitoring and accounting of revenue.

This study concludes that the use of ICT in tax administration has provided an enhanced and more efficient revenue collection method that guarantees improved revenue accounting and reconciliation processes in local governments and has increased tax payer compliance thereby reducing the rate of tax evasion. Also ICT has provided a cost effective solution that is easily accessible, as multi channels have been provided for collections, thereby providing more convenient options and encouraging more people to pay their dues to the government. The modernised system will enable local governments receive the taxes and other payments due to government in a more transparent manner as Leakages will be minimised.

5.2 Recommendations

Based on the findings of this study, in a revenue collection agency like the local governments, quality service delivery is critical to success and in order to deliver quality service to taxpayers and operate an efficient and transparent tax system that optimizes tax revenue collection, we hereby recommend the following;

a. A robust ICT infrastructure:

Without a robust ICT infrastructure, modernization projects such as the ITAS project embarked upon by local governments would not be achieve able. local governments should therefore ensure an improved ICT infrastructure which includes completion of the fibre-optic network project, provision of adequate computer systems and reliable UPS to all offices for staff. local governments and all revenue authorities should set up IT departments at least with the minimum/basic IT structure. Competent staff with the required skills should be recruited and ICT should be included in its periodic training to cater for the upgrade and development of ICT professionals.

b. Regular Training of Staff and Taxpayers

We recommend that adequate manpower should be fittingly trained to enforce tax compliance and attend to challenges of tax administration and local governments should ensure that regular training of staff and taxpayers should be given topmost priority to keep them abreast with the changes and reforms of the tax system as ICT knowledge areas are so dynamic that without continuous training, the personnel may lose touch with current trends in the industry. Strategic managers need to conduct a capacity building needs assessment in the organization to ensure ICT infrastructure put in place is of benefit to staff. local governments should also implement regular ICT workshops, training, programs, seminars and conferences to raise ICT awareness. This will enable them acquire requisite skills necessary to operate the electronic changes from manual to automate tax administration. local governments should also ensure that taxpayers have the required ICT skills, machineries and a sound understanding of the tax laws to effectively operate the new tax processes. This also will greatly improve tax payer utilization of ICT facilities.

c. Sensitization of Tax Payers / Checking the Plaque of Ignorance

Tax payers should be highly sensitized to take advantage of the business process re-engineering to file their tax returns from the comfort of their offices or homes at anytime within the required filling period thereby reducing the complexity, time and cost of paying taxes.

Top Management needs to offer timely communication in order to create awareness of the ICT innovations so that staff and taxpayers can utilize them. This can be done through regular workshops, training, programs, seminars and conferences to raise awareness. This will improve tax payer‟s utilization of ICT facilities.

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