Economic Impact Of Local Government Autonomy And Fund Management (A Study Of Enugu North Local Government Area 1990-2015)

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The research focused on theImpact of Local Government Autonomy and Fund Management. The objective of the study is to find out whether local government areas are adequately funded in the present dispensation to tackle their statutory functions and responsibilities to the rural people and to determine the effect of the autonomy in the local government financial bases. In particular, fiscal decentralization, the devolution of revenue mobilization and spending power to lower level of government has become a main theme of urban governance in recent years. Local government system as the third-tier of government deserves adequate finance to enable it cope with numerous developmental activities within its jurisdiction.

The study empirically tested the relationship between local government revenue and expenditure in Nigeria a low income developing country. A regression test was conducted using data from 1990-2015. Secondary data was used, which include textbooks, CBN bulleting, Journals and Internet material and analysis using parametric statistical tools regression co-efficient, Y was used as dependent variable and X as independent variables in this research work with a brief explanation.

Chapter One


1.4 Background To The Study

Sharnna and Sadana (2008) defined local government as a statutory authority in a specified local area, having the power to raise revenue through taxes for the performance of local services such as sanitation, education, water supply and electricity. Precisely they see local government as authority constituted by the elected representatives of local people, which enjoys autonomy from state or central control sufficient to enable it to perform its services adequately. However, Oluwa (1996), contributed that local government autonomy is the ability of local government to take some political, economic and social decisions without recourse to any of the two superstructures โ€“ state and federal governments. Nwatu and Okafor (2008), demonstrated that local government reform of 1976 brought about the creation of local government the third tier of government.

Okafor (1994) argues that the structure of governance in Nigeria has over the years remained constant despite the several military incursions. Nwatu and Okafor (2008), also claim that reform of 1976 untied the local government system all over the country. Under the 1976 local government reform, Nigeria operates a single tier multipurpose local government system. However, Olasapo (2001), contributed that the guides for the local government reform provided that the population for all local government in Nigeria should range between a minimum of 159,600 and a maximum of 800,000, thus the two characteristics of the structure of local governments in Nigeria are uniformity and largeness of local governments area. Under the local government reform, a total of 301 local governments were created in Nigeria (Okafor, 2008).

Okafor (2008), argues that these areas were entrenched into the 1979 constitution of Nigeria, the local area were so large that they lose touch of the people. However, Ojo (1994), claims that the federal governments increased the number of the local government in the federation to seven hundred and seventy โ€“ four (774) and democratized the appointment of their chairmen and enhance the autonomy of these local governments. In the word of Ogboazi (1998) argued that the issue of rural development like Enugu North has been creating a lot of concern in most third world countries. There has been growing recognition of the importance of rural development as an instrument in the overall development of the contemporary development world; this is because of glaring gap between the rural and urban areas in terms of infrastructure, resources distribution, human resources development and employment which has made rural development imperative. Husband and Dockery (1977), demonstrated that local government administration in Nigeria have been characterized by bazaar mentality, poor accounting systems, unavailability of reliable data required for planning, inadequate finance and poor revenue collection. The statutory allocations from the federation account because of poor management are said to be inadequate to cover financial obligations of local government councils on terms of staff salaries, social services and serving of debt but the autonomy had made the administration favorable to all Okoli and Nwabuto, (1990). Local government derives its existence power and autonomy from the fundamental law,the constitution of the land not at the whims and caprices of the federal or state governments. It has its legislation areas allocated by the constitution, it can be sue or sued to court and that makes inartificial personality corporation Nwatu and Okafor (2008).

1.2: Statement Of The Problem

The local government system from the early colonial days has undergone a lot of changes, most of thesechanges have occurred to correct certain deflections that emanated from the colonial masters. It is assumed that the national cake is not getting down to them while the wealth of the nation is being flatted away by some other lends of government.

The problems are:

  1. Is fund made available to local government inadequately?
  2. Is the local government system been able to effectively cater for the local stratum of Nigeria society through internally and externally revenue resources?
  3. Is the autonomy granted to them making affective fund management a force or reality?
  4. Is the staffing arrangement by the council to handle fund efficient and adequate?

1.3 Objectives Of The Study

  1. To determine if Nigeria federal statutory allocations revenue to local government is sufficient to effectively and efficiently achieve the local councils statutory functions and responsibilities to the rural people.
  2. To find out whether local government area are adequately funded in the present dispensation to tackle their statutory function and responsibilities to the rural people.
  3. To determine the effect of the autonomy on the local government financial base.

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