Effects Of Local Government Internally Generated Revenue On Community Development In Nigeria

Project and Seminar material for Public Administration

Project and Seminar material for Public Administration

Chapter One


1.1 General Overview

The local government system in Nigeria has undergone several reforms, among which were 1976, 1984 and 1991 reforms respectively. The reasons for these reforms were to make the Nigerian Local Government virile, independent and more functional.

Literally, local government can be defined as government at the local level exercised through representative councils. Local government are to exercise specific powers within deferent areas. These should give the councils substantial control to initiate and direct the provision of social services, in order to be able to determine and implement projects to complement the activities of state and federal governments in the areas (Olalekan, 2007: P.1).

Local government according to the United State Office of Public Administration (1983) is defined as political sub-division of a nation state, which is constituted by law and have substantial control over local affairs including the power to impose taxes or to exact labour for prescribed purposes.

According to the 1999 constitution, Local Government is seen as the third (3rd) tier of government, which affords the people the opportunity to participate actively in government.

As late as mid-nineteenth century, Andrew Jackson the then president of the United State asserted that the task of government was sufficiently simple and that any person of intelligence could perform them without preparation or training.

Even in a modern times when the responsibility of government for social and economic development has assumed greater magnitude and demands exacting standards of sufficiency, the impress persists that the functions of local government are not to be taken too seriously (Olowu Dele and Sako, 2012). The aims and objectives of local governments are to recognize the increasing roles of government in the management of resources and the provision of essential services to the community.

Community can be defined as a group of people living in a geographically, defined area or a group that interacts because of social, economic or political interest. There are thus many communities, like Ifelodun local government, have different needs, some of which the local government is expected to provide through meaningful projects with the objectives in some cases generating revenue for the sustainability of the projects. (Gboyega 2013: P.5).

Generally, funds are always the main stream through which the survival of any organization depends, especially on execution or carrying out it civil responsibilities. The federal, state and local governments like any other organization have range of functions, which they are expected to perform. These functions vary from higher authority to lower one. In addition to the maintenances of law and order, there are other functions like the provision and maintenance of certain social amenities and services.

For the three (3) titers of government to perform these function effectively, they need funds, they must have adequate financial resources. Local government generates their funds in two (2) common ways, through Internally Generated Revenue (IGR) and Statutory Allocation. The IGR are revenue generated within local government area, like rates, fine etc, while statutory allocation are funds from the federal government allocation, Value Added Tax (VAT), state statutory allocation, that is 10 percent of the state’s resources.

However, the three (3) tiers of government have their own way of sharing the nationally collected revenue, which is based on the revenue allocation formula. Even with the funds from central pool, staffs of local government face a problem of several fiscal imbalance, their revenue is very small compared to their expenditure.

Bearing in mind that they are the closest to the rural populace and so, have more burden as to the execution of projects that have direct bearing to the common man. More than 90% of the local government revenue comes from the statutory allocation and is not enough to fund the expanding need of the people, bearing in mind also the recent steady and progressive decline of the statutory allocation in accruing to local government, teachers salaries are deducted from it. These have left many local governments in a state of object penury. Lack of finance is the greatest obstacle to rapid socio-economic development of local government.

This research work is an attempt to highlight the problems and prospects of internally generate revenue of Ifelodun local government. Revenue records and financial regulation by the council are discussed together with the short comings and other related constraints. In this regards, problem of collecting revenue, functions of revenue collection agencies, auditing and supervision, as well as revenue mobilization will be the main focus of this research work.

From the foregoing, it is clear that local governments are to bring development, better life to the people at the grassroots. The local government under review, Ifelodun local government was created or became an autonomous, local government entity in October 2003, with Prince Taiwo Adenekan at the helm of affairs and as the head of the interim management committee (IMC).

During the 1976 local government reforms, Ajeromi-IFelodun local government became known as Awori-Ajeromi District council and during Brigadier Obasanjo’s Regime, Awori-Ajeromi was merged with Badagry local government. In 1980, during the civilian era of Alhaji Lateef Jakande, twenty-three (23) local government areas were created and Ajeromi-Ifelodun came into being. Shortly later, the then military government reversed the status to an area office under OJo local government.

Ajeromi-Ifelodun Reclaimed its status in November 1996 when the federal military government announced the creation of four (4) more Local Government Areas in Lagos State.

One cannot discuss the historical perspective of Ifelodun Local Government Area in isolation without providing an insight into the definition of traditional boundaries of rural/chieftaincy families. The main reason is families by virtue of inheritance and blood lineage have been the bonafide owners and custodians or land in all ramifications. Thus it is instructive to emphasize that land matters be it in the Old Ajeromi-Ifelodun entity or in newly created Ifelodun entity or in broader perspectives in Lagos State isstill vested exclusively on the indigence and aborigine settlers, and they exercise ownership and jurisdiction on demarcated boundaries and sphere of control.

Ifelodun local government, as it is presently constituted, comprises of five (5) district communities that evolved from generation to generation with common similarities. The five(5) communities are namely:- AMUKOKO MOSAFEYO, LAYENI, ABULE KEKE, ALABA ORO and OKE OYA ORIDILU.

Historically, what is now called Ifelodun is part of the vast Ojora land stretching up to Orile part of Surelere, Ebute Iganmu, Ajegunle and part of Apapa. Ojora family like their counterpart Aborigine landowning families are the descendants of the first and early settlers on the Islands of Eko now Lagos. Iddo including Otto and Ebuute-Metta on the mainland. These early settlers were undoubtedly Aworis, stock of Yoruba’s, mainly hunters and fishermen who migrated from fishing settlements to the mainland and crisscrossed from coast to coast to resettle at different locations within the passage of time.

For administrative purpose, the local government (Ifelodun) is headed by the chairman, followed by the secretary, then six (6) heads of departments heading the six (6) various departments in the local government council under which there are also various sectional heads heading the sections.

1.2 Statement Of Problem

Local Government authorities in the country have been criticized for their inefficiency and ineffectiveness in rendering services to the citizens. Even debates, seminars and workshops have been organized to sanitize and improve the functioning of local governments in Nigeria.

However, financial administration in Ifelodun local government is defective because some of the Officers created to support revenue generation are badly directed and lack focus. At the end of the day, the cost of setting up these offices out weights the benefits expected, yet they are retained and maintained at the expenses. Of development project in the name of indigenization.

Corruption also, has eaten deep into the socio-political fabric of the local government. Large percentages of revenue generated are diverted to private pockets or traceable percentages of revenue generated are diverted to private pockets or traceable to project that are of no benefit to the society.

Due to the recent decline in its allocation from the federal account, Ifelodun local government internal revenue mobilization, collection and management has become a center issue to the successful operation and management of the local government, because its allocation from the federal account cannot finance its programmes, prospects as well as pay its staff salaries.

As a result of fluctuation in the federal allocation to the local government, which form more than 80% of Ifelodun local government sources of income, the local government find it necessary to redirect its effort to polices that will improve its internally generated revenue. It is this precarious financial situation of this local government that arose the interest of the researcher to look into the problem and prospect of the local government Internally Generated Revenue.

1.3 Objectives Of The Study

This research has been motivated by the need to find out if local government can reduce their over dependence on statutory allocations. Having identified the threats and opportunities open to the local councils on internally generated fund, it will assist them to broaden their revenue base through finding solutions to the problem and re-directing their efforts in the direction of the identified opportunities.

The following are the remaining objectives of the study

  1. It will also look into the factors, which are likely to promote or retard the performance of Ifelodun local government.
  2. To find out how public sectors are organized and how is planed in order to ensure the realization of the organizational goals with special reference to Infelodun local government.
  3. To know whether bad administration can cause inefficiency and ineffectiveness of grassroots government, with special and particular references to Ifelodun local government.

1.4 Statement Of Research Questions

  1. Is Local Government an agent of change in community development.
  2. Is there a relationship between Local Government revenue and community development?
  3. Is there relationship between Ifelodun Local Government internally generated revenue and community development.?
  4. Does Ifelodun Local government have sufficient revenue generation means to accelerate community development.?
  5. How well does Ifelodun Local Government utilize money generated internally in term of community development?
  6. How useful can Ifelodun Local Government be in forgoing community development?

1.5 Statement Of Research Hypotheses

This study will be geared towards testing the following hypotheses.

  1. Local Government is an agent of change in community development.
  2. There is a relationship between Local Government revenue generation and community development
  3. The effect of Ifelodun Local Government internally generated revenue will be felt by the people in community.

1.6 Significance Of The Study

The study which is an attempt to diagnose the effect of local government Internally Generated Revenue on community development is of immense importance to:

The organization under consideration that have some qualified revenue staff responsible for the revenue aspect of the organization, but weaknesses still arise in the process of revenue generation if the researcher in the process of this work identifies any weakness and can seek opinion of the staff concerned as to the existence or non-existence of such weaknesses. The local government can use such information for improved revenue generation.

This work will serve as secondary data to future researchers who also intend to carry out research on the effect of local government internally Generated Revenue on community development. It will also help students in the school of business studies and department of local government studies in having an in-depth knowledge of revenue matters.

1.7 Scope And Limitation Of The Study

The study is designed to cover the effect of local government as it reflects the performance of Ifelodun local government as a characteristic and function of the community development, they are not- withstanding criticized generally for inefficiency, ineffectiveness and failure to achieve goals. The study is limited to Ifelodun Local Government only and no other Local Government organization.

The study is limited, based on the fact that there is no time and material resources to see to the whole local governments in Nigeria. These findings may not reflects, or be valid for the whole local government in Nigeria, but by and large, what happens, in Ifelodun local government can be said to apply to other local governments.

Lastly finance and time was another major problem faced by the researcher. It is general knowledge that every research work requires money to be accomplished, the researcher, been just a student encountered some difficulties in getting the required fund for this project work, shared the limited time with other academic work.

1.8 Definition Of Terms

Local Government:

Local government could be seen or defined as a legally constituted body, created at the local level, purely for development purpose. Put in another way, it is a springboard for rural development.


Development, like other revolutionary slogans, has various meanings to various people. In many countries, the word connotes industrialization. To some, it symbolizes the achievement of political intendance, in others, it indicates opportunity for education, the construction and provision of infrastructure for development, and the achievement of instantaneous, worldwide communication.

Community Development:

A community is said to be a group of people living in a geographically, defined area that interacts because of political, social or economic interest. However, community development simply means bringing advancement, better life, provision and maintenance of social amenities and services to the rural populace.


Planning is the life wire of every nation, “meaning a nation without plan is like sailing a ship without compass”. Planning can be defined as the analysis of their relevant information from the present and the past and an assessment of probable future development, so that a course of action (plan) may be determined.


Budget according to Wildarsky include:-

  • A plan of work
  • A prediction
  • A link between financial resources and human behaviour to accomplish policy objectives
  • A mechanism for making choices among alternative expenditure.
Revenue Generation:

These are revenuer or funds generated within the local government Area like rates, fines, fees etc.

Statutory Allocation:

Statutory allocation are funds assigned to the local government, from the federal account. Example of these funds are Value Added Tax (VAT) State statutory allocation.

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