The Impact Of Local Government Revenue In Rural Development In Nigeria

Project and Seminar material for Public Administration

Project and Seminar material for Public Administration


This study examined the impact of local government revenue (LGR) on rural development in Nigeria, using Ifako Ijaiye Ojokoro Local Government Council in Lagos State as a case study. In other to carryout effective and efficient research, three research hypotheses and three research questions were formulated. Forty (40) members of staff of Ijaiye Ojoroko Local Government council turnout to be responded. The data gathered were analyzed using percentage, data and tables. Then the hypotheses were tested using Chi- Square statistical instruments. It was revealed from hypothesis one that there is a link between local government revenue and rural development, while the second hypothesis shows that poor local government revenue for development may lead to rural urban migration. Finally, the third hypothesis concludes that lack of skill technicalities handling rural development is responsible for mismanagement of local government revenue. The study concludes that there is a link between local government revenue (LGR) and rural development (RD). The researcher recommended that, to improve financial viability of the local government, their revenue earning bases should be expanded by allowing them the right to set, regulate and reverse tax and rates properly within their domain.

Chapter One


1.1 Background Of The Study

To understand the best way towards building a solid democratic structure in the country, there is need to ensure (that the people enjoy that dividend of democracy at the level. Local Government in Nigeria and indeed found it increasingly difficult to fund their service because their revenue have been declining. Hence, it is important to ensure that revenue is generated on a regular, efficient and effective way to aid the development of the rural area.

As Agbakoba and Ogbonna (2004) put it, the impact of local government Revenue is the primary source of local government sustenance. It is the live sine of a local government. This is because, it is the only source of money that local government has control over. As such, the extent to which a local government can go in accomplishing its goal will largely depend on its rural development revenue strength.

The capacity of a local government to generate revenue rural area should be one very critical consideration for the creation of a local government council. Local governments in Nigeria derive their revenue from a number of sources. The internal sources otherwise, known as Internal Generated Revenue (IGR) are those sources from which the local governments generate their resources within their territories or boundary. These internal sources can be grouped under the following headings. Taxes, rates, licenses, food control, Social charges among others (Nchuchuwe 2011:72). These sources are largely exclusive preserves of the Local Governments in Nigeria.

However, with them, most if not all the local governments in Nigeria generate less than 10% of their total revenue from Internally Generated Revenue (IGR). Thus further threatens service provision and development projects at the rural area level.

Barber (1978) once remarked that the principal sources of Local Government revenue are local rates and fines. Even the government reforms recognized this fact. If meaningful, Local Government is be expected in Nigeria, much larger financial resources are needed. One of the main reasons why local government must collect various forms of revenue from its citizens is to use these to provide social services in an efficient effective manner (Orewa and Adewunmi, 1983). The fact is simply that most sources of the Local Government Generated Revenue in rural development in Nigeria for example tenement rates, liquor license, motor parks fees and the likes are not properly tapped no doubt as a result of over reliance on allocation from Federal and State Governments by the Local Governments.

It is therefore, against this background that this project work is being undertaken with a view to discover the impact of local government revenue on grassroots development in Nigeria with particular reference to Ifako- Ijayej Ojokoro Local government council development area of Lagos State.

1.2 Background Of Study

lfako Ijaiye was created on the 12th of May, 1967 by Act No. 14 by the military which divided into twelve (12)department. The 1979 constitution defines the public service of a state to encompass service in any capacity in respect of the government. In effect, public servants are employees of the government and all share a joint and indivisible responsibility and commitment.

The size and structure of present state public service have changed dramatically from what it was before October 1979. Two (2) factors made such structuring necessary. First, the structure must be attuned to the demands of the presidential system of government and

Secondly, the government wanted a public service which is structured in such a way that the various programmes on the basis of which it was elected into office can be speedily executed. As a result of the structuring, the following ministries and departments are now in existence.

  1. Office of the secretary to the government
  2. Office of the Head of the public service

16 Ministries and 15 bureau

  1. Justice
  2. Finance
  3. Economic planning and budget
  4. Agriculture and co-operative
  5. Commerce, industries and tourism
  6. Education
  7. Health
  8. Works
  9. Environment and physical planning
  10. Home affairs
  11. Transportation
  12. Youth, sports and social development
  13. Rural development
  14. Housing
  15. Establishments, Training and job creation
  16. Special duties

For any organization to be acclaimed efficient and effective, there must be some element of performance appraisal. Thus, an efficient and effective organization has the totality of everything that makes up the organization’s personality, some of which are sense of responsibility, dependability, regard for law and order, absence of laxity of whatever nature, e.t.c. the lack of efficiency and effectiveness can result to chaos or disorder.

In public sector, one always finds that the fundamental basis of efficiency and effectiveness are been challenged. In this respect, we ought to observe the standards by which performance appraisal must be judged.

  1. It is used to help in providing a basis for rewarding employees in relation to their contribution to organization goals.
  2. It is used to identify an individual’s current level of job performance.
  3. It provides information for succession planning
  4. It helps in motivating individuals.
  5. It enables employees to improve their Performance
  6. It is used to identify employee strengths and weakness
  7. It helps in identifying training and development needs
  8. It helps in identifying potential performance.

Writers such as Drucker (1954) are enthusiastic about appraisal. His view is that managers are responsible for achieving result and these results are obtained from the management of human, material and financial resources, all of which should be monitored. Monitoring means setting standards, measuring performance and taking appropriate action.

Other writers such as McGregor (1960) are critical of appraisals. He sees them as programme designed not only to provide more systematic control of the behaviour of subordinates, but also to control the behaviour of superiors.

There is a general and widespread belief that the standard of efficiency and effectiveness has greatly fallen in public sector particularly in local government. Such complaints and outing over inefficiency and ineffectiveness have taken various forms. Some have been published in some daily newspapers and some have been in form of public speeches or lectures. For example, Taire (1982) talked about lackadaisical and insensitive arrogance of workers in the treatment of clients as well as the over-bearing attitude of public sector.

In a similar comment delivered by Head of service to newly appointed senior staff in 1982, he stressed the need for efficient and effective state public service. He went further to comment that inefficiency and ineffectiveness offers a feedback to policy makers as public servants are indirectly agents of change and instruments of critical assessment of national policy. This shows the importance which the nation gives to efficiency and effectiveness of air state public service. The aim of this study therefore is to examine the causes and directions of this problem and to offer some suggestions.

1.3 Statement Of The Problem

The relevance of the local government councils as the government at the grassroots level is measured by the quality and quantity of service rendered to the populace most especially the rural dwellers (Nchuchuwe, 2011:83). This is because, most of this local government do not posses viable sources of generating funds especially the rural ones. They therefore depend heavily on the allocations from the federation account for the purpose of carrying out their basic responsibility.

As Ekweremadu (2009), put it, over dependence on the Federal Allocation is the bane of most Local Governments in the country today. Nothing is done to increase the generated revenue level of the local governments.

As a result, most local government are found to be in dire financial mess wherever the statutory funds are not forth coming (Agbakoba and Ogbonna, 2004). They attribute this abnormality to political considerations and also posit that unreliable external revenues have hampered the Local Governments ability to meet the needs of their people.

Again, the inability of Local Government to generate adequate revenue to cater for its developmental programmes has affected the provision of social-welfare services for rural dwellers thereby resulting in decay infrastructure, poor road networks, unavailability of health care facilities, poor funding of primary education etc. The situation has thus led to wide disparity between the rural and urban dwellers thereby necessitating rural-­urban migration.

1.4 Objectives Of The Study

  1. The main objective of this study is to examine the Impact of local government Revenue on Rural Development in Nigeria.

Other specific objectives are:

  1. To ascertain the extent to which poor internally
  2. Generated Revenue may lead to rural- urban migration
  3. To find out whether the lack of kills/technicalities of Local government officials in handling development is responsible for the mismanagement of internally generated revenue on rural development

1.5 Statement Of Research Questions

In this study, attempt would be made to provide answers to the following questions

  1. Is there a relationship between local government Revenue and rural area Development?
  2. To what extent can poor local government Revenue lead to rural-urban migration?
  3. Does lack of skills/technicalities in handling rural area development responsible for the mismanagement of internally generated revenue?
  4. To the impact of local government revenue in rural development Nigeria.

1.6 Statement Of Research Hypotheses

This study is geared towards testing the following hypotheses:

  1. There is a relationship of local government Revenue in rural Development.
  2. Poor local government revenue may lead to rural urban migration.
  3. That lack of skills/ technicalities in handling rural development is responsible for the mismanagement of internally generated revenue.
  4. To the impact of local government revenue in rural development Nigeria.

1.7 Significance Of The Study

The significance any human endeavor is measured by its relevance to solving human problems. Therefore” the significance of this study is measured by its relevance to measuring the impact of local government revenue on rural area development. It is hoped that this study will enlighten the political class especially the people at the rural level in the management of local government revenue and to know how its impact affected the citizenry. More precisely, the study will encourage tax paid to pay their taxes and rate promptly in order to enhance the development and growth of the local council administration. The study will also be useful to students for greater knowledge and understanding, and for the general public, organization, companies, etc. that might be interested in this research work.

The research work intends to useful to government and policy makers by creating avenues for them in taking meaningful decisions effective and efficient governance that will affect the general populace positively.

It also tends to provide machineries for administrators in the area of discharging their duties and functions judiciously without biases and favoritism.

It study shall also be of great importance to the Local government, by imploring them to be more forthcoming, transparent and accountable to the people at the area as well as in the rural community.

1.8 Scope Of The Study

This research work is aimed at examining the impact local government revenue on grassroots development this study will be limited to Ifako Ijaiye Local Government Area of Lagos State.

1.9 Definition Of Terms


This is a system of government that gives an individual maximum freedom and periodical opportunities to choose their leaders and programmes.

Local Government:

This is a legally constituted body created for the rural area level purely for development purpose.


This refers to the level of output in the economy and the welfare of the people living in a particular country. Development simply means growth in output and the standard of living.


This is a country income from taxes, rate etc Constitution: This is a system of laws and basic principles that a State, a country or nation is governed by.

Rural Area Development:

This is used to denote the action and initiatives taking to improve the standard of living in rural-urban neigbourhood, country side and remote villages.


Corruption is seen as unlawful use of official power with the intension to enrich himself or further his cause or any other person at the expenses of the public in contravention of the norms and laws of his society.

Rural-Urban Migrations:

This is the interaction that exist settlers/ inhabitants from the rural area to the well industrialized urban cities in search of white collar jobs or green pastures.

Intergovernmental Relations:

This is the interaction that exists between and among the tiers, structures of government in the country.


It denote the embezzlement of public funds by public officer for his or her own private gain.

1.10 Organization Of The Study

This study shall be divided into five chapters which shall be as follows:

Chapter one shall consist of the introductory part whereby the background of the study will be stated, also will it comprise of the study, research questions, research hypothesis scope of the study, significance of the study, definition of terms as well as the organization of the study.

Chapter two shall include the review of related literature in the area of the study, historical background, conceptual framework, theoretical framework and conclusion.

Chapter three shall examine the introduction, restatement of research question and hypothesis research design, population of the study, sampling procedures, data analysis procedure, limitation of the methodology.

Chapter four shall consist of introductory part, respondents’ characteristics and classification, presentation and data analysis according to research question, presentation and data analysis according to test of hypotheses, discussion of findings.

Chapter five which shall be the last chapter of this research study shall consist of the introduction, summary of findings, conclusion and recommendation for further studies.

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