Local Government Finance And Local Government Development

Project and Seminar material for Public Administration

Project and Seminar material for Public Administration


Local government is geared toward making local government bedrock for social economic and political development, Somehow, the 1999 constitution seems to have overridden the gain and aspiration of this tier of government with the exclusion of local government from the constitution.

However, this research work applies the technique of grander causality to determine the relationship between local government finance and development using annual revised estimated. The projects examine an assessment of local government finance and development using Surulere Local Government as a case study. Survey method was used to get information from the area of study.

‘The research work was conducted among staff of Surulere local government one hundred and fifty (150) questionnaires was administered one hundred and fifty (150) questionnaires were returned. Structure and closed-ended question were made in the study. From the hypothesis testing, it shows that finance enhance development in Surulere local government.

Conclusively, local government should make effort to be more active this will encourage the people and also involve professionals in the development in Nigeria local government.

Chapter One


1.1 Background Of The Study

The expediency for the creation of local government anywhere in the socio-political environs in world stems from the need to facilitate development at the grassroots. The significance of local government is function of its ability to generate sense of belongingness, safety and satisfaction among it is populace. All forms of government regimes or political system have so far ensured the attainment of this goal. (Ajisegiri, 2011) such strategy for ensuring national administrative development and political efficacy is found in the concept and practice of local government. Whatever is the mode of government, local government has been essentially regarded as the path to and guarantee of national integration administration and development.

Central to the creation of local government however, is its ability ‘to facilitate an avenue through which government and the people intermix, relate and more quickly than among other means resolve or dissolve issues that may have heated the system.

In a federal system like Nigeria, local governments are close to the people and hence could effectively alter socioeconomic and political conditions within’ their jurisdictions. Apart from providing and maintaining basic infrastructures, local government can complement the economic activities of other levels of government. The activities of the National Directorate of Employment, for example, or the back-to-land programmes that are agriculturally based, can have more positive impact at the grassroots level by working with local governments.

Basically, in any system local governments are created to decongest the functions and burden of central governments and to provide services that are local in character. The need for local government may be stated specifically as follows:

  1. It is more democratic. This is referring to the fact that it increases the scope for citizenship participation in the government of their locality.
  2. It provides valuable political education. This type of education exposes citizens to power and authority – its acquisition, its use and its risk.
  3. It trains people for higher public offices. Local Government becomes a platform or a springboard for acquiring experiences for higher career in government,
  4. Local knowledge is brought to bear on decision by local government.
  5. It is more sensitive to local opinion. Councilors and representatives are closer to the people and respond much easily to their demands or to be voted out.
  6. Local initiative can easily be identified and taken on board especially in mobilizing community to gain local support for projects.
  7. Power is more widely dispersed which a safeguard is against tyranny. The local government system protects citizens against this.
  8. Local variations and needs in service provision can better be handled by local government since it understands the needs of its own locality.

Local Government is grassroots government recognized by law. It is defined severally by authors and bodies. Let us look at the definition of local government from the perspective of one author and two bodies or documents.

Maddick (2005) defines local government as:

A sub-unit of government controlled by a local council which is authorized by the central government to pass ordinances having a local application, levy taxes or exact labor and within limit specified by the central government varies centrally decided policy in applying it locally.

The United Nations defines local government as:

A political sub-division of a nation (or in a federal system, a state) which is constituted by a law and has substantial control of local affairs including the power to impose taxes or to exert labour for prescribed purposes. The governing body of such an entity is elected or otherwise locally selected.

The Reform document (Nigeria, 1976) defines local government as: Government at local level exercised by representative council, established by law to exercise specific power within defines areas.

From the three definitions above, certain characteristics of local government stand out;

  1. That local government IS a subordinate system of government
  2. It has both legal and constitutional power to perform certain legislative, administrative and quasi judicial functions.
  3. Has the power to make policies, prepare budgets and a measure of control over its own staff.
  4. Its council could be elected or selected.
  5. It has legal personality i.e. can sue and be sued.
  6. It exercise authority over a given territory or population.

These definitions, point at local government as having government character within limited powers.

This can be further broken down more specifically as follows:

  1. Legal entity which can sue and be sued for wrong doing.
  2. Power to make its own laws, policies, plans and budgets on what to do, how why, where, when, for who and at what cost.
  3. Legislative body called a council composed of elected councilors and a chairman to make laws and policies.
  4. Executive body called the Committee composed of appointed or elected officials and the chairman to formulate policies and laws.
  5. Administrative body called the local government service composed of career civil servants to assist in formulating and in implementing laws and policies.
  6. Power to tap human, financial and material resources for public use within the geographical area
  7. Answerable to a higher level of government (National or State or Regional) on certain power and functions it carries out (especially concurrent function). This is to say that a local government is not absolutely autonomous.

1.2 Statement Of The Problem

For any local government to excel in its primary function which is dew of the grass-root level and contributing to the national development it must make efficient revenue and work revenue structure which IS the back bone of every organization. However, the performance of local government in the area of income generation is far below expectation of which the area of study· is not an exception in this respect. Observation across the Surulere Local Government Area shows the peculiarity of ineffectiveness of local government administration in most parts of the country due to lack of comprehensive functioning role, improper structure. The financial where withal, lack of quality personnel has been noticed to be a thorn in the flesh of development in Nigeria local governments. These invariably include bad leadership and low community participation.

This is the reason that this study is being designed to address the following research questions.

  1. How can local government contribute to national development?
  2. What are the sources of revenues of the study area?
  3. Is there relationship between the revenue generated and development in the study area.

1.3 Objective Of The Study

The main purpose is to examine the revenue and development in the local government (Surulere Local Government Area) with the view of suggesting some solving measures.

The specific objectives are to:

  1. To investigate the source of local government finance and as well its development in Nigeria economy.
  2. Identify both internal and external sources of local government revenue.
  3. Compare both sources In terms of contribution and reliability.
  4. Examine the problems of internal sources of local government revenue.
  5. To make appropriate suggestions.

1.4 Research Questions

  1. Is there any relationship between the revenue collected by the local government and development in your community?
  2. In your opinions, does your local government really have interest about development of its community?
  3. Do you think poor and mismanagement of government reduce local government development?
  4. Your own opinions, in what ways do you think local government can increase its revenue.
  5. Do you think local government has received much financial support from the federal and state government?
  6. In past year, what can you say the local government has done in terms of developing the community?

1.5 Research Hypotheses

  1. HI: Effectiveness in the internal revenue generation of the local government will lead to development In Nigerian local government.
    Ho: Effectiveness in the internal revenue generation of the local government will not lead to development in Nigerian local government.
  2. HI: Corruption is the main problem that hinders development in Nigeria local government.
    Ho: Corruption is not the main problem that hinders development in Nigeria local government.
  3. HI: Over dependency on statutory allocation affects development in Nigeria local government.
    HI: Over dependency on statutory allocation will not affect development in Nigeria local government.

1.6 Scope And Limitation Of The Study

The essence of this study or research work is to find out the impact of revenue to development in Nigeria local government.

Therefore, this research work will look into the relationship between the revenue and development in Surulere Local Government Area of Lagos State. This research will be useful to local government administrators in Nigeria on how to improve the revenue generation in carrying out this study some problems will be encountered. The problem of concentrating one local government may affect the scope of the study.

That the respondents may think that it tends to expose their inefficiency may make the unwilling to supply the data needed.

Also time constrain will affect the scope and the limitation of the study.

1.7 Significance Of The Study

The significance of this research work cannot be contested, going by the dwindling of Nigeria economy and the need to highlight the responsibility of the government to the citizen. Expectedly, the local government plays a· pivotal role in deliverance of dividend to the citizen under a federalism system of government.

The study tends to open up the sources of finance to the local government, and their development capability for inquisitive minds and as well call the attention of the policy maker where appropriate as regard fund requirement by the local government for possible review of revenue sharing basis and/or formula. In addition to this, the study will call the attention of the accounting officer at the local government to effective and efficient allocation of fund disbursed to their end for commensurate development. The research will also serve as a reference for further research work.

1.8 Definition Of Terms


A section of government department in charge of a particular activity.


A wide range of difference between two groups e.g. the rich and the poor.


To separate and go in different direction.


Strategies means a plan design ton achieved a long time aim and objectives.


A means of achieving something.

1.9 Organisation Of Study

This study will be divided into five chapters,

Chapter one will examine the introduction of study, Background of the study, statement of problem., objectives of the study, Research question, statement of hypotheses, scope / limitations of the study, significance of the study, Definition of terms and organization of study.

Chapter two is the literature review with, the theoretical framework of various scholars on the subject

Chapter three centers on introduction, Restatement of research question and hypotheses, research design, sample and sampling procedure, data collection instrument, administration of data collection instrument, data collection procedure, procedure for data analysis, limitation of the methodology .

Chapter four will examine introduction, respondent’s characteristics and classification, presentation and analysis of data according to research question classification presentation and analysis of data according test of hypotheses, discussion of findings.

Chapter five which is the last chapter introduction, summary of , finding and conclusion and makes recommendations, suggestions for further studies.

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