Local Government Finance And Under Utilization Of Funds In Nigeria (Warri-North Local Government Council As A Case Study)

Project and Seminar Material for Political Science

Local Government Finance And Under Utilization Of Funds In Nigeria (Warri-North Local Government Council As A Case Study)


With emphasis on local government finance and underutilization of funds in Nigeria, Warri North Local Government Areaas a case study. This study was undertaken by making use of research questions and a theoretical framework to explain the ill-management of local government funds in Delta state, Nigeria.

Data for this study were garnered through related literatures and questionnaires. The study also made use of simple percentage method in the analysis of data derived from the questionnaire. It was concluded that the non- adherence to established fund control mechanisms by local government officials affects the efficient management of funds in the local government. The study also resolved that the efficient management of local government funds has a positive relationship with the development of local government areas.

The study made some startling revelations which includes that the major problem of local government is not lack of finance as often purported but mismanagement of funds; lack of accountability has become rife in the local government system because of the disregard for internal control mechanism; strict compliance with the internal control mechanism has not only intensified the level of corruption but as importantly led to serious dearth in social infrastructure (e.g. roads, water, electricity, health facilities, schools etc.

In order to ensure strict compliance with the internal control mechanisms, some recommendations were made and they are; adequate monitoring of funds; improved welfare for local government officials; proper documentation of income and expenditures; recruitment of trustworthy and competent officials etc.

Chapter One


1.1 A Brief History of Warri-North Local Government Area

The Warry North Local Government Area has its administrative headquarters at Koko. It came into existence following the federal government creation of more local governments in September 1991. When the defunct Warri local government was divided into Warri South and Warri North local government areas.

The local government has a population of about 186,426 as reported in the 2007 census carried out by the federal government. It is bounded on the north by Ovia south and Oredo local government areas, on the east by the Ethiope west local government area and on the west by the Ilaje and Ese-Odo local government in Ondo state.

Apart from the fact that the area is a rural setting, all other towns and villages within it except Koko and Ajabodudun are accessible only by the means of river transportation. In other words, the local government is not only rural but also riverine.

The above therefore, call for government’s intervention in providing basic amenities such as health facilities, electricity, provision of portable water, jetties, etc to bring the much-needed relief to the various communities.

The local government is made up of mainly the Itsekiris and the Ijaws. The Warri traditional council in which the Olu of Warri serve as the chairman of the council. The Itsekiris, popularly called Iwere, are one people, having one language, one kingdom and the same law and custom. They are generally formed just a little above the medium stature and of a light complexion. The tribal mark for both men and women are usually; three small cuts on each side of the face just below the eyes, this is called Ilaju.

They are tastefully dressed. The men dress in a long sleeve silk or lace material and a judge or other fine quality wrapper which they tie round their waist down to their feet with fine quality pair of shoes to match. They top this with a hat, trinket or coral beads round their neck and also a walking stick. While the women dress with lace or other fine material blouse, a pair of wrapper mostly judge, head-tie, trinkets or coral beads and a pair of shoe to match also.

The Itsekiris have such cultural festival as Olu of Warri coronation yearly (Oye Ekoro), the Oreomi or river goddess in every three years in Koko, the Company or Masquerade festival also in Koko and the Okere juju festival each year in Warri.

They also have different cultural dances like, the Alala, Omoko, Eguen etc which involve the male and female folks. The Abeli is just for the male folks and the Alala for the female folks. The Itsekiris are good natural people whose standard of courtesy in everyday life is high.

1.2 The Study Setting

A major cause of slow and poor development in Nigeria has been the neglect of the rural areas by successive administrations. A good number of Nigerians (seventy-five percent) live in the rural areas, and are hardly included in the scheme of development.

The decision made by the Armed Forces Ruling Council (A.F.R.C) under General Babandiga’s administration was a confirmation of the Federal Government commitment to the development of the rural areas in Nigeria. this commitment gives rise to the raising of fund to the local government level. for example, the Directorate for Food and Rural Infrastructure (D.F.R.I), and Better Life for Rural Dwellers programme were initiated.

In the same vein, the local government council are now granted about seventy-five percent (75%) of the Federation Account as against sixty-five percent (65%). These bold attempts by the Federal Government are to promote development at the grassroots level so as to ensure funds are available for the development of the rural areas. The Federal Government pays the said twenty-five percent grant directly into the local government Federation Account. However it has been observed that some of the local government councils have failed to utilize the funds met to carry out expected developmental projects in their areas jurisdiction.

It is believed that the Local Government practitioners and research students examine the factor responsible for the poor utilization of funds by the Local Government Councils. Therefore, this research hope to carry out a survey of factors responsible for poor utilization of funds by Warri North Local Government Council, Koko.

1.3 Statement of Problems

This study is planned to determine the factors responsible for the poor utilization of funds in Local Government Councils.

The sub-problem of this study includes:

  1. To identify the factors responsible for utilization of funds;
  2. To determine the status of funds in terms of whether or not they were properly utilized in the local government; and
  3. What factor is responsible for the influence of poor utilization of funds.

1.4 Research Questions

The following research questions are therefore set for this study:

  1. What are the factors responsible for the poor utilization of funds by Warri North Local Government Council?
  2. Were the funds properly utilized by warri north local government council?
  3. What are the factors that influenced poor utilization of funds by local government council?

1.5 Purpose of Study

The purpose of this study is to facilitate the understanding of the causes of poor utilization of funds by Warri North Local Government.

1.6 Significance of Study

This study hopes to accumulate valid information to enable local officials and public in general understand the nature and status of the factors responsible for poor utilization of fund by Warri North Local Government Council.

The significance of this study therefore, is basically to enhance the understanding of the causes of the factors responsible for poor utilization of funds by the Warri North Local Government.

By t he same token, the findings and recommendations made in this report will enable Local Government officials and the general public in Nigeria learn about issues and related factors, likely to affects the factors responsible for poor utilization of fund by local government. Such knowledge and understanding will enhance their capacities in the solving of problems associated with the factors, which are responsible for poor utilization of fund at the grassroots levels.

1.7 Scope of Study

This study is limited to the factors, which are responsible for the poor utilization of funds by Warri North Local Government Council, Koko.

1.8 Definition of Terms


This simply means, a sum of money put aside or subscribed for a special purpose.


This is the sum or the amount budgeted for the execution or money meant to be spent on development for a year or for a period of time.

Local Government:

This simply refers to the local government council. In other words, it simply refers to warri north local government, Koko.


The act of inflating of credit of currency for a particular project or job to be done.


This simply means, a management of money affairs or the method of raising and controlling public money.


This simply means to construct or to build.


This means the bills of quantities. In other words, it is a schedule of materials prepared for the purpose of which the fund is granted for project work.


This means to show one’s certificate in order to know whether he/she is qualified to execute a project.

Chapter Five

Summary, Recommendations and Conclusion

5.1 Summary

Investigating Local Government Finance And Underutilization Of Funds In Nigeria, this study revealed that;

  1. The internal control mechanisms put in place to enhance financial accountability are not adhered to by local government officials in the discharge of their duties.
  2. Section 7, schedule 4 of the 1999 constitution guarantees the statutory funding of local governments. Section 7 (1) emphatically mandates the government of every state to make provisions for the financing of local government councils of the state.
  3. Local government funds are dwarfed by poor financial management, inadequate budgeting, improper accounting system and the lackadaisical attitude of accounting officers.
  4. Local government internal control mechanism is constrained by poor supervision, harsh socio-economic conditions, biting inflation and sapping conditions.
  5. Lack of financial accountability in the local government is occasioned by unpublished audited accounts, the nature of the nation’s political economy, inequality, poverty and corruption.
  6. Local governments in Delta state are financially equipped to meet the basic needs of the people.
  7. Local governments in Delta state are not financially accountable as funds are not duly utilized for the purpose they are provided.
  8. Poor management of funds has negative implications on local government development initiatives.
  9. Lack of accountability is largely responsible for the surge in corruption in the local governments in Delta state.
  10. Rural development can only be accelerated through the effective management of funds by local government authorities.
  11. Ineffective management of funds is responsible for the dearth in social infrastructure in the local governments.
  12. Poor accountability negatively impacts on the living conditions of the people.

5.2 Recommendations

Based on the findings of this study, the following recommendations are made;

  1. The welfare of workers should be improved upon by increasing their salaries and wages and other benefits offered as rewards in exchange for their services; this would go a long way in ensuring that their needs are well taken care of.
  2. There should be efficient machinery put in place to monitor and supervise the utilization of local government funds as this would to a large extent enthrone financial accountability and infrastructure development.
  3. The affairs of local governments should be investigated by the federal and state governments on a regular basis so as to ensure strict compliance to the rules of the Revised Financial Memoranda.
  4. Proper documentation of income and expenditures of funds as it would serve to minimize arguments that could possibly arise from unbalanced accounts.
  5. The federal and state governments should enact a law to guide the compliance of the Financial Memoranda by local government officials. Failure to comply with the financial memoranda should attract sanctions such as sack or suspension.
  6. Popular participation of the people should be encouraged as this would go a long way in keeping local government functionaries on their toes as an enlightened population would be concerned about the operations and success of the local government considering the enormous effect such would have on their lives.
  7. Local government authorities should embark on periodic workers training and orientation on the rules in the financial memoranda and the reasons for compliance. This can be carried out through seminars, workshops and conferences.
  8. Emphasis should be laid on recruiting well competent and trust-worthy officials in the local government.

5.3 Conclusions

Local government is the third tier of government established to ensure grassroot development. The huge task of guaranteeing rural development and carrying out its responsibilities efficiently is hinged on adequate finance.
Local government finance is derived through statutory allocations from both federal and state governments and internally generated revenues. Although, these sources of revenues have been touted to be inadequate for local governments to live up to their responsibilities, it is however shocking to note that the major problem of local governments is not primarily poor finance but financial mismanagement.

In order to ensure the efficient management of funds in the local government, internal control mechanisms were put in place for this purpose. Unfortunately the provisions of this mechanism are barely adhered to by local government officials; consequently leading to lack of accountability, transparency and corruption and a severe dearth in social infrastructure (e.g. roads, water, electricity, health facilities, schools etc.)

The refusal of local government officials to adhere to the provisions of the established control mechanisms can be attributed to harsh economic conditions, poor remuneration, poor supervision and poor accounting system.

However, this situation could change if; the welfare of local government officials is improved upon, trust- worthy and competent officials are recruited, adequate supervision and monitoring of local government funds is given top most priority etc.

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