The Problems Of Effective Utilization Of Revenue Available To Local Governments In Nigeria (A Case Study Of Aninri Local Government Area Of Enugu State)
When the researcher chose this topic: THE PROBLEMS OF EFFECTIVE UTILIZATION OF REVENUE AVAILABLE TO LOCAL GOVERNMENT, she was inspired by the high rate of embezzlement, poor leadership, low rate of accountability, general laxity of the finance department and corruption in Nigeria Local Government, and Aninri Local Government in particular. To do this, the researcher developed four (4) Questions. This questions were administered inform of questionnaires to 195 staff who were selected as a sample of the population. Apart from this, secondary data were used. In organizing and presenting data collected, tables and percentages were used as well. The data analysis revealed that ineffective utilization of revenue in the local government had created a negative impact in Aninri Local Government Area. The researcher therefore recommended that the revenue available to local government should be handled by honest and accountable personnel, those who posses sound knowledge about revenue generation and utilization. The outcome would be an effective and efficient management and utilization of local government revenue in such a way that would deliver the needed development.
Table of Contents
- Title Page
- Approval Page
- Table of Content
- 1.1 Background of the Study
- 1.2 Statement of the Problem
- 1.3 Purpose of the Study
- 1.4 Significance of the Study
- 1.5 Delimitation/Limitation of the study
- 1.6 Research Questions
- 1.7 Definition of Terms
- 2.1 Theoretical frame work
- 2.2 Brief History of Aninri Local government
- 2.3 Functions of Local Government Councils
- 2.4 Sources of Revenue to Local Governments In Nigeria
- 2.5 Summary of Aninri Local Government recurrent revenue and expenditure
- 2.6 The problem of effective utilization of Revenue of Local Government
- 2.7 The impact of the problems of effective utilization of revenue available to local government
- 2.8 Solutions/way forward to the problems of effective revenue utilizations
- 3.1 Research Design and Methodology
- 3.2 Sources of data
- 3.3 Area/location of Study
- 3.4 Population of the Study
- 3.5 Sample and Sampling Techniques
- 3.6 Establishing the validity of the instruments
- 3.7 Establishing the reliability of the instruments
- 3.8 Method of data analysis
4.0 Data Presentation and Analysis
5.0 Summary, Conclusion and Recommendations
- 5.1 Summary of Findings
- 5.2 Recommendations
- 5.3 Conclusion
1.1 Background of the Study
Nigeria as a sovereign nation operates a federal system of government i.e the federal government, state government and the local government councils.
Onwo (1992) Observed that each level of the three tiers of government derive its powers not from the magnanimity of the central government but from the constitution; each level of government has defined responsibilities assigned to it by the constitution. The implication of this is that the three segments of governments are mutually interrelated in a unified effort to make life worth – while for the masses.
Aninri local government area was created out of Awgu local government in October 1996 by the late head of state General Sani Abacha. As one of the new local government councils, it is facing a very serious crisis of development since its creation. Some problems facing the council include: insufficient office accommodation, staff quarters and office infrastructures. These problems seem to be insurmountable.
Indigenes of the local government are desirous of enjoying modern facilities, improved means of transportation, such as good road network and mass transit transport services. These desires are in line with stated objectives of the local government such as construction and maintenance of roads, provision of health services such as maternity homes, health centers, sanitization, provision of primary education and many others – as sponsored by the federal military government. The federation (Nigeria) years book of 1983, outlined the aims of the local government system in the country. According to that document, one of the cardinal aims of the local government system is to make appropriate services and development activities, responses to local wishes and needs by delegating authority to local representative bodies.
The citizens expect the council to excel in developmental activities. They would like to please the community or communities in the local government area through the provision of functional feeder roads and public utilizations.
The council administration in the other hand complains of inadequate finance to meet up with the numerous responsibilities yearning for attention. According to the guidelines for local government reforms or 1976, “it must be recognized that if meaningful local government is to be expected in Nigeria, much larger financial resources are needed” they also complain that staff salaries alone drain a high percentage of the monthly allocation. Financial experts postulates that money is at the center of developmental projects. Acquisition and proper accountability of funs are the pivot upon revolves. Adedeji (1979) capped it all when he declared that the success or failure and the effectiveness and ineffectiveness of local government depend on the financial resources available to the individual local government and the way these resources are utilized.
From the foregoing, it seems that an empirical study into the revenue base of the local government system at this harsh economic period is not only useful but very vital.
It is therefore against this background that this project work is being undertaken with a view to discovering the problems of Effective Utilization of Revenue Available to Local Governments with particular reference to Aninri local government area of Enugu state.
1.2 Statement of the Problem
The relevance of the local government councils as the government at the grassroot level is measured by the quality and quantity services rendered to the rural dwellers.
For the council to render meaningful services, in form of provision of basic amenities, construction and maintenance of roads, creation of employment opportunities for the citizens and pay staff salaries as and when due, money is undoubtedly required.
Without the availability of revenue, a local government council will not only be incapable of serving the people but will undoubtedly crumble. It therefore, follows that for the local government to discharge its statutory functions effectively, it should not only be adequately funded but such fund should be efficiently applied.
- One of the fundamental problems in local government financial administration is the issue of Effective Utilization of Revenue Available to the Local Government. Aninri local government council may have tits unique problems that militate against its financial administration.
- The problem of delay in payment of federal/state government grants to the local authorities.
- The problems of accountability in the local government council.
- Another problem is that of ineffective financial control and management both internally and externally.
- Fifthly, the problem of financial mismanagement and embezzlement of available funds in local government council.
Finally, the problem of corruption as stated by Oluwale (2000) militate against the utilization of local government revenue.
1.3 Purpose of the Study
The central focus of the study is to critically analyze the problems of effective utilization of revenue available to Aninri local government area as a case study.
- The study is meant to identity the major revenue sources available to local government .
- To ascertain the problems that confront the council’s administration in utilizing revenue for their services.
- To find out whether or not the revenue is adequate for the council’s expenditure.
- To investigate the system of financial control in the local government council.
1.4 Significance of the Study
The significance of any human endeavour is measured by its relevance to solving human problems. Therefore, the significance of the study is measure by its relevance to solving the problems of effective utilization of revenue available to local governments in Nigeria.
The project will be of benefit, first and foremost to the Aninri Local Government administration, as it will expose to them potential sources of generating of revenue internally.
Secondarily, it will help the council to strengthen its financial bases as this study would highlight some identified problem hampering the utilization of revenue in the council.
Thirdly, it will also be useful to the indigenes of Aninri local government to co-operate with local council administrators to enable them build a viable local government by paying their taxes and rates promptly.
Fourthly, the project will be useful to various institutions especially Caritas University, for gaining greater knowledge and understanding of the problems of effective utilization of revenue available to local government.
Finally, the project will be useful to the general public, organizations, companies etc that may have interest in the project.
1.5 Limitations of the Study
i. Delimitations (scope) of the study:
This is centered on the problems of effective utilization of revenue available to local government in Nigeria but due to the wide or vast nature of Nigeria, the researcher now chose Aninri local government as a case study to deal with this particular problems in other local government in Nigeria.
The study is also centered on the sources of revenue available to local government both the internal and external sources of revenue.
ii. Limitations (constraints) of the study:
In the effort of carrying out this research bathe researcher was faced with the problem of time, finance and visitation of Aninri Local Government, the case study of the research work.
The researcher being a student, found it difficult to get exeat out of the school premises and the time frame given was so limited in carrying out the research work. Also, the distribution and collection of the questionnaire to the staff of Aninri Local Government was not easy for the researcher as the respondents were not always available.
The study was carried out under a lot of constraints. The class work and financial constraints were other limitations which made it uneasy for the materials to be ready available at the appropriate time.
1.6 Research Questions
In the effort of carrying out this research, the following questions were formulated:
- Are you aware of the constitutional provision of revenue sources to the tiers of government in Nigeria?
- By what means has Aninri Local government planned the expenditure of available revenue?
- What systems of financial control measures are used by council administrators?
- Has the utilization of the Revenue Available to Aninri Local Government produced positive or negative effects?
1.7 Definition of Terms
Some concepts and terms required proper explanation or definition to enhance our understanding of the theme where necessary opinions of scholars will be cited to illustrate the terms.
The Ancient Greeks defined democracy as a government of the people, by the people and for the people. This political arrangement allowed every adult male citizen to participate in government activities.
Dare (1981) Postulated that modern democracy is a system of government which gives to individual maximum freedom and periodical opportunities to choose their leader and programmes. Multiple party-systems are a vital characteristic of a democratic government.
The term pragmatism is derived from the Greek from which practical action arise. It could simply be referred to as philosophy or practical consequences or result orientedness. In our context, it is used to describe political programmes aimed at betternece living standard of the masses.
Rural development is a strategy designed to improve the socio-economic life of the rural dwellers. It involves extending the benefits of development to the less privileged in the society. When applied to local government councils as a third tier of government, in the county, it means conscious efforts by the government, to carry government programmes to the village level. In so doing, deliberate actions are initiated to improve the rural population.
Owing to the fact that local government provides local services like sanitation, education, transportation etc to the people of the area, it is logical that it is accountable to the local people within its area of jurisdiction.
This principle of accountability is better ensured by making local government or local government bodies elective institutions. If they function below expectation, they may be criticized by the people or voted out during the next elections.
Absence of local accountability may make them indifferent and insensitive to the need, feelings and aspirations of the local people.
5.0 Summary of Findings, Conclusion and Recommendations
In this chapter, efforts will be made to present the findings of this study, draw some conclusions and finally make some necessary recommendations.
5.1 Summary of Findings
From the study, one could summarize that the problem of effective utilization of revenue available to local government, in particular, Aninri local government as a case study is not in the hands of the federal and state government, but in the hands of those in the council especially those entrusted with the local government revenue.
On the problem that hinders the effective utilization of revenue available to local government, it was deduced from the data collected that general laxity on the part of the finance department top the list of the problem that hinders revenue utilization. In this case, it means that the finance department to those entrusted with the revenue of the local government are strict with the regulations when it comes to handling the local revenue.
The collected and analyzed data revealed that the level of development on Aninri local government is unsatisfactory, though the actual revenue is not up to the estimated revenue, but the available revenue is not utilized to produce the basic amenities for the indigenes of Aninri local government like good roads, electricity, pipe – bore water etc.
It was identified that the utilization of the revenue available to Aninri local government produced negative impact on its indigenes. It has produced underdevelopment in Aninri local government. There are no local industries where the indigenes of Aninri can be gaily employed. Therefore, the standard of living of the people of Aninri local government is very low.
According to the interview carried out by the researcher on one of the staff of Aninri local government, he was of the views that, though the money is coming both the statutory allocation and the internally generated revenue, but before the revenue gets to the implementation stage, the revenue will be inadequate die to embezzlement of the revenue by top officials.
Misplaced priority also hinders utilization of revenue of the local governments. The revenue allocated and generated by local government are always misplaced and mismanaged. As one of the findings of this study, priorities are misplaced projects are done not according to or as demanded by the people.
The researcher also found out that lack of accountability constitute problem for effective utilization of local government revenue, poor leadership, corruption, poor electoral body at the local level, late release of fund from the state government and inadequate skilled personnels. All these problems hinders effective utilization of revenue available to local governments.
As a result of the findings of this research work, the researcher postulated that without good leadership, corruption free personnel as well as the chairman, accountability in every department of the local government, setting priority first, free and fair election at the local level, there can never be prudent management of its revenue.
Therefore, in order to combat the problems of effective utilization of local government revenue, so that intended development of Aninri local government is enhanced and citizens enjoy modern items of development, the researcher recommended the following:
- Firstly, the electoral body at the local government area should carryout a free and fair election. This will reduce the number of corrupt and unqualified personnels in the local government.
- Secondly, the internal auditors to the council should be highly qualified senior accounting staff to avoid being intimidated by other administrative officers of the council.
- Thirdly, there should be an auditor general. Auditor general is very important in local government, this is because the auditor general is a neutral person who is appointed by the state government, and by so, he knows no one in the council, and function without being partial.
- Fourthly, there should be checks and balances. This is because power corrupts and absolute power corrupts absolutely. The three tiers of government should act as a watchdog over the other.
- Fifthly, an audit alarm committee should be established in the local government so as to inform the auditor general when the chairman is making illegal payment.
- There should be inter-departmental checking of all the department especially the finance department i.e treasury department for accountability.
- Lastly, the state government should ensure to remit the share of local government revenue when due or promptly.
After careful study of the data collected and analyzed, the researcher drew the following conclusion
That the major problem of the utilization of local government revenue originated from electing corrupt and unqualified personnel who knew little of nothing about being a leader or functionaries in the local government. When the head is corrupt, certainly, the whole body fellow when the leaders or chairman of a local government embark on illegal payment in the council without being cautioned, what then become of the staff. The overall impact of the problem of effective utilization of revenue available is to say that, it has produced underdevelopment such as lack of social amenities like good road, tap water, electricity and other social infrastructural facilities and poverty.
The research work has discussed critically and analytically the problems of utilization of revenue at local government level, examining the problems associated with revenue utilization, the impact and the solutions to these problems. It is the view of the researcher that if those entrusted with the money of the local government are honest and accountable, posses sound knowledge about revenue, reduce human factors and posses accurate and reliable information etc. they will be able to effectively and efficiently manage and utilize revenue at local government level in such a way that will commend the support and approval of the people, ad deliver the needed development to where it is most needed.
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