The Problems, Challenges And Prospects Associated With Revenue Generation In Local Government (A Study Of Oke-Ero Local Government Area, Kwara State)

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The Problems, Challenges And Prospects Associated With Revenue Generation In Local Government (A Study Of Oke-Ero Local Government Area, Kwara State)

Chapter One


1.1 Background of the Study

Revenue generation simply means raising funds in the most economic and suitable manner. The history of revenue generation in Nigeria is traceable to eighteen century before the coming of the British, when the Fulani Empire was in place, when the emirates were divided into districts and village and when the hakims districts heads were made tax collectors.

Hakims is were to collect different types of taxes such a Jangali live stocks tax land tax Kharey, and the capitation tax called Gandu in Cowry. Shells currency for the Gmir who was more or less the government.

Lugard and the subsequent native revenue ordinance of 1917 could be said to be the evolution of revenue generation of the modern local government administration system of the north. Though the amending ordinance passed in 1918 extended the provision of 1917 to the south Nigeria, it was only to impose tax on all taxable adults and individual residents in the colony are a composed of Lagos, Epe and Ikorodu, the jurisdictional area of the administrator of the colony.

However in 1927 another legislation was enacted which imposed tax on all native adult and non-native alike in Nigeria.

Today neither the orthodox method of revenue generation nor the native authority system of local government in the north and south exist.

The Nigeria local government reform of 1976 has made the modern local level in deed. Now it is a government exercised through representative council of the local citizens, established by law and strengthened with specific power of substantial control over affairs, institution staffs and finance for the initiative and direct the provision of service and also to determine activities of federal and state governments in their areas as well as to ensure through devolution and through activities participation of people and tradition that local initiatives and responses to needs and conditional are maximized.

Based upon these premises in which the modern local government’s abodes it needs to be viable for it to achieve the objectives and purposes as assigned to it by the constitution. The viability of local government in turn depends not only of the nature of power apportion to it in the political system of the society as well. Local government to perform it’s function and to control it’s affairs.

Consequently it is imperative that everybody is involved that the entire people, all able bodied citizens of the council area involved and mobilized to participate in the local generation of funds for good government and the council activities effective local development. And effective local development is local participation, which is the active involvement of the local populace in the local fiscal policy formulation and execution.

1.2 Concept of Revenue Generation

Revenue as define by Oxford Advanced learner’s dictionary of current English is income especially the total annual income of the state, government department which collects money for public fund. As related to local government, revenue is any income, proceeds or returns accruing or derived from the higher levels of government of from any other operation of law or source including.

  1. Any receipt however described, arising from the operation of law.
  2. Any return however described, arising from or in respect of any property held by the local government.
  3. Any return by way of interest on loans and dividend for share or interest held by the local government in any company or statutory body.

Revenue generation is the art of securing for money or funds to accurate to the local government from taxes and rates, fees from licenses permits, charges from commercial services, loan and grants statutory allocations from federal or state government and any other sources not here specifically mentioned but not of which the public expenses are defrayed.

1.3 Scope and Limitation of the Study

The study is limited in scope to Oke-Eru Local Government Area of Kwara State. The study provides an insight into the various sources of revenue to the local government, the types of revenue machinery, it’s method of collection, administration efficaciousness and otherwise as well as problems and prospect.

1.4 Aim and Objective of the Study

The purpose of writing this project is to highlight the problems, challenges or hindrances and prospects associated with revenue generation generally and in Oke-Ero local government is the extent of its financial independent even when more public goods and services and demands, become necessary for the society to love averagely comfortable its ability to control most of it’s financial resources has a great deal to do within its capacity to discharge competently its function. Next .to this fact is that for local government to be able to execute the functions allocated to it by the constitution as the third her government efficiently, it must have not only executed capacity and discretionary power but also adequate finances.

Since most of these functions and service cannot lend themselves easily to individual ownership because of the huge capital out lay necessary for their execution, it thus requires, team efforts greatly from the locality, federal government and from state government who should be frank in the part it plays to pull resources together for local government so as to provides these indispensable goods and service that require colossal sum of money for their provision.

As a result of the solution to the perennial financial crises faced by local government can only be found in efficient and effective generation of revenue.

The general principles is to provide an sight the general altitude of the people of this local government can only be found in the course of revenue collection and to give meaningful advice and various recommendations on how these problem can be overcome so as to ensure the effectiveness collection of various revenue in local government.

The write up will show the efforts made by the local government to reduce the problems encountered during revenue generation and prefer some useful suggestions or recommendation on how to effectively and efficiently generate more revenue for the local government to enable it implement it programmes for which it was establish.

1.5 The Importance of the Study

The fact remains that local government is the basic cell of the series of the decision making levels of a nation. But the fact also remains that Nigeria local government councils are severally limited by paucity of financial resources. This situation makes it important for every student of public administration and local government management that want to engender ways out of the poverty.

This work being an engagement in these directions wills surely benefits sets of policy formulation policy implementers’ public managers and local government employees. The various issues that are reviewed employees. The various issues that are reviewed or analyzed and recommendations that are preferred shall certainly be of good assistance to the people in their official engagements. The research work may also benefit future research work may also benefit researchers in their fields serving as source of references for their works.

1.6 Conceptual Meaning of the Terms Used

Effective Operation:

Effective operations are operations that optimally served the objective themselves are optimal in relation to higher objective.

Efficient Operation:

These are operation in which the various of out put produce to resources used, is the highest desirable one under the prevailing circumstances. That is the those operation in which the optimal processes are employed to convert resources available into services and goods they are intended to produce.

Special Grants:

Special grants are made and tied to important national or state economic or social programme to be handled by the local government.

Revenue Allocation:

Revenue allocation is a mechanism or a system where by the local government has a direct share of its specific item or the total nationally derived revenue.

Statutory Allocation:

These allocations are by both the federal and state government in principle statutory allocation are intended to cover both recurrent and capital requirement of local government.

Special Rate:

These are rates levied every adult in a local council area for special purpose such as education and water supply. Some people call it development rate.

Flat Rate Tax:

It is a common rate levied upon every male adult in a local council area payable only once in a year.

1.7 Organization of Study

The study is organized and divides into five unequal chapter for a better understanding and for an easy development of point so as to drive the fact embodied in the topic home clearly.

Chapter one: this chapter is the background of the study. It is the introduction into the topic (local government administration and revenue generation). The chapter of revenue generation, scope and limitation of the study aim and objective of study, type of research method used and the importance of the study aim and.

Chapter two: this is the literature review just as the title portrays, it consists of the reveiew of ideas, views and opinions of some other authors asa related to the write up so that they can shed more light on the discuss for instance Geoff and sean honan gave us an insight into what revenue generation, policy on revenue generation the (principals aim of local government reforms as related to revenue.

Chapter three: this chapter is mainly about the historical background of oke-ore area, the people, their local government and the structure of the local government. It tries to explain to a single manner, the history, and composition, cultural heritage of the people, their religious beliefs ceremonies tourism attractions in the land and the functions of their principles officers alike.

Chapter four: this is the analysis and interpretation of idea which are apprising the over whelming financial dependence of local government on federal and state government finding. The chapter went further to explain the legitimacy of self dependence through internally generated revenue duties of collectors, sources of revenue open to oke-ero local government and problem of revenue generation in oke-ero council area.

Chapter five: this chapter deals extensively on what it takes to change the trends of financial dependences of the local government to a better financial position of self – reliance and financial buoyancy.

Chapter Five

5.0 Summary, Conclusion and Recommendation

5.1 Summary

The topic of this research work is “Local Government administration 8 problems generating. And Oke-Ero Local-Government council has been chosen for the research as a case study.

Therefore during the causes of the study, the following facts discovered that there is improper or lack of grass root orientation civil education and if a local government id to discharge it’s potions well, it must have a sufficient financial administration bases.

If local units are too weak or small in their financial resources they will be irresponsive to demands and thus incapable of discharging a wide range of profoundly important functions which concern socio-economic development, health and vitality of the general well being of the people in the area of their jurisdiction.

The fact must be recognized that takes knowledge, understandings and contributions from the citizen to make a local government’s treasury rich. It is a fundamental laudable objective to have every citizen of the council area knowledgeable political literature and participative in the affairs of their local government. To this end hoping that a local orientation unit of education department be created. The council should go out with full strength for civil education campaign. Teach all citizen about all the matters and all what they ought to know about their local government inculcate in the people love for the councils make the people understand that the local government is every body substance even an enviable heritage that require everybody’s patriotic support and contribution to make it viable. Also, these must also put into consideration internally and externally generated revenue. It a local government must develop and grow. It is imperative for finding through internal revenue generation one level of government is the extent of its financial independence and its ability to control effectively its financial resource.
Consequent to the view I think, two broad role can be prescribe for the council to aspire to financial self sufficiency.

They two roles are strategic roles and tactical roles.

  1. Under the strategic roles, the council are the think tank for the community their major role is to generate idea that will boost the revenue of the council with out having undue strain on the people they should be able to bring idea that can cause expension of revenue bases chat are viable, profitable, economical and simple to operate if such ideas become nature and approved by the council the council member must take a step further to ensure proper implementation and coordination.
  2. The tactical role delves on hour curb corrupt and mal-practice during and after collection of revenue. One of the major problems facing local expense for example. It is noted that local councils spends more money collecting revenue under some items than yields. So also some collectors pinch money out of their collections and records are manipulated to reduce the actual yield. These are just a few of corrupt offence, problems and mal-practices associated with revenue collection in the council.

While the external revenue is the solution to the perennial financial crisis faced by local government and the panacea to centre government bluffs is the establishment of a local government credit institution, a central financial institution created and supported by all levels of governments for the local governments. If established it can be Christian community development fund, local government, local bank, bank of local governments and municipalities or what ever name. it is not name given to it that matters what matter most is the advantage of the institution.

5.2 Conclusion

A government which lacks knowledge of how much money at its sources is anything but irresponsible government. So also there is no state which pays only lip service to the development of her rural areas and the welfare of the masses who are the dwellers can develop and progress. We must develop from below chat is the sure strategy because a nation develops and grows from below chat is nation building.

If adequate funds are to be made available for capital development in the country side, if the serious difficulties and inconveniencies now at the moment by local governments in financial their capital development programms and in providing satisfactory essential social amenities and basic infrastructural facilities are to be reduced to the barest minimum, if not totally obviated and if erratic and discordant developments in particular and to be state and national economy in general is to avoided, then the establishment of local credit institution is a categorical imperative.

5.3 Recommendations

If a local body is to discharge its function well, it must have a sufficient financial and administrative base.
If local government is too low in their financial resources that is resources will boost the area of socially and personal management should make sure that there should be strategy and even tactics in the way of employing people into different department in order to avoid incompetent employee and mismanagement.

Oke-Ero localty is endowed with so many tourist potentials and very fertile fadama lands that are yet to be resourcefully exploited and not even only Oke-Ero local government but also in the remaining local government in the federation that possess these potential. In Oke-Ero place like Ero Omola natural fall at Idofin-Igbana, and Imole-Boja, a natural rock shelter at Odo-Owa it developed will become beautiful edifices of alteration to tourists who will bring their money for the development and growth the council area.

So also, there are here and there are very many fertile Fadama lands such as Odo-Atan, Igbira, Kakola and Egbere Marshat Odo-Owa, Idofin-Odo-Ashe plam land, Agbara swamp at Egosi, Iyemo-wo-Ajure fadama to mention but few. These swampy lands can be fully engaged all what it demands is to build earth demands is to build earth dams in these places, provide water pumps and implements far irrigation farming and surely money will roll in.

If the federal government could established the suggested local government fund and it is entrenched in the constitutor every share of the local government from the federal government could be paid to them directly through the institution.

Good inter-governmental lobby, cordial human relations good leadership and political tactics are the local governments’ share of the internally generated revenue within the state or any other state

The Problems, Challenges And Prospects Associated With Revenue Generation In Local Government (A Study Of Oke-Ero Local Government Area, Kwara State)

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The Problems, Challenges And Prospects Associated With Revenue Generation In Local Government (A Study Of Oke-Ero Local Government Area, Kwara State)


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