Revenue Generation, Utilization And Grassroots Transformation In Nigeria

Project and Seminar material for Public Administration

Project and Seminar material for Public Administration


Revenue generation in the public sector is very important because of demand for economic development. This study examined Revenue Generation, utilization, grassroots transformation and accountability in Uyo Local Government Council. It employed descriptive and analytical approaches. A total number of forty (40) respondents out of fifty (50) were selected. Data were collected mostly from questionnaire and interview data collected, were analyzed using simple percentage while chi-square statistic was used for testing the hypotheses. The study revealed that, there is a significant relationship between revenue generation, utilization, grassroots information and accountability for any meaningful development in a local government. The study recommended strict implementation of financial regulation policies, funds control techniques, regular auditing and implementation of penalties for tax defaulters.

Table Of Content

Preliminary Page(s)

  • Title page i
  • Certification page ii
  • Dedication iii
  • Acknowledgement iv
  • Abstract v
  • Table of content

Chapter One


  • 1.1 Background Of Study
  • 1.2 Statement Of The Problem
  • 1.3 Research Aim And Objectives
  • 1.4 Research Questions
  • 1.5 Research Hypotheses
  • 1.6 Significance Of The Study
  • 1.7 Scope And Limitations Of The Study
  • 1.9 Definition Of Terms Used In The Study
  • 1.10 Historical Background Of The Study
  • 1.11 Organization Of The Study

Chapter Two

Literature Review

  • 2.1 Empirical Review
  • 1.2 Theoretical Framework
  • 2.3 Revenue Generation In The Nigerian Local Government System
  • 2.4 Sources Of Internal Revenue Generation Of Nigerian Local Governments

Chapter Three

Research Methodology

  • 3.1 Method Of Data Collection
  • 3.2 Population Of Study, Sample And Sampling Techniques
  • 3.3 Research Design

Chapter Four

Analysis And Result Presentation

  • 4.1 Problem Of Internal Revenue Generation In Uyo Local Government
  • 4.2 Negligence On The Part Of Revenue Officers Is A Major Problem To Internal Generation Of Revenue In Uyo Local Government
  • 4.3 Revenue Utilization In The Local Government
  • 4.6 Accountability And Transparency

Chapter Five

Summary, Conclusion And Recommendation,

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendation
  • References

Chapter One

1.0 Introduction

1.1 Background Of Study

Revenue according to Buchanan, Flowes (1975:70) is defined as the money generated by the Government or any public sector to carry out its functions. It is the amount of income received or total receipts. The main source of Government revenue generation is through taxes. It therefore has great impact on revenue base of the nation, state or even the Local Government Area. The 1976 Local Government Reform goes forth to apply that, which ever institution or Arm of Government is entrusted with the task of collection or generation and disbursement of public funds must do so in absolute respect to the laid down rules and regulations. These Local Government Reform Guidelines has guaranteed self sustained sources of revenue to the Local Government and it is captured in the forth schedule of 1999 constitution and the Joint Tax Board (JTB) harmonization of the taxes and levies schedule for the three tiers of Government (1997). Local government as an institution is designed to provide a wide range of services; citizens and indeed all stakeholders feel that their achievement of social, economic and political aspirations depends on their involvement in the affairs of the Local Government.

Consequence to this, Local Government as preferred by Gorvine (1965), consists of those institutions of Government which are closed to the people constitutionally, legally and physically whether the Area is rural or urban. Although it is can carryout a lot of functions since it is closer to the people, only what the National or State Government permits. Local Governments and their Administration are therefore strategic in the overall macro-economic growth and development of the Nigerian economy. Even though the National Government in the nature of things sets limit to Local Government, the functions of macro- economic growth and development, effectively and positively altering of the socio political conditions of the people at the grassroots’ are still met as the result of these third-tier of Government being nearer to the people of the grassroots’.

It is in recognition of the important role of local government administration that this project will focused on which is revenue generation, utilization, grassroots information and accountability in Uyo Local Government Council of Akwa Ibom State.

1.2 Statement Of The Problem

The main purpose of revenue generation from the point of view of any government organization is to raise funds to provide essential, social and economic amenities. As money is the life wire of all types of development, fiscal management which in those operators designed to make funds available to officials and to cause lawful and efficient use becomes a problem. The principal fiscal functions connected with the receipts and disbursement of public funds includes budgeting, safeguarding and disbursing of funds in line with goals and various constraints and problems which coupled with failure to comply with regulation governing the collection, accountability of public funds by Uyo Local Government Council.

1.3 Research Aim And Objectives

The Reform Local Government System in Nigeria is relatively new and has been done to study its lapses and problems in the area of revenue generation, utilization and accountability. Therefore, objectives of the study are were as follows;

  1. To identify the sources of revenue as approved by the statutes and other Instruments in Uyo Local Government.
  2. To Find out how revenue is being generated and controlled in Uyo Local Government Council.
  3. To determine the extend to which the generated revenue has been utilized to meet its respective purposes.
  4. To pin-point potential problems limiting effective revenue generation and accountability and to make recommendations on how to control these problems.

1.4 Research Questions

  1. What is the usefulness of revenue collected from the tax money by the Local Government?
  2. What are the sources of revenue generation available in the Local Government?
  3. What could be the problems associated with the revenue collection and Administration in the Local Government?

1.5 Research Hypotheses

  1. There is a significant relationship between payment of tax and the non-chalant attitude to work by revenue collectors.
  2. There is a significant relationship between revenue generated and the project implemented in Uyo Local Government.
  3. There is a significant disparity between revenue generated internally by Uyo Local Government through tax and the income or grant from both the State and Federal Government.

1.6 Significance Of The Study

The significance of this research work is as follows:

  1. It is hoped that the findings in this study will generate useful input to other Local Governments to evolve strategies and fund control techniques to ensure judicious use of Councils’ funds and resources.
  2. It will be an eye – opener to public servant within the confine of Local Government employment to work harder, appreciate financial management policies and procedure, and improve their effectiveness and efficiency in administration as it plays a vital role in the! developmental growth of any Local Government.
  3. The study will motivate other government ministries, parastatals and agencies in charge of local government supervision to ensure strict compliance with laid down guidelines and procedures for revenue generation and disbursement.
  4. The study would also expose those sources of revenue not well explored in terms of revenue generation.
  5. The study will serve as a reference material for other researchers and interested parties.

1.7 Scope And Limitations Of The Study

This research project will be limited external and internal sources of revenue accruing to Uyo Local Government as well as the aspect of accountability that has to do with controlling of these sources of funds and its utilization. This study only cover the period of 2005 and 2006 fiscal year as the result of the following constraints and problems

Financial Constraint:

In view of the economic situation in the country, it often difficulty to meet the financial objectives in a research project of this nature. Consequently, this study is limited to Uyo Local Government Council due to the limited financial resources at our disposal

Time Factor:

A tangible research work will normally require a number of years for completion but that is not applicable here. The time constraints not withstanding, could say, I have been able to delve into required facts of this research that would make this project a useful material for any mature research that could be carried out in this Local Government.

1.8 Assumptions

In this study, it is assumed that several factors contribute to the inability of Uyo Local Government to undertake infrastructural development in its area of jurisdiction. These include poor revenue generation owing to irregular or non payment of taxes and rates and fraudulent disposition of revenue collectors.

1.9 Definition Of Terms Used In The Study


Howard al, (1999). Accountability has to do with a system f& ensuring proper stewardship of assets which involves a legal and word liability for ensuring that public funds are used for public ends and purposes and that the best value is obtained for money spent.


According to Buchanan, Flowes (1975,p.70), Revenue is defined as the money generated by the government or any public sector to carry out its functions. It is the amount of income received or total receipts. The source of internally and externally generated revenue varies from one council to another.


This refers to the institutionalization of administrative and statutory measures to ensure that appropriate Funds are spent according to laid down rules and regulations, minimizing of waste, checking dishonesty and extravagance and the promotion of economy and effectiveness in the conduct of the financial activities of government.

Local Government:

In the words perceives Local Government as “that Nation or State which deals mainly with people of a particular place”.

The 1976 Local Government reform conceives Local Government as government at the Local level examined through representatives council established by law to exercise specific powers within defined areas. For the purpose of this research therefore, a local Government can be implied to be a unit of government established by act of law to administer the function of government and see to the welfare and interest of the Local dwellers under the Local Government system.


Derek (1983:72) defines fee as “the amount of money charged for service rendered”.


Hunby et al (1972: 77) defines generation as “the bringing or causing something to exist or occur”. Therefore to define generation to suit the study as follows: – it is the bringing of revenue into existence.


Derek (1972: 78) defines charges as “the price demanded for services of goods”.


This is defined as tax of property (land and building) paid to local authority for local purposes.


It is a regular payment for land and building utilization: – it is to use or making use of something especially for a practical purpose.

1.10 Historical Background Of The Study

Uyo is the state capital of Akwa Ibom, a major oil producing state of Nigeria. The town became the capital of the state on September 23, 1987 following the creation of Akwa Ibom State from erstwhile Cross River State. The University of Uyo resides in this town. The population of Uyo, according to the 2006 Nigerian Census which comprises Uyo and Itu, is 427,873 while the urban area, including Uruan is 554,906.

The city can be accessed by road via the A342 highway, as well as Abak Road, Nwaniba Road, Itu Road, Oron Road, Idoro Road and Aka Road. Nearby airports include the Akwa Ibom International Airport at Okobo and Margaret Ekpo International Airport, Calabar.

Uyo is a fast-growing city as it has witnessed some infrastructural growth in the past nine years. It has an intensive network of roads such as the IBB Way, Atiku Abubakar Avenue, Udo Udoma Avenue, Nsikak Eduok Avenue and Edet Akpan Avenue which is an eight-land superhighway and currently the widest road in Uyo.

Transportation in Uyo mainly by tricycles, popularly known as Keke in the urban areas and motor bike called Alaluk in Ibibio in the rural areas like interior villages. Uyo is home to many notable housing districts such as the Ewet Housing Estate, Osongama Estate and Shelter Afrik. The city of Uyo is notably neat and hospitable to foreigners and its aborigines. Highbrow residential areas in Uyo include the prestigious Ewet Housing Estate, Osongama Estate, Shelter Afrik and a host of other choice areas in the town and its environs. The city boasts recreational areas such as the Ibom Connection popularly known as “Ibom Plaza” and the prestigious Le Meridien Ibom Hotel & Golf Resort.

Uyo is home to the University of Uyo, formerly known as the University of Cross River State. Its name was changed in 1991, when the government of Nigeria established it as a Federal University. This school has various campuses in Uyo such as Town Campus and Annex Campus in Ikpa Road, Permanent Site/Main Campus in Nwaniba Road, UYTH/Medical Campus at Abak Road and Ime Umana Campus at Ediene-Abak.

1.11 Organization Of The Study

This project is organized into five chapters. Chapter one introduces this study, gives the nature of the problem, statement of the problem, research objectives, the significance, scope and limitations of the study, the assumptions and definition of terms used are also highlighted in the chapter with the historical background to the area of study of the research before the organization of the study.

Chapter Five

Summary, Conclusion And Recommendation

5.1 Summary

This research work focused on the internal revenue generation of Uyo area council of Akwa ibom State and its utilization; we examined the source of revenue generation of Uyo Local Government. These sources include- the external and internal sources. External sources are defined as the statutory allocation and grants –in-aid from Federal and State Government to Uyo local council. Internal sources are those sources by which the local government can raise revenue constitutionally aside from the statutory allocation and government grants to Uyo local government. All these two sources were well treated in details in this work. We also mentioned in this work that grants from both the federal and state government from the external revenue of the local government.
We went further to examine the strength and ability of the Uyo local government to explore especially the internal sources of revenue in order to maintain financial balance. Facts and figures as presented in the tables were used to demonstrate how the local government depends on external sources for its revenue generation.

The two research hypotheses which state that negligence on the part of revenue collectors and lack of financial autonomy of Uyo local government were also tested. By our findings, we were able to show that internal revenue generation in the local government due to negligence on the part of revenue collectors and lack of financial autonomy. We defined negligence as habitually neglecting duties, responsibilities etc; lacing attention, care or concern. Financial autonomy was defined is this work as to be self-governing in matters of money, with its attendant benefits and evils. We stated that absence of this financial autonomy in Uyo local government has affected its internally generated revenue.

The reasons for lack of financial autonomy were given as follows-

  1. Infringement on internal revenue sources of the local government by the state government,
  2. Centralization of tax base that resulted in a narrow revenue base of the local government,
  3. Lack of tax raising power to impose certain taxes and collect fees and licenses and
  4. Absence of powers and ability to make bye-laws which will help the local government to expand its revenue base.

The research work also proffered solutions of how to enhance internal generated revenue in Uyo local government. Some of the solutions proffered by the work are-

  1. Employment of high-ranking officers for revenue collection and management,
  2. Orientation and education of revenue collectors,
  3. Motivation of revenue collectors,
  4. Involvement of traditional rulers and chiefs in mobilization of revenue
  5. Modification and expansion of existing revenue sources
  6. Punishment of defaulters, reduction of tax evasion and exemption,
  7. Decentralization of tax power,
  8. Respect for financial jurisdiction of local government by both federal and state government etc.

5.2 Conclusion

The major problem of internal revenue generation in Uyo local government is the over concentration on sharing the national cake without much attention on baking it. Uyo local government relies on external transfer for about 90% of its revenue. There is shift in the emphasis from internally generated revenue to external revenue as a means of financing local government over the years (Omapariola and Aewale, 1998:139). This phenomenon can be explained in part by the fact that in early sixties, agriculture used to be mainstay of the Nigerian economy. The oil boom created the condition of over dependency on oil revenue in Nigeria and the country basically became a mono-cultural economy that relies mainly on oil for its survival. This over reliance on oil revenue has made virtually all the local governments in Nigeria to focus unceasingly on it without blinking. Hence agriculture and sources of income was neglected

Again, tax jurisdiction in Nigeria has not changed significantly from the beginning of federalism in Nigeria till date; what has changed has been the revenue sharing rights among the different tiers of government (ovwasa, 1995:160). The conclusion that can be reached from the above is that while responsibilities for the administration and collection of major different types of taxes would seem, on the surface, to approximate an optimal distribution, a more closer look will reveal that the federal government has cleverly chosen the mix to ensure that the lion share of total Nigerian revenues is collected and retained by it (Onuoha and Nwanegbo 2007:195). In fact over ninty (90)percent of the total Nigerian government revenue are collected by the federal government. The federal government continues to achieve this feat by tinkering with the rights of other tiers of government to collect revenues.

The Constitution made adequate provision for the autonomy and effective take off of the local governments as third tier of government in Nigeria. This work calls for proper implementation of the provision of the 1999 Constitutions as it affects local government statutory allocation if thes local government system is expected to perform in a free and unencumbered atmosphere.

5.3 Recommendation

To improve the financial capacity of Uyo local government, it is necessary to utilize the internally generated revenue. This will reduce the over dependence on external sources of fund. To do this, the following steps should be taken:

  1. Firstly, there is need to employ and involve the service of higherranking officers in financial management of Uyo local government. High-ranking officers are likely to have greater ability for revenue collection than low ranking inexperienced officers who lack reward feelings. Again experienced officers can assist in taking vital financial decision that can enhance internal revenue generation in the local government. To make this more result oriented, it is suggested that these high-ranking officers could make use of available records at ward and community levels. Through this means, it will be able to compare the revenue yield at any moment with the total expected from each unit, ward or community. In essence one of the functions of these superior officers would entail mobilizing the communities to live up to their civic responsibilities by discharging their financial obligations to the local government promptly.
  2. Again, there is need for proper re-orientation and training of low-rank officers. The orientation of revenue officers of the local government will build in them a high sense of challenge, importance and achievement. It will increase their knowledge of how to keep proper account of the local government. The trained revenue officers at least will know how to use his/her initiative to improve internally generated revenue instead of waiting directives from the superiors. The high rank officers should best assist in this area. Also staff should be properly motivated through adequate incentive package like improved remuneration and revenue drive should also be provided.
  3. It is also suggested that poor attitude to work of revenue collectors should be checked. Cases of proven dishonesty should be seriously handled and adequate punishment meted out to deserving officers. Sanitations should be enforced. In the Model Financial Memoranda for Local Government (1991) (39,3), offences and sanitations are stipulated as regards irregularities in losses to local governments due to either fraudulent activities of the functionaries or due to their negligence or competence, irregularities not directly or immediately resulting in losses to the local government but which infringe upon budgetary control and proper financial management and irregularities arising from poor or inefficient management of accounts and which may result in losses. Again, as Adewale and Omapariola, (1994:189) suggested, local government officials must comply with all applicable rules and regulations, be consistent with good accounting principles, provide accurate financial reports and spend government money on real and legitimate objectives.
  4. Again, most tax payers in Nigeria can hardly pay in absence of official action. Therefore, revenue collectors have to be at heels of the tax payers to ensure compliance. Effort should be made to bring more people into tax net. Traditional rulers and Chiefs would then be engaged in helping to get the defaulters to pay. Enjoyment of certain services should be tied to payment of taxes. Effective computerization will also help in respect of accuracy and voluntary compliance by taxpayers.
  5. On revenue sources of the local councils, as Ademoloekun (1983:49) had noted that the “dominant theme in intergovernmental relations is the administration of federal finance to the satisfaction of each level of government”. Danjuma (1994:28) also noted that the existence of a federal system with its accompanying political units necessitates a revenue sharing arrangement to enable its unit to carry out its constitutionally assigned responsibilities. In a federation, the logic that underlines the allocation of tax powers (revenue sources) must tally with the logic that underline the assignment of constitutional responsibilities. There is need to bridge the gap between the revenue obligation and revenue sources to all levels of governance. For this to be effective and efficient, however, it has to have clearly stated objectives and equitable formulae, principles and criteria. Tax must be decentralized and more tax base should be given to local government. A mechanism that gives more revenue sources to local government should be evolved. This will not only expand the revenue base of the local government but invariably overcome horizontal fiscal disparities between localities and vertical fiscal imbalance between tiers of government.
  6. For balanced fiscal federalism to exist, each federating unit must respect and stay clear from revenue jurisdiction of other tiers. There should not be any interference and intervention of any level of government in the affairs of others. Local government councils will be accorded full administrative autonomy and allowed to operate in accordance with the spirit and letter of the constitution. Local government council will also enjoy their full financial autonomy in this regard, all forms of control, overt or covert, which have hitherto been exercised by the state government on the financial dispensation of local government cease forthwith (Oyelakin, 1994). Local government should be given power to make bye-laws. Local government council should be free to take decisions and enact bye-laws that would concern financial matters. They should be allowed to expand their revenue base to match their expenditure through bye-laws
  7. Similarly, for effective revenue generation in the local government council, it is necessary to ensure that the existing sources of local government revenue are fully tapped Nwankwo (1998:87), also suggested that the existing revenue yielding sources should be modified. For example, taxes and rates may be modified to include local entertainment tax, laws which will centers on getting money from things like- title taking, birthday parties etc. Rural property (tenement) rates can also be modified to include designing appropriate property rates on rural residential mansions. Local government should also generate new revenue yielding areas. These may include mass transit transportation programmes, petrol filling stations, rural pharmacy houses and medicine stores, establishment of poultry farms / fish ponds and nursery schools and day care centers
    (Oguonu 2003: 150).
  8. The kind of financial relationship that exists between the state government and the local government should be restructured, such that assigning of tax powers tax bases etc. would be left to the appropriate tier of government. A situation where the state government collects virtually all revenue is unhealthy. Certain lucrative taxes should be left to the local government. The weak administrative machinery should be strengthened to enable Uyo local government major taxes for further development.
  9. The state government should also complement the revenue raised internally by the local government with special grants to the local government. Akwa ibom State government should desist from tampering with the monthly allocation of the local government. Both the two levels of government should operate separate account to dislodge the state government from having access to the local government money.
  10. Finally, it should be noted that despite the various provision made on accountability and rules for effective revenue generation, not much can be achieved, unless the concerned officers are committed. There is no doubt that the implementation of the above recommendations will enhance revenue generation and management in Uyo local government system in Nigeria.

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