THE PROBLEMS OF REVENUE ALLOCATION AND GENERATION IN LOCAL GOVERNMENT IN NIGERIA (A CASE STUDY OF AGWU AND IGBO-EZE SOUTH LOCAL GOVERNMENT AREA, ENUGU

ABSTRACT

The adverse situation in the various local government areas of Nigeria has led the researcher to go into this very topic.  The problems of Revenue Allocation and generation in local government areas in Nigeria, a case study of Awgu and Igbo –Eze South Local government areas of Enugu State).  Hence purpose of this work is to enlighten people, mostly students in the school of Business Studies on how revenue is been allocation to the various local governments particularly to Awgu and Igbe-Eze South local government areas of Enugu State from the federation account, and also how they generate revenue within and outside the local government area.  Local government as an organization, entity and tier of government requires revenue in order to enable it carry out its statutory responsibility such as primary health care, primary basic education, social amenities like electricity, roads, water etc.  But due to some constraints which are shown in this work it have been very difficult for them to meet up these responsibilities. Also in this work, recommendations on how those abnormalities can be dealt with. It is therefore recommended for people and student in the school of Business studies at all level who will be opportune to lay hand on this write up as a ground for the much needed knowledge to facilitate the administration of local government in Nigeria.

TABLE OF CONTENTS

Cover Page                                                            i

Title page                                                               ii

Approval Page                                                         iii

Dedication                                                              iv

Acknowledgement                                                   v

Abstract                                                                 vi

Table of Contents                                                    vii

CHAPTER ONE: INTRODUCTION

1.1   Background of the study                                   1

1.2    Statement of the problems                                5

1.3    Objectives of the study                                     6

1.4    Research Questions                                         8

1.5    Significance of the study                                   9

1.6    Delimitation of the study                                   11

1.7     Limitation of the study                                     11

1.8    Definition of Terms                                          12

References

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.0    Literature Review                                               14

2.1    The Historical Overview and Composition of LGA     15

2.2    Power and Functions of Local Government             17

2.3   Sources of Local Government Revenue                   19

2.4   Administration and Allocation of Local Govt Council   22

2.5   Problems of Local Government Finance                  24

2.6   Problems Involved in Revenue Collection                25

2.7   Fraudulent Practice in Allocation of Revenue in the

Local Government System                                   27

References

CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY

3.1     Research Design                                             32

3.2    Area of the Study                                            33

3.3   Population Size                                               33

3.4    Sample size and Sampling Techniques                 34

3.5   Sampling Techniques                                        35

3.6   Instrument for Data Collection                            35

3.7   Sources of Data Collection                                 36

3.8   Validation of Instrument                                    37

3.9    Reliability of Research Instrument                      39

3.10  Method of Data Analysis                                    40

Reference

CHAPTRE FOUR

DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1      Data Analysis                                                43

4.2     Personal Interview and Questionnaire                 55

References

CHAPTER FIVE: FINDINGS, CONCLUSION, AND

RECOMMENDATIONS,

5.1     Summary of Findings                                       59

5.2     Conclusion                                                     59

5.3     Recommendations                                          61

Bibliography

Appendix

CHAPTER ONE

INTRODUCTION

• BACKGROUND OF THE STUDY
• For purpose of convenience – The federal government of Nigeria created two other bodies (state and local government, 1966 and 1976 respectively) to assist her on the governance of the country. This brought to the three autonomous bodies in the administration of the Nation’s affairs. This three-tier system of government has at the apex the federal government known as the first tier, the state government as the second-tier and the local government as the third-tier.
• The local governments are autonomous bodies created by law, solely for the performance of locally based functions to ensure that citizens at the grass roots are fully benefited. These functions includes:- construction and maintenance of roads, markets and rural health facilities etc.
• Allocation of revenue generated in the local government system has been the focus in Nigeria in the recent time, revenue being the life wire of every organization demands that all functionaries in administration of local government council should show serious interest in revenue generated internally which has been to bring about desirable reforms in our local government system.

Such reforms are intended to enhance the efficiency and effectiveness of our local government system, accord it guaranteed source of revenue and strengthen it capacity and ability to render services to the people at the grass roots.  Allocation/ administration and revenue generation in the local government system have left much to be desired with respect to internal revenue generation.

Revenue generation is the act of creating or producing money. It is the realization of the money accruing to this government. In the recent years, revenue generation and allocation have transcended all known consideration in importance because the extent to which any government executes its developmental projects depends largely on it amount of revenue generated and properly managed.

The aspect of internal revenue source that have suffered gretest neglect in the recent times at the local government level includes properly rates, market fees, stallage, tolls motor park fees, hawkers permits.  Although these sources are deemed to constitute the major revenue potentials of the local government, unfortunately, their exploration and collection are yet to be properly harnessed.  Commenting on this Udeh M. O. (2005), maintained that government realizes its largest revenue come from the proceeds of taxes it imposes on the people.

Ubesie M.C ( 2004 )  in his own contribution gave the comprehensive run down of sources of public finance as follows: Rates and rents and living, sales of government security, receipts from public properties, penalty of offense committed against the state etc. other sources of revenue like radio licenses, out door advertising fees, eating houses and sales of food fees, license for shops kiosk etc. these were also transferred to them by the 1979 constitution of Nigeria.

There are administrative constraints, policy and project complementation that are not effectively carried out. Hence an attempt is being made in this study to unveil the constraints inherent in the allocation and generation of revenue in the local government system.

1.2  STATEMENT OF PROBLEM

Local government as an organization is faced with lots of problems as regards to revenue allocation and generation, and those problems are stated below:-

1. Mismanagement and control of statutory allocation (federal allocation) to local government by states governors in the name of state and local government joint account, particularly in Enugu State were this study is concerned.
2. Apathy on the side of Awgu and Igbo-eze-South local government chairmen to know the actual state internally generated revenue per month.
3. inability of Awgu and Igbo-eze-South local government to train its staff  with modern technologies.
4. problem of non-payment of taxes by citizens of Awgu and Igbo-eze-South local government areas respectively.
5. inadequate logistics, poor educational background of staff of both local government areas, lack of training and retraining of staffs, lateness and absenteeism of staffs etc.

In summary, this study is meant to x-ray the consequences of the above problems stated on Awgu and Igb-eze-South local government areas and to also profer solutions to them.

1.3 OBJECTIVES OF THE STUDY

1. The purpose of this study is to access the possible sources of revenue generation and allocation in local government system vis-avis in Awgu and Igbo-eze-South local government of Enugu State. The objective is also to provide the bases for local government to operate efficiently and effectively find out why the rate of development is still at the elementary stage and unprogressive in nature.
2. The purpose of this study also includes to institute an effective system of checks and balances to prevent possible abuse and entrench a culture of public probity and accountability.
3. There are usually casualties in every action or inaction of human. There is no smoke without fire they said. The researcher has something in mind before embarking on this study; the following are some of the objectives of this study.
4. To find out the level of relationship that exists between the chief executives of local government (Awgu and Igbo-eze-South local government area) of Enugu State.

• RESEARCH QUESTION

In other to carry out this study, the problems of revenue allocation and generation in local government in Nigeria (A case study of Awgu and Igbo-eze-south local government area of Enugu State. The researcher posed the following questions to be confirmed or disapproved based on the respondent’s reaction through the questionnaire for data collection.

1. What factors are responsible for the poor allocation of revenue in Awgu and Igbo-eze-south local government?
2. Do lack of honest staff adversely affect the allocation of revenue generated?
3. How does problem/logistic support affect allocation of revenue in Awgu and Igbo-eze-south local government council?
4. To what extent could the collusion of the staff with the tax/rate payers for under=assessment determine the amount of revenue generated by Awgu and Igbo-eze-south local government?
5. Does lack of manpower development and training programmes hamper the overall allocation and generation of revenue in Awgu and Igbo-eze-south local government?
   • SIGNIFICANCE OF THE STUDY

According to Charles Worth (1967) research arises when there are problems to solve, peculiarities or puzzles about phenomena or the question of giving meaning to them, there are many reasons for the study of allocation and generation of revenue in the local government system with particular reference to Awgu and Igboeze-South local government. One is purely the academic interest of knowing the extent to which local government have gone in achieving the objectives for which they were created especially with references to managing their revenue generation and allocation.

Secondly, the study will enable us to the importance of efficient allocation of revenue generated in Awgu and Igbo-eze-south local government. This is buttressed by the fact that problem of revenue generation hampers the ability of any local government from discharging its basis functions leading to economic stagnation and consequent retrogression in the local government.

It is expected that by the end of this research work, the society, government and the agents will be able to evaluate the performance of local government in achieving the objectives for which they were created especially with reference to allocation and generation of local government revenue in Awgu and Igbo-eze-south local government areas.

• DELIMINATION OF THE STUDY

The scope of this study is restricted to the operation and the geographical areas of Awgu and Igbo-eze-south local government. This will enable us have an indepth study of problem of revenue allocation and generation in the council. The belief that the problems encountered or experienced by this local government council. With the belief that the problems encountered or experienced by this local government council could be felt in the same way by other local government council in the system.

• LIMITATIONS OF THE STUDY

The limitation of the study came by way of true and financial constraints, attempt were made to master the subject areas through a review at detailed literature. Therefore, the study was carried out under sense pressure of time.

• DEFINITION OF TERMS

It is vital to define and make justice to some ambiguous terms used in this chapter.

• Revenue- In this text, it refers to all money or monies accruing to the local government council as the third tier of government.
• Allocation – Allocation here means an organized and constitutional sharing of scarce resources from the federal, state to the local government areas.
• Tax – This is defined as a compulsory levy composed by the government against the income, profit or wealth of an individual, partnership or corporate organization.
• Rate – It is a levy composed on local government inhabitants who make use of the services rendered by the local government authority. This rate come in from property, housing rate, capitation, water etc.
• Grants – These are financial aids from federal or state government to the local government without the beneficial council area paying back or giving interest to the giver.

REFERENCE

Charles J.C (2002) Contemporary Political Analysis, London,

Oxford Publishers, p. 8

Ejiofor P. N (1983) Allocation in Nigeria Sera printing Nigeria

Ltd., p.8

Ude M.O. (1992)  Public Finance and Nigerians Current

Economic Problems, Sera printing Nig. Ltd., p. 20

Ubesie M.C (2003)  Laws and account lecture notes.

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