ROLE OF LOCAL GOVERNMENT INTERNAL REVENUE AS IT PROMOTES SOCIAL ECONOMIC DEVELOPMENT.

INTRODUCTION

 While efforts have been made since 1976 to bring about local government as a tier of government under a three tier federal system, local government administration is still seen as an appendage of the state governments. In spite of the constitutional provision which defined functions and sources of funding of the system, local governments in the country have not been able to extricate themselves from the apron string of state governments.

Funding of local government administration in Nigeria remains a mirage. In spite, of the constitutional provisions and guarantee of funding of local governments from the federation account, local governments in the country operates a joint account with their respective state governments thereby making it difficult if not impossible to discharge their constitutional duties

and responsibilities. State governments’ releases money to local governments only to pay staff salaries and in some instances their staff are owed for months. Yet, financial paucity in local government administration could be blamed on lack of seriousness on the part of local government administrators to explore internal sources of revenue generation. Most local governments in the country are contented with the federal and or state allocations. Thereby serving as a mere distribution outlet for federal and state generated revenues; a situation Suberu (2004) describe as the cost of distributive federalism. In his words, "for a federal system that is dominated by the redistribution of centrally collected revenue, it is hardly surprising that the revenue generation and allocation issue has remained particularly contentious and intractable in

Nigeria".

CHAPTER 1

1.1           BACKGROUND OF THE STUDY

Local government administration through internally generated revenue (IGR) raises revenue to finance development programmes at the grassroots’. This is in addition to the statutory allocation from the federation account. Through such monies, it provide social amenities and services such as pipe born water, boreholes, roads, cottage industries, skill acquisition centers, maternity and cottage hospital and health care delivery, market stalls, etc. to the people.

Local government administration promotes democratic rule in the society. This is because, local government administration is the closet level of government to the people and as such, it provides the opportunity for the people to further learn the democratic values and norms. Local government administration in a federal system like Nigeria promotes nation building and

Contributes to socio-economic and political development in the country. However, despite the elaborate justification of local government administration, local government administration is faced with a number of issues and challenges, poverty of leadership at the local government level remains one of the most daunting challenges of sustainable development of the grassroots’ in developing countries. While we recognize the fact that leadership problem is a national phenomenon in Nigeria, local government administrations have come under serious criticism over years for poor service delivery and bad governance. Both political and administrative leadership are in deficit at this level of government due to financial challenges among other .pertinent issues

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1.2           STATEMENT OF THE PROBLEM

Maddick (in Igbokwe-Ibeto, 2003) notes that: to achieve social change and general economic growth requires a spreading efforts so that local communities and individuals can participate to bring under ideal conditions, energy, enthusiasm and most important of all local development activities... local authorities provide the opportunity for local people to participate in local decision and local schemes within the general national policies, and to act above all, as local centers of initiative and activity conducive, to development. The above statement buttresses the fact that local government has a meaningful and positive role in development process. Akhakpe Fatile & Igbokwe-Ibeto (2012) noted that community development through the instrumentality of the local government is essential for a sustained development process. The local government system is therefore the surest way to get the grassroots’ through planning and sustenance of implementation strategies if adequately funded under a corrupt free system. The problem confronting this research is to appraise the role of local government internal revenue as it promotes social economic development.

1.3           OBJECTIVE OF THE STUDY

1.     To find out the sources of local government internal revenue.

2.     To find out the roles of local government internal revenue in socio-economic development.

3.     To discover the challenges of local government in the promotion of socio-economic development.

1.4           RESEARCH QUESTIONS

1.     What are the sources of local government internal revenue?

2.     What are the roles of local government internal revenue in socio-economic development?

3.     What are the challenges of local government in the promotion of socio-economic development?

1.5           SIGNIFICANCE OF THE STUDY

This study is meant to reveal the role, sources and challenges of local government internal revenue as it promotes social-economic development to states in Nigeria.

It is also meant to serve as an eye-opener on the benefits of local government towards the socio-economic development of the country.

1.6           STATEMENT OF HYPOTHESIS

H_O: There is no significant role of the local government in promoting socio-economic development.

1.7           SCOPE OF THE STUDY

This study is restricted to the role of local government internal revenue as it promotes socio-economic development in Enugu state.

1.8            LIMITATION OF THE STUDY

The following limitations of the study are as follows:

1.  Time: - This is the first limitation that affected the research study badly because carrying out the study requires time and one can’t afford to miss lecture and embark on a journey to the cost study.

2.  Finance: - It is another limitation because the study requires enough funds to carry out the research and without the funds the study will not be fruition.

1.9           DEFINITION OF TERMS

SYSTEM OF TRANSACTION

Odugbemi (1989:175) defines it “as a system of transactions (behavior

patterns) among managers of hierarchically, structured levels of government in a state”. He goes further to argue that the objectives for intergovernmental relations is the achievement of the division of work, authority, resources sharing among levels of public and sometime extra government authorities in state.

STATUTORY ALLOCATION

Under the 1979 and 1999 Constitutions, local governments throughout the country were entitled to statutory allocation from the federation account.

This is a system whereby the local authorities have a direct share of either

Specific items or the total, nationally derived revenue.  Orewa (1991:121)

INTER-GOVERNMENTAL RELATION DEFINED

Cameron (2001:213) defined intergovernmental relations “as an arrayof structures, processes, institutions and mechanisms for coping with the inevitable overlap and interdependence that is a feature of modern life”.

LOCAL GOVERNMENT DEFINED

Local government in the presidential system, in Nigeria, is the third tier of government which also is constitutionally empowered to make decisions over a specified range of government functions and services. As such, local government deserves serious attention from the central government so as to be able to deliver essential services to the rural populace.

EQUALISATION GRANTS DEFINED.   

This grant is paid as an aid to less economically privileged local governments whose revenue is not enough to finance and maintain a particular essential service. The Federal Government therefore, pays a subsidy to meet the excess of expenditure over revenue.

ii. Block Grants

This is an annual payment made by the central or federal government to its local government on a basis related to the number of persons or tax payers in each local government. This grant is not tied to a specific service. The rationale for this grant is the recognition of the fact that a local authority, for one reason or another, has lost some sources of revenue to the central authority. It is therefore compensatory.

Iii. Percentage Grant

This is usually given for a specific service to encourage a local authority to provide the service or facility at a nationally acceptable standard. The grant is given as a percentage of the total expenditure incurred by local authorities on a giving service.

Fees, License, and Rent

This is another internal revenue generating source for financing the local government. In some local government councils however, the term ‘permit’ is used in place of license or “permit fee” instead of “license fee”.

Fees are charged by local government either for specific services provided for individuals and which are paid for by the users, or as a charge for controlling the activities of their citizens.

Iv. Unit Grant

This type of grant is paid for each unit of service such as a clinic, a mile/kilometer of road, a patient attending a clinic, a child attending a school etc. The unit grant is a fixed amount per unit or it might be a fixed amount for a specified number of units. The unit grant is aimed at encouraging local

Authorities to increase the number of units of services provided or employed.

v. Special Grants

The federal governments give a special grant to support a local government in times of emergency, such as occurrence of natural disaster, famine or rain storm etc. Similarly, special grants could be given for important national economic and social programs to be handled by the local governments, such as re-vitalizing the agricultural programme of a country.