ABSTRACT
The purpose for this research is to determine the relevance of a
critical analysis of the sources of revenue and expenditure pattern of
Enugu North Local Government Area, with reference to Enugu North Local
Government. The research was carried out to discover the availability of
expenditure and revenue in the Local Government; this involved going to
Enugu North Local Government to administer questionnaire and interview
on some key staff of the local government.
It was revealed among
others that revenue and expenditure is available for all categories of
staff. Unfortunately, critical analysis of the sources of revenue and
expenditure pattern has not enhanced productivity of the local
government.
It should therefore, be recommended that the local
government should try as much as possible to encourage those staffers
who put their effort to enable them contribute meaningfully to the
advancement of the local government sources of revenue and expenditure
in the local government.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The study of Local
Government in Nigeria is traceable to the traditional political system
in the country local government administration. It was through the
instrumentalities of tradition authorities. By this is meant the Igwe,
Chiefs, age grades and village councils. It was through the societal
interaction that authoritative allocations of values were made for the
society.
In the past, most of these local governments were created to
score cheap political points without due regard for their viability.
Apart
from political and administration considerations that ought to be
carefully examined in determining the viability of a local government in
Nigeria, financial consideration is also a relevant factor that must be
scrutinize and ascertained before considering a certain geo-political
entity for a local government.
Local administration was strengthened
further when Britain made its presence felt in Nigeria, in 1900 Lord
Laggard introduced the system of direct rule into Northern Nigeria and
by 1914 the system has spread to other parts of the country.
The
colonial native authorities were established with the traditional rulers
having absolute powers. The native authorities provided form of stable
local administration which strengthened the base of the colonial
government. However the concept of the local administration charged to
that of local government in 1946 after the defect of conservatives and
the coming into power of the labour party.
Before the coming of the
Britain into Nigeria as mentioned above the institution of the
traditional authorities were held sacred and is legitimized their
actions and decision. In the North, the Emirs ruled in the emirates and
developed a well organized fiscal system, a definite scheme of land
tenure, a regular scheme of local rule and established judiciary with
trained personnel interpreting the Islamic laws in the Southern part of
the country. Local rulers with defined administrative system through the
fiscal system were less organized.
Administrative consideration will
include a number of factors, one of which is purely government
annually. This item includes councilor’s allowances, personal emoluments
of staff and miscellaneous expenditure like pensions and granitites
etc.
The financial considerations include a number of factors. One
is the revenue base the size and major sources of revenue such as taxes,
rates and fees including market and motor part fees, etc. Since tax is
paid by the taxpayers resident in the local government area of
authority. The amount of revenue derived from tax depends on the number
of tax payers in the area.
Thus, the size of the local government in
terms of taxable population becomes important. There is also the ability
of the area to execute development projects from its internal sources
or from short and medium term loan. The magnitude of the council,
reserves or end of year surpluses is another factor. This research work
is on the analysis of the sources of revenue and patterns of expenditure
of Enugu North Local Government Area of Enugu State for the period of
1999 – 2001.
Enugu North Local Government Area is one of the Local
Government Areas in Enugu State. It was created in 27th August 1991 by
the administration of General Ibrahim Babangida. The Local Government
Area was carried out from Old Enugu Local Government Area.
They have
secondary schools and primary schools. Still before the creation of
Enugu North Local Government, the view of the society later became
official position of labour party, a policy which favoured and advanced
the demoralization of local Government. Thus, Local Government in this
area was to become a means not only of political but also of economic
development, performing functions which of had hardly concerned itself
within the previous period.
The Local Government therefore assumed a development oriented posture.
The
structure and working of the native authorities in the fears before
1950 all over the country had not pleased a number or educated
Nigerians.
The Local Government is not richly endowed with many
economic resources which should form basis of income generation for both
the people and local government. With the establishment of town
planning Authority of Enugu North, it is hope that residential,
commercial and industrial layouts will be developed for the greater goal
of the local government.
Markets and motor parks have been traditional sources of revenue for local government.
Mostly every local government and the surrounding communities have been provided with pipe born water.
It
is necessary to single out the problem of erosion, perhaps as the most
dangerous of all problems facing the Local Government Area. Even though
none of the autonomous communities has escaped the wrath of erosion on
its soils, roads and farms, some towns have sulfured more than the
others. Particularly noted is Obiagu under Enugu North Local Government
where almost half of the town has been gulped by gully erosion. The
situation demands a comprehensive study of the problem in the local
government area and conscious intervention by both the state, federal
and international agencies.
1.2 STATEMENT OF THE PROBLEM
The sources of
revenue available to local government are both internal and external.
The identifiable internal sources are community tax, rate or property
tax. License and fees, commercial undertakings, while loans, grants and
statutory allocation constitute the external sources from the revenue
generated, local government incurs expenditure in the form of recurrent
and capital expenditure. The extent generated internally and externally
is inadequate and therefore greatly affects the provision of basic
services by the local government. Not only are the available funds
hardly adequate and sufficient to meet with these expenditures, there
also a general apathy on the part of local government to explore new
sources or revenue outside their traditional bases.
This project,
therefore, will seek to analyze the available and potential sources of
patterns of expenditure of Enugu North Local Government area with a view
of ascertain whether such makes for grassroots development.
1.3 PURPOSE PF THE STUDY
1. The purpose of this study is to examine the extent to which the revenue pattern sources of the local government are managed.
2. To bring out the need for an in-depth appraised of a project before it is embarked upon.
3.
To analyze the problem associated with the generation of revenue and
the reasons for inadequate of funds available to Enugu North L.G.A.
4. To analyze the expenditure pattern of Enugu North Local Government Area.
5. To ensure the prospects of Enugu North L.G.A and make appropriate recommendations based on the findings.
1.4 SCOPE OF THE STUDY
A study of this nature is
quite a broad one. There are 774 local government areas in Nigeria.
Within the local government area there are many aspects that could have
been accommodated under this study.
However, the scope of the study
shall be centered on the Enugu North Local Government Area of Enugu
State to the exclusion of the others further and expenditure patterns of
the council for period of 2 years 199 – 2001 to the exclusion of other
aspects.
1.5 RESEARCH QUESTION
The research work will try to find answer to the following questions.
1.
To what extent does the shortage of experience staff constitute a
problem in the internal revenue generation of the Local Government?
2. Are the environments in which they operate suitable?
3. To what extent does fraud and mismanagement constitute a problem in the internal revenue generation of Local Government?
1.6 SIGNIFICANCE OF THE STUDY
As no previous
study has been undertaken on the finance and expenditure of Enugu North
Local Government Area, it is hoped that the results of the research will
be valuable to the following categories of people.
The outcome of
this study will be beneficial to the inhabitants of the Enugu North
L.G.A. They will gain insight into the constraints that militate against
the execution of certain projects that would have enhance their taxes
and rates as at when due. In other words, it reduces the incidence of
tax evasion.
It will also guide them in their future demands for facilities in their localities from the local government.
Secondly,
present and future administration of the local government area will
find the result of this study to be very useful especially on the
recommendation on new sources of revenue in order to strengthen their
financial base. Again it will help them to formulate foolproof policies
to over come some, if not all the constraints affecting the generation
of revenue even from the traditional sources. Still it will be a grid
such that the expenditure pattern will be geared towards the provision
/improvement of new/existing facilities to stimulate grassroots
development in the area.
Thirdly, other research student interested
in local government affairs may find this work to be a variable source
to guide further research into other aspects of the local government;
such as financial management accountability and control.
Finally,
the result of this study may compel the research to seek employment in
Enugu North Local Government in order to translate some of the funding
from this study into reality thereby improving on the welfare of the
rural populace.
1.7 DEFINITION OF TERMS
Local Government
political subdivision of a state which is constituted by law and has
substantial control over local affairs including the power to impose
taxes;
Indirect Rules: - A system where by administration is affected
through the administrative machinery which had been created by the
natives themselves and under which the chief, the natives court, native
laws sand institutions are recognized and controlled by the natives
themselves.
Finance: - Money resources available to a person private
or public enterprises use in its maintenance and discharge of its
duties.
Cost – Benefit Analysis: - The attempt to calculate all the
direct and indirect cost and benefit of a set of alternative projects or
policies, subject only to the provision that all cost and benefits be
expressed in terms of common denominator money.
Revenue: - The funds available to the local government from different sources for the purpose of meeting its expenditures.
Expenditure: - Cost incurred by the Local Government in carrying out the administration of the area.
Budget:
- A budget is a comprehensive financial plan setting forth the expected
route for achieving the financial goals of an organization for a
specific period.
Tax Avoidance: - It involves the use of loopholes
in the prevailing tax laws to avoid the payment of tax. Its is not a
criminal act.
Tax Evasion: - It is done either making fraudulent and
incorrect tax returns or not making any at all, true or untrue its is a
criminal act.
REFERENCE
A. Adedeji and L. Rowland (1972), Local Government Finance in Nigeria Problems and Prospects; University of Ife Press.
G.O.
Adenigo. (1977), A New System of Local Government (Government by the
Community in the North Central State of Nigeria) Enugu Nwanife
Publishers Ltd
Lecture Notes on Introduction to Finance Offered by
the Department of Finance, University of Nigeria Enugu Campus 1990 –
1991 session.
M. Blavy (1977), Public Expenditure: Allocation Between
Competing Ltd. Edited by M.V. Posner London, Cambridge University
Press.
R. S. Edwards (1959), Building in Public Authorities; London George Allen and unwin.