Revenue Generation in Local Government Areas (Problems and Prospects)
Chapter One
OBJECTIVE OF THE STUDY
The broad objective of this study is to examine revenue generation in Buruku local government. The specific objectives of the study are as follows:
- To find out the various ways of generating revenue in Buruku local government.
- To find out if lack of financial autonomy constitutes a problem to internally generated revenue in Buruku local government.
- To proffer solution to the problem of poor internal revenue generation in Buruku Local Government Area.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
This chapter reviews the literature on revenue generation in local government areas (problems and prospect). It discusses issues arising from the topic of discuss as viewed from different perspectives, with a view of giving a theoretical and empirical foundation to the study.
LITERATURE REVIEW
L Rowland (1977:77), made some comments on the desirability for local governments to have their own sources of revenue.. He state’s that “an effective local government system cannot exist where the local authority has no power to improve and collect its own taxes”. Certainly, in many developing countries such as Netherland, local authorities have fewer sources for revenue generation”. Orewa (1986:180), in his book titled “Local Government Finance in Nigeria”, described and discussed various sources of revenue open to local governments and problems in the collection and management of their finance. Such problems are-shortage of trained manpower, ignorance of the councilors over their duties and non-commitment to duty on the part of the staff and councilors alike.. Adediji (1979:87), blames poor internal revenue generation of local government on the following reasons a. Lack of proper structure b. Low quality of staff and c. Lack of mission and comprehensive functional role According to him, these problems lead the local government into vicious circle of poverty. This is due to the fact that inadequate funding results in employment of low skilled and poorly paid staff. Bello- Iman (1990:134), in the same vein states that “ the major constraint to internal revenue generation in local government is the shortage of well trained and qualified personnel which suppose to serve as tool for collection of taxes and rates at the local level”. According to him, even the few available are not peoperly trained in efficient budgetary and financial management systems. Also most of the local governments are short-stuffed to carryout their duties”. Nkala (1985:60), talking about the problem of personnel in internal generation of local governments states that “at the inception of democratic local government system in the former Eastern region of Nigeria in 1950, early recruits into the local government service were mainly ‘sons of the soil’, party stalwarts, relations of councilors”. He blamed shortage of trained staff in local government on politicization of recruitment, selection and placement. Mugrave, R.A (1959:89), noted that “poor auditing has contributed immensely to problem of internal revenue generation of local governments”. According to him, “local governments should have a means of ascertaining whether it’s financial operation is properly conducted, this can only be done through audit”. In a more recent study, Ebo (2000:123), did a thorough work on how to enhance internal revenue of local government, using Nsukka as a test case. He corroborated the evidence of other scholars to the effect that there is a great loss of council’s revenue due largely to the loopholes in the management of revenue sources. He noted that collection procedure of the council could be streamlined in many areas especially where their facilities were used. Citing motor parks for instance, he observed “motor parks fees paid by taxis can be good money earned for local government councils if properly managed But as of now (2000) each of these taxis pays #10 a day to the local government no matter how many loads they made. In contrast to this, each taxi pays touts up to #30 per load and there may be several loads per day. Thus, the local council receives #10 per taxi daily. What a flagrant case of robbing peter to pay paul”.
As Ikejiani-Clark (1995:53) pointed out that, the growing prominence of corruption and fraud in local government as evidenced from massive data from the various parts of the federation has coincided with increased academic interest in corruption and fraud in our public life\. Still in the same view, Obi (1996) and Ikejiani-Clark (1995) produced massive data on cases of corruption and fraud in Nigerian local governments; for instance, Obi observed that the poor state of accountability in the local government studied was as a result of interwoven tragedy emanating from the Nigeria factor, weak accounting control mechanism lack of prosecution of offenders, dishonesty, absence of adequately maintained financial records, conflict in role perception by the chairmen and many others. He concluded that “unaccountability was the major cause of poor internal generated revenue and low development in the local communities’ in Nigeria (Obi 1976:179).. Further, Ezeani (2004:120), states corruption remains a major problem which has constrained local government especially in developing countries from contributing meaningfully to the upliftment of the standard of living of the local people. It is rife in the areas of revenue generation and declaration by collectors to embezzlement of local government funds by officials of local government. To stress the point, Obinna had (1995:47) stated that some unscrupulous revenue collectors and senior financial officers of the local government defraud the local government by printing fake receipts which they use to collect unaccounted revenue. On the side of lack of adequate manpower for revenue generation by Nigerian local government, Nwankwo (1995:154) observed that why local governments have not paid proper attention to internal generation of revenue was due to poor staffing, sharp and fraudulent practices of the revenue collectors, lack of logistic support for revenue collectors and refusal of most citizen to cooperate in paying the necessary fees due to the local government. Wraith (1972:68) stated that lack of foresight and entrepreneurial skills on the part of key local government function arises especially the revenue officials have contributed heavily to the failure of internal revenue generation for the local governments. He maintained that local government functionaries who should look inwardly to identify and exploit fully more viable sources of revenue in their areas of jurisdiction unfortunately fail to do so mainly because they are not enterprising.
On the issue of the auditing system in Nigerian local government, Musgrave (1959:39) noted that poor auditing system in Nigerian local government has contributed immensely to problem of internal revenue generation of local government. To him, local government should have means of ascertaining whether its financial operation, are properly conducted, this can only be done through audit. In this view, Oguonu (1995:143) pointed out that: the dearth of qualify staff to conduct audit has resulted in using people who do not possess the requite experience and knowledge to face the challenges of the work. Supporting this view, Ezeani (2004:124) pointed out that “inefficient supervisors do not effectively supervise the revenue staff and records”. Again, internal auditors lack independence required for effective performance of their duties. As Ezeani (quoting Oguonu 1993:860) succinctly put it: The administrative set up in such that the internal auditor can hardly exercise his powers independently because; he depends on his superiors for recommendations, for promotions and career advancement. Again, Oguonu (2003:135) pointed out that another fundamental reason for poor internally generated revenue is that Nigerian local governments were not created on the basis of their viability. She maintained that they are mere political creations. Further she stated that: “some of the newly created local governments were as a result of political patronage to ruling party loyalists”. Other reasons for poor revenue collection by Onyisi (1999), Adewale (1998) and Ezeani (2004) are the fact that most of local governments cannot enforce bye laws on revenue collection. In some cases the law of revenue collection is not updated. They also maintained that there is also poor communication network especially in the riverine areas. Finally, Omopariolar and Adewale (1998:247), stated that high incidence of tax evasion also plays a major role in poor internally generated revenue in the local government system. Most Nigerians are not willing to pay taxes.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to a critical analysis of revenue generation in local government areas.
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
(ii)Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information a critical analysis Of revenue generation in local government (problems and prospects) 200 staff of Buruku local government area council were selected randomly by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
DATA ANALYSIS
The data collected from the respondents were analyzed in tabular form with simple percentage for easy understanding.
A total of 133(one hundred and thirty three) questionnaires were distributed and 133 questionnaires were returned.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain a critical analysis of revenue generation in local government areas.
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations are made, which in the opinion of the researcher will be of benefit in addressing the challenges of revenue generation in local government areas.
Summary
This study aimed at having a critical analysis of revenue generation in local government areas. Three objectives were raised. These objectives include: To find out the various ways of generating revenue in Buruku local government, to find out if lack of financial autonomy constitutes a problem to internally generated revenue in Buruku local government, to proffer solution to the problem of poor internal revenue generation in Buruku Local Government Area.
Conclusion
Based on the above findings pertaining to the objectives of the study the following conclusions are drawn.
The major problem of internal revenue generation in Buruku local government is the over concentration on sharing the national cake without much attention on baking it. Buruku 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.
Recommendation
To improve the financial capacity of Buruku local government, it is necessary to enhance the internally generated revenue. This will reduce the over dependence on external sources of fund. To do this, the following steps should be taken:
- Firstly, there is need to employ and involve the service of higher ranking officers in financial management of Buruku 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.
- 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.
- 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.
- 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.
REFERENCES
- Adedeji, A. (1969) Nigerian Federal Finances, Its Development, Problems and Prospects, London Hurchthinson Educational Ltd.
- Adamolekun L. (1983) Public Administration, Nigerian and Comparative Perspective, Longman: New York.
- Anyafo, A.M. O. (1996) Public Finance in a Development Economy: The Nigeria case. Enugu: B and F publication UNEC
- Asika, N. (2010) Research Methodology in the Behavioural Sciences; Lagos: Longman Nigerian Plc.
- Bello-Iman, I.B (1990) Local Government Finance in Nigeria, Ibadan NISER.
- Ezeani. O. E (2004) Local Government Administration, Enugu: Zik-Chuks printing pres.
- Ikejiani-Clark (1995) “Pathologies of Local Government Administration: Corruption and Fraud” in M. Ikejiani-Clark and F.C. Okoli (eds.) Local Government Administration in Nigeria; Current Problems and Future Challenges, Lagos: Mangrove Publication.
- Kerlinger, F.N. (1973) Foundations of Behavioural Research, Holt Rinehart and Winston Inc.
- Musgrave, R. A. (1989) Public Finance in theory and Practice, 5th Ed. Singapore: McGraw-Hill.
