THE IMPACT OF LOCAL GOVERNMENT INTERNALLY GENERATED REVENUE ON COMMUNITY DEVELOPMENT IN NIGERIA

Introduction

1.1 Background To The Study

The constitution of the Federal Republic of Nigeria recognizes Local Government as the third tier of government. According to the United States Office of Public Administration, a local government is seen as a political sub-division of a nation state, which is constituted by law and have substantial control of Local affairs including the power to impose taxes or to exact labour for peaceful purposes.

The local government system in Nigeria has undergone several reforms among which were 1976, 1984, 1991 and 2003 reforms respectively. The reasons for these reforms were to make the Nigeria local government virile, independent and more functional. Literally, local government can be defined as government at the local level exercised through representative councils. Local governments are to exercise specific powers within defined areas: such as, these powers should give councils substantial control over initiation and direct provision of social services, in order to be able to determine and implement projects to complement the activities of state and federal government in their areas.

Government administration is useful in the provision of public needs because the world changes. It is hard to say that economic conditions, competition, public needs and the other factors will be the same, some years to come. The importance of this process is that it enables a government to help to shape its own future than to simply prepare for the future.

The aims and objective of local government are to recognize the increasing role of the government in the management of resources and the provision of essential service to the community.

Community can be defined as a group of people living in a geographically defined area or a group that interacts because of social, economic or political interest. There are thus many communities within each local government area. These communities like Ifelodun local government have different needs some of which the local government is expected.

Generally, funds are always the main stream through which the survival of any organization depends, especially for execution or carrying out its civic responsibilities. The federal, state, and local governments like any other organization have a range of functions which they are expected to perform. In addition to the maintenance of law and order, these are other functions like the provision and maintenance of certain social amenities and services. For local government to perform these functions effectively they need funds, they must have adequate financial resources.

Local government generates their funds from two (2) common ways one is through Internally General Reserve (IGR) and the other is statutory allocation. The IGR is revenue generated within local government areas, like rates, fines etc, while statutory allocation are funds from the federal government allocation, value added tax (VAT), state statutory allocation that is 10 percent of the state’s resources.

However, the three (3) tiers of government have their own way of sharing the national collected revenue, which is based on the revenue allocation formula. Even with the funds from the central pool, and local government still face a problem of several fiscal imbalance, their revenue is very small compared to their expenditure.

This research work is an attempt to highlight the problems and prospects of internally generated revenue of Ifelodun local government. Also the printing and control of revenue records and financial regulations by the council and to discuss the short coming and other related constrains.

In this regards, the problem of collecting revenue, function of revenue collection agencies, inadequate auditing and supervision, as well as revenue mobilization will be the main focus of this research work.

From the foregoing, it is clear that Local Government are to bring development or better life of the people at the grass root.

The Local Government under review, that is Ifelodun Local Government was created or became an autonomous Local Government entity in October 2003, with Prince Taiwo Adenekan at the helm of affairs and as the head of the interim management committee (IMC).

During the 1976 local government, Ajeromi-Ifelodun local government became known as Awori-Ajeromi District council and during Brigadier Obasanjo’s regime, Awori-Ajeromi was merged with Badagry local government. In 1980, during the civilian era of Alhaji Lateef Jakande, twenty-three (23) local government areas were created and Ajeromi-Ifelodun came into being. Shortly later, then military government reversed the status to an area office under Ojo Government.

Ajeromi-ifelodun reclaimed its status in November. 1996 when the federal military government announced the creation of four (4) more Local Government Area in Lagos State.

One cannot discuss the historical perspective of Ifelodun Local Government Area in isolation without providing an insight into the definition of traditional boundaries of rural/chieftaincy families.

The main reason is that, from time immemorial, descendants of these royal or chieftaincy families by virtue of inheritance and blood lineage have been the bonafide owners and custodians of land in all ramifications, It is instructive to emphasize that land matters be it in the old Ajeromi- Ifelodun entity or in newly created Ifelodun entity or in broader perspectives in Lagos State is still vested exclusively on the indigene and aborigine settlers, and they exercise ownership and jurisdiction on demarcated boundaries and sphere of control.

Ifelodun Local Government, as it is presently constituted, comprises of five (5) district communities that evolved from generation to generation with common similarities. The five (5) communities are namely: Amukoko, Mosaiejo, Layeni, Abuke Keke, Alaba Oro and Oke Oya Oridilu.

Historically, what is now called Ifelodun is part of the vast Ojora land stretching up to Orile part of Surulere, Ebute Iganmu, Ajegunle and part of Apapa. Ojora family like, their counterpart Aborigine landowning families are the descendants of the first and early settlers on the islands of Eko now Lagos, Iddo including Otto and Ebute-Metta on the mainland. These early settlers were undoubtedly Aworis, a stock of Yorubas, mainly hunters and fishermen who migrated from fishing settlements to the mainland and crisscrossed from coast to coast to resettle at different locations within the passage of time.

For administrative purpose, the local government (Ifelodun) is headed by the chairman, followed by the secretary, and six (6) heads of department, heading the six (6) various departments in the local government council under which there are also various sectional heads, heading the sections.

1.2 Statement Of Problem

Local government authority in the country has been criticized for their inefficiency and ineffectiveness in rendering services to the citizens. However, financial administration in local government are defective because some of the officers created to support revenue generation are badly directed and lack focus. At the end of the day, the cost of setting up these offices out weight the benefits expected, yet they are retained and maintained at the expenses of development project in the name of indigenization.

Corruption also has eaten deep into the socio-political fabric of the local government large percentages of revenue generated are diverted to private pockets or traceable to a project that are of no benefit to the society.

Due to the recent decline in its allocation from the federal account, local government internal revenue mobilization, collection and management have become a central issue to the successful operation and management of the local government.

This is because its allocation from the federal account cannot finance its programmes, projects as well as pay its staff salaries.

As a result of fluctuation in the federal allocation to the local government which form more than 80% of local government source of income, the local government find it necessary to redirect its effort to policies that will improve the internally generated revenue.

It is this precarious financial situation of this local government that arose the interest of the researcher to look into the problems and prospects of local government internally generated revenue.

1.3 Objectives Of The Study

This research has been motivated by the need to find out if local government can reduce their over dependence on statutory allocation.

Towards this end, the study intends to:

1. To determine the extent to which attitude of staff affect revenue yield and grass root development in Nigeria
2. Find out if there is a relationship between Local Government internally revenue generation and community development
3. Examine the impact of Local Government Revenue on community development.
4. To examine the improvement in the effort to bridge up the gap between revenue estimate and actual collections and grass root development in Nigeria

1.4 Statement Of Research Questions

The research question as derived from the objectives are:

1. How can dishonest attitude of staff in revenue generation affect grass root development in Nigeria?
2. Is there any relationship between local government internally generated revenue and community development?
3. Is the impact of local government revenue on community development felt by the people in the community?
4. Is there any relationship between efforts to bridge the gap between revenue estimated and actual collections and grass root development in Nigeria?

1.5 Statement Of Research Hypothesis

The statement of hypothesis are stated in their null (Ho) and alternative (Hi) forms;

1. Ho: That dishonest attitude of staff tends not to affect revenue yield in local government councils in Nigeria
   Hi: That dishonest attitude of staff tends to affect revenue yield in local government councils in Nigeria
2. Ho: There is no relationship between local government revenue and community development.
   Hi: There is a relationship between local government revenue and community development.
3. Ho: The impact of local government revenue on community development is not likely to be felt by the people in the community.
   Hi: The impact of local government on community development is likely to be felt by the people in the community.
4. Ho: There is a relationship between revenue estimate and actual collection of revenue at the grass root level in Nigeria
   Hi: There is no relationship between revenue estimate and actual collection of revenue at the grass root level in Nigeria

1.6 Significance Of The Study

This study which is an attempt to diagnose the impact of local government internally generated revenue on community development is of immense important to:

1. Ifelodun local government:

The organization under consideration has some qualified revenue staff responsible for the revenue generation in the organization. However, there are weaknesses which the researcher intends to make recommendations to improve. The local government can use such information for improved revenue generation.

2. Future research:

This will serve as secondary data to future researchers also intending to carry out research on the impact of local government internally generated revenue on community development. It will also help students in the school of business studies and department of local government studies in having an in-depth knowledge of revenue matters.

3. The researcher:

This work will also help the researcher to enable him/her to know more about local government internally revenue generation and where there are lapses and appropriate suggestion are made to the management.