REVENUE GENERATION, UTILIZATION AND GRASSROOTS TRANSFORMATION IN NIGERIA
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ABSTRACT
This study examined revenue generation, utilization, grassroots transformation and accountability in Uyo Local Government Council. Revenue generation in the public sector is very important because of demand for economic development. It employed descriptive and analytical approaches. A total number of forty (40) respondents out of fifty (50) were selected. Data were collected mostly from questionnaire and interview data collected, were analyzed using simple percentage while chi-square statistic was used for testing the hypotheses. The study revealed that, there is a significant relationship between revenue generation, utilization, grassroots information and accountability for any meaningful development in a local government. The study recommended strict implementation of financial regulation policies, funds control techniques, regular auditing and implementation of penalties for tax defaulters.
CHAPTER ONE
INTRODUCTORY
1.1 Background to the Study
Local government as a public sector organization and the third level of government, local government is responsible for managing its finances and upholding itself while carrying out its legally prescribed duties for its citizens (Uguru, 2011).
The third level of government in Nigeria is made up of local government officials, who are essential to the execution of national government programs and policies. It addresses the concerns of the populace and is the closest government to them. It acts as a solid link between the federal and state administrations. The Federal Republic of Nigeria’s 1999 constitution recognized it, designating the federal government as the supreme authority over the states.
One way local government finance aims to bring the influence of government closer to the people at the grassroots level by improving their lives is through the provision of social services and rural infrastructure that directly affects the masses at the grassroots level. This is among the facets of public finance that are addressed by local government finance. Any level of government may receive either capital or recurring revenue.
On the other hand, recurring revenue—also known as internal source—is produced daily all year long. On the other hand, capital revenue is referred to as an external source and is realized occasionally and in greater amounts.
Local governments mostly rely on statutory allocations and grants from the federal and state governments, while internally generated money falls under the following categories: Taxes, rates, local licenses, penalties, fees, commercial revenues, rent on government property, interest payments, dividends, and other receipts. Local governments face challenges in mobilizing and generating internal revenue due to declining federal allocations, making it difficult to finance programs, projects, and salaries (Azu, 2017).
Rural development and transformation has grown to be a significant issue in recent years, particularly as low revenue generation has become more prevalent for the level of government most suited to handle grassroots development. The local government system is often considered to be the most successful tier of government for rural development due to its close closeness to rural populations.
The main responsibility of the local administration is to guarantee the quick development of the hinterlands. To achieve this objective of rural development and ensure efficient local government administration and governance, local government funding must be greatly increased both within and externally.
Effective administrative ability and the political cooperation of the local government executives and another relevant personnel council will enable this (Nwanegbo, 2004).
Buchanan (2015), defined revenue as the money generated by the Government or any public sector to carry out its functions. It is the amount of income received or total receipts. The main source of Government revenue generation is through taxes. It therefore has great impact on revenue base of the nation, state or even the Local Government Area. The 1976 Local Government Reform goes forth to apply that, whichever institution or Arm of Government is entrusted with the task of collection or generation and disbursement of public funds must do so in absolute respect to the laid down rules and regulations.
These Local Government Reform Guidelines has guaranteed self-sustained sources of revenue to the Local Government and it is captured in the forth schedule of 1999 constitution and the Joint Tax Board (JTB) harmonization of the taxes and levies schedule for the three tiers of Government (1997).
Revenue generation is the process by which the government or organization generation income for the purpose of embarking on estimated projects or budgeted activities. A lot of contributions have been made by many “experts” in public administration. According to Anyaefula (2016) “whoever is responsible to maintain the steady growth of the country should have sufficient revenue in order to escape from insatiability and inefficiency in using the limited resources of the country.
From this statement, it has an implication which means that revenue is the life wire of every local government, state as well as federal government for its growth and survival. Okaiwehi (2013) submitted that “the major advantages of revenue are that it use of money”. From the statement it can be observed that revenue has significant role to play not only in the local government but state, to the country’s future plan retaining the financial expenditure and savings.
Rural Development is a reflection of modern civilization that improves the standard of living of the rural communities. It involves provision of socio-economic goods and services that are too remote to the federal government to reach out to or have become an overburden to it (Ojo & Oyedele, 2017). In order to achieve development at the rural level, it is the responsibility of the local government to have a critical assessment and improvement on the sources of revenue in the form of taxes, rates, federal and state allocations, and so on. For efficient financial improvement in the local government, all finance officials and allied local government staff, as well as the executive, should adopt a new attitude.
According to Asobie (2000) in Nwali (2018), studies on the performance of local government have focused on the council’s failure to create and expand revenue. This worry stems from the fact that the local government cannot properly perform its tasks without a sufficient financial base. Local government must have its financial existence to be efficiently governed; otherwise, it will continue to rely on the generosity of other levels of government for its financial needs, as has been the case in the past.
Local government as an institution is designed to provide a wide range of services; citizens and indeed all stakeholders feel that their achievement of social, economic and political aspirations depends on their involvement in the affairs of the Local Government. Consequence to this, Local Government as preferred by Gorvine (2015), consists of those institutions of Government which are closed to the people constitutionally, legally and physically whether the Area is rural or urban.
Although it is can carryout a lot of functions since it is closer to the people, only what the National or State Government permits. Local Governments and their Administration are therefore strategic in the overall macro-economic growth and development of the Nigerian economy.
Apart from the fact that the Nigerian local government system exists to provide socioeconomic services to the people at the grassroots, it is important to note that this duty cannot be fulfilled successfully until the third tier of the government’s revenue base is improved. In a democratic society like ours, strategic functions must be grounded in the laws, regulations, principles, and traditions that serve as a guide for the collection and management of local government revenue.
Even though the National Government in the nature of things sets limit to Local Government, the functions of macro- economic growth and development, effectively and positively altering of the socio political conditions of the people at the grassroots’ are still met as the result of these third-tier of Government being nearer to the people of the grassroots’. It is in recognition of the important role of local government administration that this project will focused on which is revenue generation, utilization, grassroots information and accountability in Uyo Local Government Council of Akwa Ibom State.
1.2 Statement of the Problem
Within the confines of Nigerian federalism, the problem of revenue allocation has remained the most dominant and contentious in the interaction between local governments, as the third tier of government, and the other two tiers, namely, the federal government and the states (intergovernmental relations). Given the associated rising cost of running the local government, that is the provision of secretariats, staff salaries and allowances, rental and buildings, provision of utilities and increasing outlays on maintained and new projects, statutory allocations to state and local government together with internal revenues have become grossly inadequate.
These are a total of seven hundred and seventy-four (774) local government councils in Nigeria including Uyo local government councils. These local government areas are trying to generate enough fund to sustain themselves financially in the area of revenue generation, the following are many hindrance on the way to their success ranging from instability and poor condition of the economy, poorly conflicted road for revenue collection, uncooperative attitude of payee, insufficient industrial units, inadequate supply of social amenities etc. these problems standing against revenue generation government including Uyo local government area as a case study.
These problems have stimulated the researcher to move into a great mission through research in order in set up strategies to achieve these goals. Poor revenue generation will no doubt prevent the council from rendering good services to the public. It is against this backdrop that the study seeks to examine revenue generation, utilization, grassroots transformation in Uyo Local Government Council.
1.3 Research Aim and Objectives
The Reform Local Government System in Nigeria is relatively new and has been done to study its lapses and problems in the area of revenue generation, utilization and accountability. Therefore, objectives of the study are were as follows;
- To identify the sources of revenue as approved by the statutes and other Instruments in Uyo Local Government.
- To Find out how revenue is being generated and controlled in Uyo Local Government Council.
- To determine the extent to which the generated revenue has been utilized to meet its respective purposes.
- To pin-point potential problems limiting effective revenue generation and accountability and to make recommendations on how to control these problems.
1.4 Research Questions
- What is the usefulness of revenue collected from the tax money by the Local Government?
- What are the sources of revenue generation available in the Local Government?
- What could be the problems associated with the revenue collection and Administration in the Local Government?
1.5 Research Hypotheses
H1: There is a significant relationship between payment of tax and the non-chalant attitude to work by revenue collectors.
H2: There is a significant relationship between revenue generated and the project implemented in Uyo Local Government.
H3: There is a significant disparity between revenue generated internally by Uyo Local Government through tax and the income or grant from both the State and Federal Government.
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