ECONOMIC IMPACT OF LOCAL GOVERNMENT AUTONOMY AND FUND MANAGEMENT
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ECONOMIC IMPACT OF LOCAL GOVERNMENT AUTONOMY AND FUND MANAGEMENT
ABSTRACT
The study concentrated on the effects of local government autonomy and fund management. The study’s goal is to establish whether local government areas are appropriately funded in the current regime to address their statutory obligations and responsibilities to rural people, as well as to determine the impact of autonomy on local government financial bases.
In recent years, fiscal decentralisation, or the devolution of income mobilisation and spending power to lower levels of government, has emerged as a major subject in urban governance.
As the third tier of government, the local government system demands appropriate funding to deal with the myriad developmental tasks that fall under its purview.
In Nigeria, a low-income developing country, the study empirically evaluated the relationship between local government revenue and expenditure. A regression test was run on data from 1990 to 2015.
Secondary data sources included textbooks, CBN bulletins, journals, and internet content, which was analysed using parametric statistical methods. In this study effort, Y was employed as the dependent variable and X as the independent variable, with a brief explanation.
INTRODUCTION
1.4 BACKGROUND OF THE STUDY
Sharnna and Sadana (2008) described local government as a statutory authority in a specific local area with the capacity to levy taxes in order to fund the provision of local services such as sanitation, education, water supply, and electricity.
They define local government as an authority formed by elected representatives of the people, with sufficient autonomy from state or central supervision to provide basic services. Local government autonomy,
according to Oluwa (1996), is the power of local government to make some political, economic, and social decisions without resort to either of the two superstructures – state and federal governments.
Nwatu and Okafor (2008) demonstrated that the 1976 local government reform resulted in the establishment of local government as the third tier of government.
Okafor (1994) contends that despite many military incursions, Nigeria’s governance system has remained similar over the years. According to Nwatu and Okafor (2008), the 1976 reform loosened the local government structure throughout the country.
Nigeria operates a single-tier multifunctional local government system under the 1976 local government reform. However, Olasapo (2001) stated that the guides for local government reform stipulated that the population for all local governments in Nigeria should range between a minimum of 159,600 and a maximum of 800,000,
indicating that the two characteristics of the structure of local governments in Nigeria are uniformity and the size of the local government area. Nigeria has 301 local governments as a result of the local government reform (Okafor, 2008).
Okafor (2008) contends that these zones were enshrined in Nigeria’s 1979 constitution, and that the local areas were so wide that they lost contact with the people.
According to Ojo (1994), the federal administrations expanded the number of local governments in the federation to seven hundred and seventy-four (774) and democratised the appointment of their chairman in order to increase the autonomy of these local governments.
According to Ogboazi (1998), the issue of rural development, such as Enugu North, has caused widespread concern in most third-world countries. The growing recognition of the importance of rural development as an instrument in the overall development of the modern development world is due to the stark difference between rural and urban areas in terms of infrastructure,
resource distribution, human resource development, and employment, which has made rural development imperative. Husband and Dockery (1977) highlighted that local government administration in Nigeria has been marked by a bazaar culture, bad accounting systems, a lack of trustworthy data needed for planning, insufficient financing, and inefficient revenue collection.
The statutory allocations from the federation account are said to be insufficient to cover financial obligations of local government councils in terms of staff salaries, social services, and debt servicing due to poor management, but autonomy had made the administration favourable to all Okoli and Nwabuto, (1990).
Local government derives its power and autonomy from fundamental law, the state constitution, rather than the whims and caprices of the federal or state governments.
It has legislative regions assigned by the constitution, it can be sued or sued in court, and it has artificial personality Nwatu and Okafor (2008).
1.2: STATEMENT OF THE PROBLEM
Since the early colonial days, the local government system has undergone numerous adjustments, the majority of which have occurred to remedy certain deflections caused by the colonial overlords. It is assumed that the national cake is not reaching them while the nation’s wealth is being flattened by other government loans.
The issues are as follows:
Is funding made accessible to local governments insufficiently?
Is the local government system capable of properly catering to the local strata of Nigerian society using both internal and external revenue resources?
Is the autonomy afforded to them transforming affective fund management into a force or a reality?
Is the council’s staffing arrangement for handling funds efficient and adequate?
1.3: OBJECTIVES OF THE STUDY
To examine whether Nigeria’s federal statutory allocations money to local government are sufficient to effectively and efficiently carry out the statutory roles and responsibilities of local councils to rural people.
To determine if local government areas are appropriately funded in the current administration to carry out their statutory functions and responsibilities to rural residents.
To assess the impact of autonomy on the financial foundation of local governments.
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