SOURCES AND UTILIZATION OF LOCAL GOVERNMENT FINANCE IN NIGERIA
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SOURCES AND UTILIZATION OF LOCAL GOVERNMENT FINANCE IN NIGERIA
ABSTRACT
Local government is the third degree of governance in Nigeria. It presumes direct communication with the people through their representatives; it is through a successful local government system that the people’s obligations and duties will be idealised.
The goal of the new system of local government is to standardise and stabilise the functions and financial resources at the local government level.
The primary difficulties of the local government are revenue mobilisation and effective utilisation, especially given that they appear to be no comprehensive approach to the sources and uses of money in the local government.
The initiative aimed to shed light on the sources of financing accessible to local governments as well as effective methods of harnessing resources. It also attempted to provide advise on how to best utilise these resources.
This initiative will provide crucial information to students, researchers, and local government administrators in quest of a solution to an approaching problem.
INTRODUCTION TO CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
Nigeria’s federal government establishes the local government, which is the third layer of government. Its creation is intended to promote grass-roots growth.
The local government is a rising organisation whose mission is to provide socioeconomic services to its citizens and to contribute to enhancing their living standards. It is able to attain these goals by maximising her existing financial resources.
The local government should be largely responsible for the construction and upkeep of trunk roads, plants and equipment, buildings, and other assets.
Aside from that, residents in the area typically expect enhanced service and facilities from the local government. Tarmac surface roads, concrete drains and bridges in place of earth roads, drains, and wooden bridges,
modern gas-fired incinerators instead of dumping garbage in barrow pits, concrete structures, and asbestos-roofed classrooms to replace old mud wall buildings are among them.
For these and other purposes, the local government may also invest in viable projects to earn traditional revenue and provide employment opportunities for the people; the local government requires money as well as an annual capital budget to plan and programme the funding of capital projects and other obligations.
According to Adedesi and Row Lang (1970: 10), financial issues have traditionally plagued Nigerian local governments. This was especially true when the local government system had a competitive and self-contained budget that could be effective and efficient. The municipal government became an autonomous administrative body.
To achieve this goal, the local government took on the task of producing revenue and using it to solve problems within its jurisdiction, with little help from the federal and state governments in the form of grants and allocations. At this point, revenue sourcing and precision in its use became a challenge among its municipal administrations.
Finance, according to Gboyegar Alex (1973: 43), is the art of providing a method of payment as a body of facts, concepts, and ideas dealing with the raising and of finances by individual businesses and the government.
Both the federal and municipal administrations have the authority to seek funding from both within and beyond the country.
Any local government’s resources, as well as its administration, to assess its revenue sources and utilisation.
At this point, I’d like to emphasise the need of restructuring and streamlining all revenue-generating activities.
1.2 STATEMENT OF THE PROBLEM
In Nigeria, appropriate utilisation of local government finance is not always done.
Any local government in the area can be used as an example; the goal of creating local government is to bring government to the grass roots, namely rural development, such as upkeep of local roads, market squares, provision of health centres, and so on. All of this is now being neglected by local government authorities as a result of inappropriate fund utilisation.
However, the sources from which these monies are raised are not disclosed. Because of the amount of corruption in Nigeria, federal and state allocations to local governments are not always fully utilised. These have posed a significant challenge to local government leaders in carrying out their responsibilities.
1.3 OBJECTIVES OF THE STUDY
The following is the study’s goal:
i) To investigate the sources and applications of local government revenue in Nigeria.
ii) To comprehend the elements influencing the financial health of the local government.
iii) Conduct a scientific investigation of the extent to which local government revenue is utilised.
1.4 THE SIGNIFICANCE OF THE STUDY
The study is notable in that it is meticulously analysed with an aim to show all sources and utilisation of Nigeria’s third tier of government.
Despite being the lowest tier of government, how it generates its own revenue and how well it spends it.
The study will be extremely useful to banking scholars, local government finance managers, and students at both secondary and postsecondary institutions.
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