ABSTRACT
Nigeria’s experience in local government in local government administration, whether or not in military regimes or in democratic era has clearly shown that local governments are faced with discouraging challenges in their mandate to promote development and provide essential services to the people, The failure of the local governments in the area of service delivery has made the people to lose their trust in government as an establishment. The study therefore, examined the relationship between revenue generation and good governance in Ibadan North Local government Area, Oyo State.
Survey research was adopted, Ibadan North Local Government, Oyo state was purposely selected because of the accessibility. The population of the selected local government was 828 according to the administrative department. The purposive sampling was used on the grounds of convenience to select 100 staffs from 9 departments in the selected local government. A validated questionnaire was employed to collect data. Reliability test of the instrument yielded cronbach alpha coefficient ranging from (α) 0.717-0.762. The response rate of 78%. Descriptive statistics of mean and standard deviation and the inferential statistics of Pearson correlation were used for data analysis to show the relationship between revenue generation and good governance. Hypothesis were tested at 5% level of significance.
The study found that there is a relationship between revenue generation and good governance in Ibadan North Local government area of Oyo State. The major source of revenue to the local government is taxes, haulages, rent and rate, grant. Good governance has effects on the efficiency in Ibadan North Local Government such reducing poverty rate. The revenue generated by the local government help in getting people of the local government out of poverty. Base on the based on the study, this was achieved by building and expanding market for trading. The study reveals that some of the major challenge face by the local government while generating revenue are tax avoidance and delinquencies, inability by most people of the society to pay up amount due for rent and rates on local government properties, lack of job training and poor educational background and inadequate operational vehicles and other facilities.
The study concluded that there existing relationship between revenue generated at the local government and good government in Ibadan North Local government area, Oyo state. This means that the ability of local governments to provide good governance especially in terms of provision of basic amenities to some extent depends on its ability to generate revenue from its internal and external sources. In line with the findings of the study, it was recommended that more revenue sources should be identified and adopted in order to increase and improve the revenue base of the local governments. Property and tenement rate as potential sources of local government revenue should also be tapped fully to improve the revenue base of the local governments.
Key words: revenue, local government, revenue generation, governance, good governance
Word count: 440
CHAPTER ONE
INTRODUCTION
1.1. Background to the Study.
Nigeria is a sovereign nation. It operates a federal system of government that is, the federal government, the state government and the local government councils. According to Aluko (2011) in Fatile, Majekodunmi, and Oni (2013) defined local government as a government at local level that operates through a representative council established by law to exercise specific powers within defined areas. It is responsible for the creation of an appropriate and conducive environment in which all sectors of the economy can perform optically, and it is this catalytic role of local government that propelled governments all over the world to search continuously for better ways to deliver their services.
Scharticles (2014) posited that amongst the foremost justifications for the present day government is that it promotes participation of native communities in governmental activities moreover serving as machinery for harnessing native efforts for development functions. Local governments serve as a link for interactions between local populations and the central arena of government. Local government is so not sovereign; it’s subordinate to the state and federal authorities. Nonetheless, it possesses some good amount of responsibility and discrepancy powers over a spread of functions or services.
Local government finance is one of the aspects of public finance. It deals with the generation of revenue, expenditure and utilization of economic resources in order to bring the impact of government closer to the people at the grass root level. Finance is also quite crucial at enabling local government rework the lives of rural dwellers through the availability of social services and rural infrastructures just like the construction and maintenance of rural roads, markets, health centers, etc.
Finance is the main aspect of major activities of government. Government units at all levels-national, state and local are daily engaged in the production and distribution of public merchandise and services in areas such as agricultural extension, education, healthcare, welfare, security, all of which involve immense amounts of money. The mobilization of the money resources or revenue to satisfy the various welfare desires of the folks have an impact become a crucial responsibility that governmental authorities need to shoulder. This responsibility not solely includes the generation of revenue however additionally its allocation among competitive wants of the local government. It’s inside this context that we are able to appreciate the task of revenue collection at the local government (Abubakar, 2013).
Generally, revenue accruing to any tier of government could be classified as recurrent or capital. While the previous is generated on an everyday basis throughout the year, the latter arises occasionally and in an exceedingly larger proportion. They are additionally represented as internal and external sources of revenue severally. The internal sources of revenue comprise many major and miscellaneous items aggregated to provide the required fund for financing the enormous functions ascribed to Local Governments as the third tier of Government, Orewa and Adewunmi (1983) stated that one of the main reasons why a local council exists is to collect various forms of revenues from its citizens and to use these to provide social services in an efficient manner as possible. These sources are summarized into the following revenue heads: Tenement rates, local licensing, fines and fees, interest payment, and dividends and miscellaneous (Orewa and Adewunmi 1983).
The 1976 local government reforms in Nigeria provided for the promulgation of authorities edicts, so embodying uniform provisions within the laws of all the state with Nigeria. The reforms therefore, saw the need for a uniform structure of local government in Nigeria. The local government recognized, their functions clearly stated and the human and financial resources were increased and guaranteed.
Revenue generated by local governments through the internally generated revenue or the externally generated revenue is needed to carryout various projects like construction of good roads, health care centers and facilities, construction of bridged, etc. Therefore, local government cannot embark, execute and possibly carryout the maintenance of various projects and many other responsibilities without adequate revenue generation. This is the basic reason why development is important at some Local Government councils in Nigeria. The generation is not exceptional to Ibadan North Local Government.
In order to bring the term ‘Good Governance’ into proper perspective, it is proper to examine the meaning of governance. Governance has been defined as the exercise of political, economic and social authority to regulate human interactions for the wellbeing of the society. The attainment of good governance in essence requires accountability, transparency, the rule of law and respect for human rights, a strong civil society, efficient systems and structures. Good Governance in Local Government is the ability for local government to utilize their resources properly and provide adequate service for the people. It can also be said to be the capacity and capability of local government to discharge their responsibilities effectively and efficiently.
Local Government in Nigeria play a very vital role in the provision of services to the public. The success of any Local Government is its ability to utilize its human and material resources to attain the desired objectives i.e. rendering needed services to the community.
1.2. Statement of the Problem.
The importance of the local government councils is because the government at the grassroots is measured by the quality and quantity of services rendered to the suburb populace. For the local government council to render worthy services, in form of provision of basic amenities, construction and maintenance of roads, creation of employment opportunities for the citizens and payment of workers’ salaries as at when due, money is extremely needed but without the availability of revenue, a local government council will not only be incapacitated by serving the people but will eventually crumble. The only possible way for survival of the local governments in Nigeria is revenue generation.
Nigeria’s experience in local government in local government administration, whether or not in military regimes or in democratic era has clearly shown that local governmentsare faced with discouraging challenges in their mandate to promote development and provide essential services to the people. Local government, which is statutorily established to be the tier of government closest to the people is not doing its bidding not to talk about the actual fact that resident population in the local government has no important access to benefits of its existence. The failure of the local governments in the area of service delivery has made the people to lose their trust in government as an establishment.
The local government is faced with a large number of problems starting from Un co-operative attitude of the Tax payers, high rate of unemployment, lack of adequate by-laws’, lack of essential tools to generate revenue to poor governance skills. General poverty level in the local government of the area, inability for local government to prosecute tax offenders and dishonesty among revenue collectors and inadequate system of revenue sharing formula among federal/central and local government. However, the most important drawback of local government is revenue generation and good governance. This has greatly affected the development of local government in Nigeria. The major issues here are: what has contributed to the non-performance of the local government, is it because of the total dependence on federal and state statutory allocation? Is it because the local government does not generate enough Internally generated revenue?, is it because of the high poverty level rate in the community? Or because of the ineffective utilization of the available scarce resources or the mismanagement of public funds. Among others, certain percentage of the statutory allocation has always been deducted by the state government thereby causing the local government to underperform which include;
- Without revenue independence, the goal of local government cannot be achieved.
- Absence of resource mobilization is by far the greatest problem of local government administration.
The study therefore seeks to study the problem of revenue generation and how it affects good governance in Nigeria of which Ibadan North Local Government will be the case study.
1.3 Research Objectives.
The broad objective of this study is to examine the relationship between revenue generation and good governance in Ibadan North Local Government, Oyo state, Nigeria.
The specific objectives are to:
- examine the sources of revenue generation in Ibadan North Local Government from 2014-2018.
- determine the relationship between revenue generation and good governance in Ibadan North Local Government.
- evaluate the extent to which the sources have contributed to the development of Ibadan North Local Government.
- determine the challenges of revenue generation in Ibadan North Local Government Area.
- offer suggestions on how to improve revenue generation in Ibadan North Local Government.
1.4 Research Questions.
This research project would answer the following questions:
- What is the relationship between revenue generation and good governance in Ibadan North Local Government?
- What are the sources of Local government revenue in Nigeria?
- To what extent have the sources contributed to the development of Ibadan North Local government.
- What are the issues that the Ibadan North local government face while generating revenue?
- What can be done to improve revenue generation in Ibadan North Local Government?
1.5 Significance of the Study.
From the outlook of this project, it is quite obvious that local government need to work on their performance and on improving their efficiency and effectiveness in the area.However, this research can considerably contemplate the actions and inactions of the government at the grassroots a regards questions of revenue generation and good governance therefore the need to utilize substantial revenue from its numerous sources in addition to federal and state statutory allocation for developmental purpose. This research project would give a clear understanding on some of the means of generating revenue that has been neglected over the years. Once the means of generating revenue is improved in the area, it would help reduce the rate of poverty level in the local government. It will be very beneficial to the people due to the fact that once both the internally and externally generated revenue are improved, it means that the standard of living of the people in that area would improve. In the provision of various amenities like health care centers, good roads, good water co-operation, good electricity supply, etc. People in the society will understand the importance of revenue in the local government and it would also be educative for them. The study will most importantly take into consideration the financial issues, deficiencies and challenges of generating and utilizing revenue in the Ibadan North local Government and how Good Governance is achieved. It would analyze facts and figures concerning revenue status of the local government and create recommendations which will be valuable for educationists, researchers, and political office holders.
1.6 Scope of Study.
The main focus of this study is to examine the Revenue generation and Good Governance in Ibadan North Local Government, Oyo State, Nigeria. Data would be collected from the Ibadan North Local Government area. This research project will analyze the revenue generated and how good governance has been achieved for the period of four years (2014-2018) in the local government. The geographical scope is strictly limited to the Ibadan North Local Government, survey revealed that information for research is easily accessible.
1.7 Definition of Terms.
Revenue
Public revenue could be defined as funds generated by the government to finance activities. In other words, revenue is the total fund generated by the government to meet their expenditure for a fiscal year. This refers to the grand total of money of income received from the source of which expenses are incurred. Revenue could be internal or external. The financial gain received by government. Revenue is also the amount of money the government collects to run program to expand in support of public policies.
Generation
This is the process of sourcing revenue from the local government in carrying out their aim and objectives.
Good Governance
Good Governance means the processes and institutions producing results that meet the needs of the people in the society while making the best use of the resources available at their disposal.
Local Government.
They are semi-autonomous bodies created by an act of parliament to undertake certain governmental functions within the areas of jurisdiction. The United Nations Office for Public Administration defines Local Government as “a political sub-division of a nation in Federal system is constituted by law and has substantial control of local affairs which includes the power to impose taxes or exact labor for prescribed purpose”. The governing body of such an entity is elected or locally selected.
1.8 Chapter Outline.
This study is organized into five chapters.
Chapter one deals with the background to the study, statement of the problem, objectives of study, research questions, significance of the study, scope of study and definition of terms.
Chapter two entails the literature review and theoretical framework. The literature review explains the purpose, objectives and significance of the study in a well explained manner. The literature review entails of the following subtitles (Introduction, Conceptual Framework, Sources of Revenue Generation to Local governments, Challenges of Internal Revenue Generation in Ibadan North Local Government, Corporate Governance, why corporate governance is important, the role of Local Government towards Corporate governance in Nigeria.) The theoretical framework deals with theories that best explains the subject matter of the study, with the following subtitles (Fiscal Federalism Theory and Classical Administrative Theory).
Chapter three of this study is the Research Methodology, which identifies the methods and procedures adopted in this study. It consists of Introduction, research design, population of study, sampling technique and sample size, method of data collection, instrument of data collection, test for validity and reliability of instrument and methods of data analysis.
Chapter four of this study is the data presentation and analysis of data obtained from field investigation. With the aid of administered questionnaires based on this study, the response from various respondents was analyzed and presented in table form. The various analysis was discussed in relation to the various cases of poor revenue generation in the Ibadan North Local Government.
Chapter five of this study is where the findings from the data are summarized and conclusion is drawn. It also contains recommendations given by the researcher on the basis of the findings as well as suggestions for further studies.
