CHALLENGES FACING REVENUE ALLOCATION IN THE LOCAL GOVERNMENT
Abstract
The existence of Government primarily to provide services that will make life worth living. Furthermore, local governments as third tier government are created to bring government closer to the people at the grassroots and for transformation of lives at the rural level. The purpose of this paper is to examine local government and the challenges of revenue allocation in Nigeria using Yewa South Local Government as a case study and to probe issues with revenue allocation among tiers of government with focus on the third tier of Government. This study employed both primary and secondary method of data collection. The paper concludes and recommends that state joint local government account should be abolished as it gives state government absolute control over local government.
Keywords: Local Government, Federalism, Revenue Allocation and Fiscal Federalism
- Introduction
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. Agba et al (2014), stated that local governments is the third tier administrative structure created in Nigeria to decentralize governance and bring government closer to the people at the grassroots and render social services necessary to engender national development. The 1976 Local Government Reform Hand Book defined local government as: Government at the local level exercised through representative councils established by law to exercise specific powers within defined areas. These powers should give the council substantial control over local affairs as well as the staff and institutional and financial powers to initiate and direct provision of services and to determine and implement projects so as to complement the activities of the state and federal government in their areas, and to ensure, and through devolution of functions to these councils and through the active participation of the people and their traditional institutions that local initiatives and responses to local needs and conditions are maximized (Quadri, 2013). The above assertions necessitate the availability of financial resources for the local government to carry out various functions expected of her by the citizen. Ideally, under a federation, each tier of government (federal, provincial/state, and district/local) should have assigned taxing powers to raise enough revenue to conduct its operations/administration and provision of public services, and no government should rely on another government for a significant portion of its revenue. The problem with Nigeria’s federalism is that most states governments and local governments rely heavily on revenue allocated from the federation account, i.e. revenue collected by the federal government, FG on behalf of the federation (Richard and Eme, 2015). In view of the above, revenue allocation has remained the most critical policy issue in the local government administration in Nigeria. None of the local government councils in the polity can as a matter of fact survive without a sound financial base. Owing therefore to the development responsibilities place on local governments, there is need for adequate financing of this tier of government. In dealing with this important practical issue, this study, therefore, seeks to examine the challenges of Local Government with respect to revenue allocation in Nigeria. And to limit the scope of this work, the researcher took Yewa South Local Government, Ogun State as the study area.
- Statement of the Problem
Without any doubt the issue of revenue allocation has remained the most dominant and contentious in the relationship between local governments, as the third-tier of government, and the other two tiers, i.e. the federal government and the states, within the parameters of Nigerian federalism. In the 1976 Local Government Reform, which drew heavily from the Brazilian experience’ and which took firm root in Nigeria, local government was included in the mainstream of the country’s intergovernmental fiscal relations, with a defined share of the federation account, among other statutory provisions and administrative arrangements (Akindele and Olaopa, 2002).The reform, that was referred to as great and a real breakthrough gave prominence to local government making it possible for them to have legal entities which in turn entitled them to perform certain functions that have since been contained in the 1979, 1989 and 1999 Federal Republic of Nigeria constitution. Even though the reform clearly articulated the idea of a three- tiered federation in Nigeria, its consequence recognition of revenue sharing and administration arrangement has led to many problems which, according to Adamolekun can be broadly classified into six categories intergovernmental conflicts, structural organizational problems, financial problems, shortage of qualified manpower, the place of traditional authority in local government and political and bureaucratic corruption (Murana, 2015).These problems largely remained un-resolvable within the Nigerian political landscape even during this period of the fourth republic. These problems have been more compounded by the 1999 constitution which makes the institution of local government in Nigeria (particularly in its creation and control) a residual matter for state governments. However, of these problems faced by local government in Nigeria, it is quite clear that the most recurrent ones are finance and sizeable mismatch between their statutory functions and responsibilities; the flow of financial resources available to them; and constraining limits of their tax-raising powers or fiscal jurisdictions (Murana, 2015).Given the associated rising cost of running local government, that is 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. It is in the light of the economic growth process in Nigeria has not been utilized.
Hence the need to examine empirically whether revenue allocation formula adopted in the past has had any meaningful impact on the national development. What are the challenges facing local government on revenue allocated to them? Is there solution to those problems? The issue of revenue allocation in Nigeria is a fundamental one that border on promotion of national unity and rapid national development.
- Objectives of the Study
The main focus of this study is to critically analyze challenges of revenue allocation in local government of Nigeria, using Yewa South Local Government as the study area.1. Challenges of Revenue Allocation in Local Government Administration in Nigeria2. Possible Solutions to challenges facing Revenue Allocation in Local Government Administration in Nigeria.
2. Literature Review
2.1 Meaning of Local Government
Many scholars define local government differently. This is as a result of varied perspectives on the actual role of local government which differ from one environment to another. However, local government can be defined as government at the local level exercised through representative councils established by law to exercise specific powers within defined areas (Local Government Reform Handbook, 1992). According to International Union of Local Government Authorities (IULA), Local Government is defined as the level of government with constitutionally defined rights and duties to regulate and manage public affairs which are also constitutionally defined for the exclusive interest of the local population (Abe & Omotosho, 2014). Local governments are the third tier administrative structure created in Nigeria to decentralize governance, bring government closer to the people at the grassroots and render social services pivotal in engendering national development. They are purposefully located and responsible for the governance of about 70 percent of the estimated 152 million people of the Nigerian population. Thus, they are said to be in a vintage position to aggregate and articulate the needs of the majority of Nigerians and facilitate rural development through the application of the needed financial and human resources in their operations (Agba et al, 2014).2.2 Federalism and Revenue Allocation in Nigeria Federalism simply refers to a system of government where there is constitutional division of power between two or more levels of government. Federalism, according to (Anyadike, 2013) refers to a political system where there are at least two levels of government. In such cases, there is the juxtaposition of two levels of power of a central government otherwise called the federal government and other states labeled variously as states, regions, republics, cantons or unions. Akindele and Olaopa (2002) opined that, one of the primary features of a federal system of government is the assignment of functions between the various components of government. This also forms the basis for the determination of revenue rights and the delimitation of tax-raising powers, which constitute the genesis Of Intergovernmental Fiscal Relations (IGFR). Most constitutional arrangements in federal systems classify the powers and responsibilities into exclusive, concurrent and residual legislative lists, as is the case in Nigeria.
