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THE IMPACT OF POOR REVENUE GENERATION ON THE DEVELOPMENT OF LOCAL GOVERNMENT AREAS IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1    BACKGROUND OF THE STUDY

Development is a dream of every individual, group or organization and even the government. At every point in time, there must be a significant growth and development in people’s lives. This can be achieved individually and/collectively. In the struggle for development in the society, the tier of government closer to the people; the local government, takes up the responsibility of the people to a certain level. To achieve the objectives of this responsibility, enough revenue is needed to plan, execute, and maintain facilities and infrastructures. Enough fund is needed for the wellbeing of the people in terms of accessible roads, building of public schools, health care centers, and construction of bridges, market, and portable water supply among others. Such funds can be generated from taxes, royalties, haulages, fines and grants from states, national and international governments.

Hence, the local government cannot start, execute and maintain these projects and other responsibilities without adequate revenue generation and this is the main reason why development is only superficial at some Local Government councils in Nigeria. Though the state and federal government allocate funds or even embark on some projects that develop local governments indirectly; this cannot be enough for a fast growth and development of a local government. Personal efforts need to be made by the local government to improve their poor revenue generation.

Revenue generation in Nigeria local governments is principally derived from tax. Tax is a compulsory levy imposed by government on individuals and companies for the various legitimate function of the state (Olaoye, 2008). Tax is a necessary ingredient for civilization. The history of man has shown that man has to pay tax in one form or the other that is either in cash or in kind, initially to his chieftain and later on a form of organized government (Ojo, 2003). No system or rules can be effective whether foreign or nature unless it enjoys some measures of financial independence. Local governments in Nigeria have developed over a number of years. Historically, the development of direct taxation in local government in Nigeria can be traced the British pre-colonial period Under this period, community taxes were levied on communities (Rabiu, 2004) recently the revenue that accrues to local government is derived from two broad sources, viz the external sources and the internal source An effective Local Government system rests majorly on the availability of human and material resources which the nation could mobilize and harness for local governments development. In 1976, the Federal Military Government then issued guidelines on local governments reforms. The reforms which gave recognition to local governments as the third tier of government whereby government activities at the local level were taken care of. In 1988, another reform of local government was established. This gave a substantial and unprecedented reform of autonomy to the local governments in the country. With this autonomy, greater responsibilities devolved on the local government therefore, became a common knowledge that most of the local government are finding it difficult to cope with the present level of responsibilities. The principal aims of creating local governments were as follows:

1. To serve as the third tier of government through which appropriate services and development are made in response to the wishes of local community through their representatives.

2. To serve as an intermediary between government at the center and local communities.

3. To mobilize and utilize both human and material resources by engaging the people at the local level in the government activities.

4. To facilitate the exercise of democratic self – government closer to the grass root of the society and to exchange initiative and leadership potential.

Mostly, all local governments in Nigeria do no longer perform their responsibilities simply because of poor finances arises from adequate revenue generation drive. The bad financial situation is further aggravated by the prevailing inflationary situation in this country which erodes the value of funds available to render essential social services to the people. Development is highly associated with fund, much revenue is needed to plan, execute and maintain infrastructures and facilities at the local government level.

Different local governments strategize comfortable and feasible ways to generate their revenue.

1.2     STATEMENT OF THE PROBLEM

The local government is saddled with the responsibility of taking care of the citizens at the local level. These people most time lack the direct care from state and federal governments thereby lacking essential facilities and state of modern civilization. In these localities, there is lack of pipe borne water, accessible roads, electricity, markets etc. which leads to rural-urban migration. Due to all these, a poor revenue generation is an issue that must be tackled as soon as possible. Therefore, the researcher will find out the impact of poor revenue generation on the lives of people at the rural areas and how it has affected development in the local government as a whole.

1.3     OBJECTIVES OF THE STUDY

The aim of this research is to actually investigate the effect of poor revenue generation on the development of local government areas in Nigeria.

The objectives are:

1.     To examine the effect of poor revenue generation  on the livelihood of people

2.     To determine the relationship between poor revenue generation and the infrastructural development of the community  

3.     To find out the causes for poor revenue generation in local government

4.     To make useful suggestions to solve the problem of poor revenue generation as development depends on revenue generated.  

1.4     RESEARCH QUESTION

1                   What is the effect of poor revenue generation on the livelihood of people?

2                   What relationship exist between poor revenue generation and the infrastructural development of the community 

3                   What are the causes for poor revenue generation in local government?

4                   What are the suggestions to solve the problem of poor revenue generation since development depends on revenue generated?

1.5     SIGNIFICANCE OF THE STUDY

This research will look critically into the effect of poor revenue generation on the development of local government areas in Nigeria. Even though the government have tried several schemes to generate funds, the effort have not been effective enough to execute projects. This study will analyze how the local government can strategically and continuously work towards a better means of generating fund for projects handled by the local government. This study will also serve as a background knowledge for further research works.

1.6     SCOPE OF THE STUDY

The idea of the research work is to decipher if actually poor revenue generation can affect development in local governments. This research will cover the local governments in Osun state, methods and the citizens’ response to revenue generation for development in local government areas in Nigeria will be used.

1.7     LIMITATION OF THE STUDY

Finance for the general research work will be a challenge during the course of study. Correspondents also might not be able to complete or willing to submit the questionnaires given to them.

However, it is believed that these constraints will be worked on by making the best use of the available materials and spending more than the necessary time in the research work. Therefore, it is strongly believed that despite these constraint, its effect on this research report will be minimal, thus, making the objective and significance of the study achievable.

1.8     DEFINITION OF TERMS

Revenue: this is the income, especially when of an organization and of a substantial nature.

Development: this is the growth of something

Local government: this is an administrative body for a small geographic area, such as a city, town, county, or state.

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