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CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

The local government system is a system of government established as a third tier of government after the federal and state governments. The local government is a government at the grassroots level of administration meant for meeting peculiar grassroots needs of the people (Agagu, 1997). Put succinctly, the local government system is that tier of government closest to the people; it is vested with certain powers to exercise control over the affairs of the people in its domain (Lawal, 2000).

Like every other institution, local governments require resources to meet its responsibilities as demanded by the constitution. Broadly construed, resources are any assets that an organization might draw on to help it achieve its goals (Bryson et al. 2007, 704). More specifically, “resources include all assets, capabilities, organizational processes, firm attributes, information, knowledge, etc controlled by a firm that enables the firm to conceive of and vary out strategies that will improve its efficiency and effectiveness” (Barney 1991, 101).

Rainey and Steinbauer (1999) offer three types of organizational resources; financial, human, and technological resources. Given that human resources is always touted as the most important of all the resources, the centrality of financial resource to organizational survival and growth cannot be treated with any sense of frivolity.

Resource generation in the local government is without incertitude, synonymous with revenue generation. According to (Rabiu, 2004) revenue generation in the local government is derived from two broad sources, viz: the internal and external sources, internally generated revenue includes local rates, taxes and fines and fees and miscellaneous sources (e.g. rents on council estates, royalties, interests on investments and proceeds from commercial activities). While external sources include the statutory 20 percent received from the federation account and 10 percent from the states’ internally generated revenue (Adedokun, 2004).

One of the recurring problems confronting the local government system in Nigeria is dwindling revenue generation and poor utilization of scarce resources. Thus, culminating in the inadequate provision of public utilities and worsening socio-economic conditions (e.g. poverty, unemployment, malnutrition, etc) that are existent in the local governments.

In Kogi state, the situation is nonetheless different, as revenue generation and effective utilization continues to generate controversies. Well aware of the importance of resource generation and utilization in the local government system, the Kogi State government transformed the Department of Local Government into the Ministry of Local Government and Chieftaincy Affairs in 2007; empowering it to oversee to the affairs of local governments. But despite its creation, it is shaming to note that in resources generation and utilization in the local government continues to be a conundrum.

It is against this backdrop that this study sets out to investigate the lack of development in the local governments in Kogi state and the continued mismanagement of generated revenues; in spite of the creation of the ministry of local government and chieftaincy affairs charged with the responsibility of ensuring that local government receive their 10 percent remittances from the state’s internally generated revenue and that development plans in the local governments are well articulated and requisite funds meted out accordingly for such purposes.

1.2       Statement of the Problem

Local government as a third tier of government was established with specific functions to assist the federal and state government in enthroning effective rural development and good governance at the grassroots level (Nwankwo, 2004). However, the local governments system in Nigeria has failed to accelerate socio-economic and human development, mainly because of poor utilization of funds.

The 1976 local government reforms as emphasized by Alu (2006) provide two main sources of revenue for local governments namely: internal revenue and statutory allocations from federation and state accounts. In spite, of these sources of revenue, local government funds are rarely available to meet expenditure requirements.

Adebayo et al (1973) argues that poor utilization of funds is responsible for the failure of local governments to perform their primary functions. Similarly, Nwankwo (2004) blamed the lack of development in rural areas on poor financial management, which has over time hampered the completion of public projects, especially those that has to do with the provision of social welfare services.

With a determination to ensure the effective utilization of funds in Kogi State local government system, the Ministry of Local Government and Chieftaincy Affairs was established. But unfortunately, the Ministry has not done much in terms of ensuring that public funds in effectively managed by local governments in the state. This development the Ministry attributes to operational challenges (Ministry of Local Government and Chieftaincy Affairs Hand-over address, 2011). Considering the aforementioned problems the following research questions have been raised;

1)  How are the resources of the local governments in Kogi State local government system generated?

2)  What are the factors that are responsible for the poor utilization of resources in the local government system in Kogi State?

3)  What is the role of the Ministry of Local Government and Chieftaincy Affairs towards effective resource generation and utilization in Kogi state local government system?

4)  What are the consequences of poor resource generation and utilization in the local government system in Kogi State?

5)  What measures can be put in place that would enhance resources generation and utilization in the local government system in Kogi State.  

1.3     Objectives of the Study

The general objective of the study is to investigate resource generation and management in the Ministry of Local Government and Chieftaincy Affairs. The specific objectives of the study are as follows:

1)  To find out how the resources of the local government in Kogi state are generated?

2)  To ascertain the factors that are responsible for the poor utilization of resources generated in the local government system

3)  To examine the role of the Ministry of Local Government and Chieftaincy Affairs towards effective resources generation and utilization in Kogi state local government system.

4)  To determine the consequences of poor resources generation and utilization in the local government system in Kogi State.

5)  To make recommendations on how resources can be effectively generated and utilized in the local government system in Kogi state.  

1.4     Significance of the Study

This study has both theoretical and empirical significance. Theoretically, this study is pertinent because it adds to the science of public administration. It also serves as a stepping stone for researchers who wish to undertake a similar study. Empirically, this study will assist in identifying more potent and pragmatic ways of managing local government revenues effectively in Nigeria and in Kogi state particularly. This study will also add to the body of knowledge, not only by enriching the existing literatures on the subject of resource generation and management in public institutions in Nigeria, but also by proffering solutions on how best to manage generated resources effectively.

Apart from this, the study will impart more knowledge on State governments and local government administrators, state, chairmen, councilors, political appointees, scholars, local government stakeholders, accounting staff in the finance department, revenue officers and council revenue staff and their agents, that effective management of revenues will help to increase local government efficiency and boost infrastructure development in the rural areas.  

1.5       Scope and Limitations of the Study

This study covers resource generation and management in the Ministry of Local Government and Chieftaincy Affairs, Kogi State. 

This study was constrained by the inability to get specific requisite reference materials and the unwillingness of most local government operatives to divulge certain information that would have helped the course of this study considerably. The study was also faced with the overwhelming task of convincing most of the sample population to participate in this study by filling questionnaires distributed.

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