Annual survey of state and local government finances. Sources and utilization of local government finance in nigeria abstract local government in nigeria is the third tier of government. Right of occupancy fees on lands owned by the state government in urban areas of the state. Strengthening local government finance strengthening local government finance can improve the efficiency of the public sector and reduce the need for transfers from central to local government, particularly in urban areas. Revenue generation in local government councils in nigeria. Abstractlocal government in nigeria is the third tier of government. These are the sources of fund that comes through the government through budgeting allocation. Although local government revenue was about the same relative to gross domestic product in 1977 8. In fact, democracy itself originated and developed along the lines of local governance initiatives in the. While state governments generally aim to provide sufficient autonomy and support to local governments, there are fifty statelocal revenue systems that even vary within states. The current financial predicament of local government councils and constant pressure for increase in allocation has been in the front burner of local governments administration in nigeria. In addition, fine is another important source of revenue to the local government in nigeria which are financial penalties imposed on individuals for a breach of bye. Banks and other commercial lenders are popular sources of business.
The amount a municipality gets depends mainly on the number of lowincome people in the area rural municipalities usually get more. Basically, revenue in terms of governance can be defined as the total annual income of the federal, state and local government council. Agricultural credit sources and determinants of credit acquisition by farmers in idemili local government area of anambra state 35 as acquire improved technology for enhanced performances. Petroleum tarriffs as a source of government revenue. It supposes to communicate directly with the people through their representatives, it is through an effective local government system that is obligations and duties to the people will be idealized.
The amount a municipality gets depends mainly on the number of low. Sources of government revenue in nigeria nigerian finder. Types and sources of financing for startup businesses. Nigeria summary nigeria is a federal republic with three tiers of government. Since local governments are corporations of state government, local revenue structures are largely determined by state doctrine. Sources of business financing for entrepreneurs nigeria. The sources of revenue will be analyzed on the basis of level of government. Local government is faced with varieties of difficulties to source adequate revenue from federal government, state government and the internally generated revenue, such problems are cogwheel to the smooth running of local government administration. There are 774 local government areas in nigeria, all are within the 36 states and their capitals. Fiscal federalism, local government, autonomy, finance 1. State and local finance initiative data query system. The focus of this paper therefore is an examination of local government finance in nigeria using iwo local government as a case study. In this post, we shall reveal major sources of revenue.
Fiscal federalism and local government finance in nigeria eric. Apr 10, 20 local government source their finance from both internal and external sources. Local government borrowing as part of the system of local government finance in tanzania a brief synopsis of local government borrowing is provided in section 1. Sources and utilization of local government finance in nigeria abstract local government is the third tier of government, it suppose to communicate directly wit the people through their representatives. The two major sources of local government financing in nigeria are internally generated revenue i. Representatives of this organization collect taxes, work with telebroadcasting and radio, transport licenses, cemeteries and provides houses for the people in need. Introduction a sound revenue system for local governments is an essential precondition for the success of fiscal. In this case, autonomy refers to the amount of authority a municipality has over its.
In all, there are 774 local governments in nigeria including the four area councils in abuja. Agricultural credit sources and determinants of credit. Certain revenue sources, such as user charges and property taxes, are more easily administered by local government. Most of the contributors identified inadequate finance as a major problem hindering the efficient performance of the functions of state government in nigeria adedeji, 2006. The concept of financial accountability of the thirdtier of government in nigeria is all about holding and ensuring that stewards with resources which are not theirs, give an accurate and up to. Following this background, the paper is structured as follow.
This is the result of a number of factors, which will be discussed in more detail in the following section. The federal government has the responsibility of preparing the financial statement of account which must show the true and fair view to the nation at a particular point in time. Market taxes and levies where state finance is involved. Sources of agricultural credit to smallscale farmers in ezeagu local government area of enugu state, nigeria 1mgbakor miriam n. Many reasons, ranging from the political to the socioeconomic, have been given for the creation of local government. Section 6 local government borrowing as part of the system.
Top 10 major sources of revenue for local government in nigeria. Types and sources of financing for startup businesses ag. Thus, lowerlevel governments should tax revenue bases with low mobility between jurisdictions. The earliest form of local governments exists in the form of clan and village meetings. They include statutory allocation, loans, grants, aids and so on. Petroleum tarriffs as a source of government revenue author. It follows therefore that the essence or role of finance in any organisation.
Section 2 deals with the function of the local government while section 3 provides insights on the sources of revenue to the local. Financing infrastructure in africa a landscape of evolution. Chapter 2 meaning, nature and scope of local governments. There are two major sources of local government finance in nigeria, namely. This is a facility given to the entrepreneur with an obligation to pay the sum and accrued interest at an agreed date. Every government depends on revenue from different sources to thrive and the nigerian government isnt different.
Functions of local government in nigeria the functions and tasks of the local government are prescribed in the nigerian constitution of 1999. It is through an effective local government system that is obligations and duties to the people will be idealized. External sources are loans that come from foreign countries while internal sources are loans that come from within the country. These are usually hard to come by for a start up business. Although borrowing currently only plays a very minor role in the system of local government finance, the question of local government borrowing is becoming. So far the local government system in nigeria has not been stable and thus its future remains bleak, uncertain and insecure. Sources and utilization of local government finance in nigeria with abstract, chapter 15, references and questionnaire. Financing local government open knowledge repository. Sources of agricultural credit to smallscale farmers in. What are the sources of revenue for local governments. Pdf compendium of all lawscategories also available email. Wikipedia defines a local government as a form of public administration which, in a majority of contexts, exists as the lowest tier of administration within a given state. The 1976 local government reform fixes the population of a local government not less than 150,000 and not more than 800, 000.
These are financial sources of which local government dont have full control of the inflow, amount and some times is unsure of its time of arrival. In constitutional sense, democracy is the system of government, in the administration. Local revenue structures national league of cities. Additionally, avoidance of tax by the private sectors and rich individuals raises a fundamental challenge to revenue generation and local government administration in nigeria. Figure 3 lists the total local government revenue for.
This was equally reinforced by several constitutional provisions in the 1979 and 1999 constitutions. Many reasons, ranging from the political to the socioeconomic. Considering the sources of financing education, vaizey 1961 raised the. Nov 18, 2010 in developing countries characterized by low capital formation, and weakness of both the capital and money markets, the major sources of finance available to budding entrepreneurs are majorly through personal savings, loans and support from family and friends and government schemes to support smes.
Local government revenue mobilisation in anglophone africa. A case study of ekiti state destiny chiagozie abstract. Although democratically elected local government is protected by the constitution, and development areas and autonomous communities are created by individual state legislation, elected local government is lacking in. Jul 19, 2016 sources of funding education in nigeria. This bill is to among other things amend the following tax provisions and make them more responsive to the tax reform policies of the federal government. Sources of government borrowing and reasons why government.
The system of local government by democratically elected local government councils is under this constitution guaranteed. The thrust of this paper therefore is to examine the pattern of rural and community development in nigeria, especially in those areas which have the greatest impact on the lives of. Nnanna 5 and olaitan 6 identified several credit policies and guidelines, which ensure availability of credit through rural banking scheme. Structure and functions of local government in nigeria. Local government source their finance from both internal and external sources. This report an outcome of an expert group meeting held on the challenge of local government financing in developing countries documents both the challenges and solutions related to the ability of local governments to mobilize revenues from local resources. It is the branch of economics that assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achieve desirable effects and avoid undesirable ones. Considering the sources of financing education, vaizey 1961 raised the question, how can education be financed. The following points highlight the nine main sources of government revenue. It is not the best source of financing new business, because the payment put pressure on the entrepreneur and the business. Public finance is the study of the role of the government in the economy.
Most lenders require a solid business plan, positive track record, and plenty of collateral. In fact, the so called independent sources of revenue are not really independent because they require government authorization before they can be collected. Sources of funding education in nigeria gemanalyst. Yet political economy issues can hamper the use of own revenue sources. A tax is a compulsory levy imposed by a public authority against which tax. Data for the study were gathered from facetoface interview, available records in iwo local government, text books, lecture notes, journals, reports, seminar presentation and internet materials. Top 10 major sources of revenue for local government in. Imf, government finance statistics, and world bank data. The purview of public finance is considered to be threefold. What are the reasons for the creation of local government in nigeria. Market research indicates the possibility of a large volume of demand and a significant amount of additional capital will be needed to finance. A wide, secure and buoyant revenue base is critical if local authorities are to effectively execute their functions local government finance commission of uganda, 2003.
Thus, the paper is an attempt at revisiting the sources of local government finance in nigeria and the factors affecting the financial viability of local government councils within the purview of fiscal federalism as enshrined in the 1999 constitution of the federal republic of nigeria. This can be sourced from private sources or financial institutions such as microfinance houses or commercial banks. Fiscal federalism and local government finance in nigeria. Answering the question, he argued that the financing of education can be derived from fees paid by parents, repayable loans to parents, local government taxes, general budgetary funds, gifts and. Sources and utilization of local government finance in nigeria. Assessment of the contributions of local governments finance to. Nigerian local government visavis state and federal government using theory of. Developing alternative sources of funding local governments in. Metzger bureau of economics federal trade commissjon february 1991. While state governments generally aim to provide sufficient autonomy and support to local governments, there are fifty state local revenue systems that even vary within states. Local governments, by contrast, require relatively stable sources of revenue. Contents sources of government borrowing reasons why governments borrow sources of government borrowing as government debts were divided into external and internal debts, sources of government borrowing is also divided into external and internal. Despite these great efforts which many believed would guarantee local government autonomy, there still exists a number of unresolved issues which hinders local government performance. Basically there are two broad sources of funding educational programs in nigeria.
The concept of the new system of local government with its objective is aimed at standardizing and stabilizing the function and. The report also identifies successful governance mechanisms for efficient. The challenge of local government financing in developing. Sources and uses of local government funds in nigeria. Panchayats and municipalities at grass root as such, in india, local government is the third stratum of the government, the first two being the central and state governments. The local government service commission has been empowered to handle staff matters. Sources of business financing for entrepreneurs nigeria as. Revenue generation and local government administration in. In 2009 and 2010, revenue growth was negative overall. The local government equitable share is meant to ensure that municipalities can provide basic service and develop their areas. The challenges of selffinancing in local authorities the. Download this complete banking and finance project material titled.