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PROJECT TOPIC: IMPACT OF LOCAL GOVERNMENT REVENUE ON SERVICE DELIVERY IN KUDAN AND SABON GARI LOCAL GOVERNMENT AREAS, KADUNA STATE

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CHAPTER ONE

INTRODUCTION

Local government finance is one of the aspects of public finance. It deals with the generation of revenue, expenditure, and utilization of financial resources in order to bring the impact of government closer to the people at the grassroots. Put differently, finance is essential at enabling local governments to transform the lives of the rural dwellers through the provision of social services and rural infrastructures like the construction and maintenance of rural roads, markets, schools, health centers, etc. Finance is the heart of the major activities of government. Government units at all levels-national, State, and Local are daily engaged in the production and distribution of public goods and services in areas such as agricultural extension, education, healthcare, social welfare, security, all of which involve huge amounts of money. The mobilization of the financial resources or revenue to meet the diverse welfare needs of the people has in effect become an important responsibility which governmental authorities have to shoulder. This responsibility not only includes the generation of revenue but also its allocation among competing needs of the local governments. It is within this context that we can appreciate the task of revenue collection at local government level (Abubakar, 1999). Generally speaking, revenue accruing to any tier of government maybe classified as recurrent or capital. While the former is generated on day-to-day basis throughout the year, the latter arises once in a while and in a larger proportion. They are also described as internal and external sources of revenue respectively. Barber (1978) remarked that the principal sources of local government revenue are local rates, federal government grants and trading receipts. 1976 Local Government Reforms (in Nigeria) recognized the fact that if meaningful local government is to be expected in Nigeria, much larger financial resources are needed. 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 Adewumi (1983) stated that one of the main reason why a local council exists is to collect various forms of revenues from its citizens and to use these to provide social services in as efficient a manner as possible. These sources are summarized into the following revenue heads: Tenement rate/property rating, local license, fines and fees, earnings from commercial undertakings and rent on the property, interest payment, and dividends and miscellaneous (Orewa and Adewumi,1983). According to Abubakar (1999), Local Government units today are assigned a wide-ranging number of functions and of reaching responsibilities for which they are statutorily empowered to raise revenue from local sources to supplement their allocations from the Federation Account and other intra-governmental sources. A development-oriented local government system is therefore expected to be a vehicle for the provision of goods and services, which are necessary prerequisites for sustained development. In the 1976 Local Government Reforms, the Federal Republic of Nigeria articulated four basic objectives for establishing a local government. These are: i. To make appropriate services and development activities responsive to local wishes and initiatives by developing or delegating such services to local representatives bodies. ii. To facilitate and bring the exercise of democratic self-employment close to the local level of our society and to encourage initiative and leadership potentials. iii. To mobilize human and material resources through the involvement of members of the public in their local government, and iv. To provide a two-way channel of communication between local communities (both state and federal) (Fajobi, 2010:3).


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