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The Challenges Of Local Government Finances And Rural Development In Bayelsa State Between 1999 And 2016




The study examined the challenges of Local Government finance and rural development in Bayelsa State. Four research questions and four hypotheses were formulated to guide the study. The survey research design was employed for the study. The population of the study comprised of 8,571 staffs of the 8 Local Government councils in the State. Simple proportion was used to extract a sample of 1052 from the general population. Purposive sampling technique was employed to collect data from the respondents. Data was collected using a self-structured questionnaire titled “challenges of Local Government finance and rural development questionnaire”. The collected data were analyzed using frequency counts, percentages, mean and standard deviation, and independent t-test (which were used for testing the hypothesis at 0.05 level of significance). It was observed from the findings that The various reforms on Local Government have impacted on the rules and principles of Local Government financing in Bayelsa State The specific external financial challenges local government in Bayelsa State face are:  undue state government interference on local government statutory allocation, poor local government reforms, insufficient allocation from the federal account and undue interference of state house of assembly on local government budget’. The most prominent external challenge to local government finance in Bayelsa State is undue state government interference on local government statutory allocations. Based on the findings, the study recommends that an all-inclusive and participating LG reform that will succinctly address the challenges of Local Government finance and rural development be made. Local Government should endeavor to invest in revenue yielding businesses to help to help them address some of their financial challenges in areas of IGR and other sources of finance Financial auditing using electronic/computer aided medium should be highly encouraged in LGs to stall inappropriate use or mismanagement of LG revenue embarked for rural development.



  • Background to the Study

The origin of Local Government administration in Nigeria dates back to the pre-colonial period. There were the emirate systems of Sokoto and Borno caliphates; in Ibadan, Egba and Ekiti, the Obas and Chiefs were noted to wield exclusive authority over the governance of their respective domains (Eneanya, 2012).  Moreover, in these areas, there were smaller districts, villages and wards that were subjects of the kingdom and the emirate governments. These smaller or sub- ordinate levels of government could be seen or described as Local governments in pre- colonial era.

The emergence of indirect rule which later degenerated into direct rule by the British colonialists subverted the exclusive powers of the pre- colonial Local government system as the traditional rulers under the direct rule system became mere Local agents of the Obas in the west; and, warrant chiefs in the East became sole native authorities in their domains (Ugwu, 2008). Modern local government system emerged  in Nigeria in 1960 and by 1965 just five years after independence, the number of Local Government areas in Nigeria which was 106 before 1965 rose to 299. This figure later rose to 301 in 1979 to 781 in 1981, when the creation of States became prevalent and the State Governments were given authority to create local government (Ugwu, 2000, p. 8). After the overthrow of the civilian government, the Local Government were again reduced to 301 and later increased to 449 in 1987 and 589 in 1991. The figure later increased to 774 in 1996 and has remained so since then (Otobo, 2002).

Globally, the purpose of local government is to provide an organized system where councils exercise their power and responsibilities to work together for peace, order and good governance of their municipal districts. The creation of the Local Government system in Bayelsa State was mainly to enhance development at the local level through its nearness to the local environment. This is because the Federal and State Government are considered by the rural populace as too distant to the plights of the grassroots. As such, the only government or administration which rural dwellers easily recognize is that which interacts with them on a daily basis.

However, the effectiveness of Local Government in Bayelsa State is through the development it generates, the social amenities it provides and the extent to which it catered satisfactorily for the happiness and general well-being of the grassroot populace for which it has been established to serve (Ndoh, 2002). Thus the establishment of Local Government System in Bayelsa state and the myriad of functions tied to the system have sometimes eluded appropriate definition of the meaning and functions of this third tier of government.

According to the 1976 Guideline for the Reform of Local Government in Nigeria, Local Government is a form of government exercise through the representative councils established by law to exercise specific powers within well-defined areas. What this implies is that a Local Government system in Nigeria must be constituted by elected representatives, and not appointed ones as is often the case in Nigeria where sole administrators and care-taker councils have been constituted to carry out Local Government Administration in many States. Njoku (2009) noted that Local Government is a third tier of government which administrative functions are generally limited to small local areas into which a country is usually split. Sharma et al (2011) opines that Local Government is that government that operated at the lowest level of society when compared to the sovereign and State government. It works at the grassroot levels close to the people, touching their everyday life. To Agarwal (2009) Local Government, simply put, is the administration of local areas run by elected representatives. If the administration of local areas is to be run by the State or central government offices, the administration shall be local but it shall not be local self-government. To Ogunna (1985 cited in Akamere, 2013), Local Government is simply and precisely, government at that local level. But in another way, Local Government is a system of devolution of powers to the local authority to provide services of a local status.

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Going by the above definitions of Local Government, it is not farfetched to stipulate that Local Government as the term implies is that system of government with elected representatives conferred the legislative and administrative powers of the affairs of manning the local environment by identifying with the grassroots populace and meeting up the democratic insistence of rural transformation through active participation of the local people.

The importance of the duties and functions of Local Government in Nigeria cuts across many sectors of the Nigerian society such as economic development, social services, political leadership and nation building etc. Indeed most of these functions cannot be efficiently and effectively executed without an adequate finance or strong revenue base. The revenue generation of Local Governments in Nigeria is principally derived from statutory allocation “a direct share of the Local Government from the federal account” and tax (a compulsory levy imposed by government on individuals and cooperate bodies for various legitimate functions of the State. Historically, Local Government in Nigeria has developed a system of taxation and other sources of revenue generation and this can be traced to the era, prior to British pre-colonial and colonial period. Under this scenario, community taxes were organized and levied on taxable adults. In recent times, the sources of local revenue generation have been expanded; hence, Local Government can now generate revenue through various external and internal sources (Nwachukwu, 2013).

The 1999 constitution of the Federal Republic of Nigeria as amended,  identified various sources of local government’s internal source of finances in Nigeria to include: Shops and Kiosks rates: tenement licence fees; marriage, birth and death registration fees; naming of streets restoration fees excluding any street in the State capital; right of occupancy fees on land in rural areas, excluding those collectable by the Federal Government; market taxes and levies excluding any market where State finances are involved; motor park levies; domestic animal licence fees; Bicycle, truck, canoe, wheel barrow and cart fees, other than a mechanically propelled truck; cattle tax payable by cattle farmers only, merriment and road closure levy, radio and television licence fees, vehicle radio licence fees,wrong parking charges; public convenience, sewage and refuse disposal fees; customary burial ground permit fee, religious places establishment permit fee; and signboard and advertisement permit fee. These constitute the internal sources of finance available to Local Government in Nigeria for the execution of their rural transformation functions.

The idea of local government as an instrument of rural development in Bayelsa State and Nigeria at large has attracted serious attention both nationally and internationally since the local government reform of 1976. Agagu (1997) viewed local government as a level of government which is supposed to have its greatest impact on the people at the rural areas. In the views of Enero, Oladoyin and Elumilade (2004) local government is the third level of government in a federal system  which is nearest to the citizens and saddled with the responsibility of guaranteeing the political, social and economic development of the grassroot populace.

As a result of the local governments’ capacity for rural development in Bayelsa State, there has been growing recognition of the importance of rural development as an instrument in the overall development of the contemporary state. Local governments exists in a federal system due to the infrastructural, resources distribution, human resources development and employment deficit  in the rural and most urban areas which has made rural development imperative (Ogbazi, 1982 in Zakari ya‟u, 2014). This imbalance has subjected the rural areas in Bayelsa State to more disadvantaged economic position.

It has induced rural – urban migration, thereby, increasing unemployment situation in the urban areas mostly in such places as Southern Ijaw, Kolokuma/Opokuma, Brass among others, while, simultaneously depriving the rural areas of their agricultural workforce (Dickson, 2014). The rationale behind the existence of  the local government system in Nigeria is to bring the presence of the government closer to people in the grassroots for active participation in governance, service delivery and to enhance socio-economic development and good governance (Ogunna, 1996 in Okoli, et al, 2015; Ogbette, Idam &  Kareem, 2018). But unfortunately transparency and accountability in the local governments in Bayelsa State is a rhetoric, most local government officials display provocative wealth gotten through criminal institutionalized stealing and corrupt practices, coupled by the inability of state governments to effectively fund local government administration in the state due to the State local government joint account system that gives state government officials the capacity and capability to siphon the funds meant for the local government administration to their own personal use (Dickson, 2014). This have translated to development deficits in infrastructure provisions in education, health, electricity and even the supply of pipe borne water for the rural populace.

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Therefore, the realization of rural development by Local Governments in Bayelsa State becomes frustrated since it depends largely on the capacity to which each of these internal sources of finances as well as the external sources of revenue (which chiefly is the statutory allocation from the federation account) contributes to the overall finance available to the Local Government at any given period.  Ogunna (1996, p. 28) observed that the inability of the Local Government in Nigeria to meet up their rural transformation obligations usually stems out from the paucity of funds accruing to them from both the internal and external source of finances. This has adversely impacted on the smooth running of the Local Government Administration in almost every part of the country. In the midst of these teething problems are dishonesty and mismanagement of the Local Government revenue among most revenue officers and sometimes the machinery put in place for the collection of revenue is  inadequate, leading to paucity of funds for rural development. It thus follows that Local Government inability to effectively and efficiently dispense their rural development objectives in Nigeria and more specifically in Bayelsa State are off-set by challenges to Local Government finances. This study therefore examines Local Government finances and rural development in Bayelsa State.

1.2   Statement of the Problem

It is a known fact that “the extent to which Local Governments in Nigeria can accomplish their goals of rural development depends largely on their finance base (Olusola, 2014).  The problem in Bayelsa State, however, is that. The lack of political will to raise collorary finances to complement their statutory allocations from the Federation Account (FACC) as required by the fiscal federalism which Nigeria operates. In fact, fiscal federalism as pertaining to Local Government entails clearly demarcated functions in both revenue generation and expenditures. Kizito and Fedila (2015, p. 2) rightly stated that:

In a federal system such as Nigeria there exist three tiers of government namely Federal, State and Local Government. The constitution provides for the functions of the different tiers of government… Consequently resources are allocated to the three tiers of government from the federation account to enable them carry out their functions effectively, in addition to the revenue generated by each tier of government.

From the above, it is evident that the Local Governments in Bayelsa State are aptly empowered by legislature to generate finances for the effective and efficient administration to achieve the goals and objectives which serves as pointers to their establishment, including rural development.

Sadly the continued decline in Local Government finances since the dawn of democracy in Bayelsa State and poor rural development index across the 8 Local Governments in the State does not portray the meaningful definition of fiscal federalism as it pertains to the Local Government system in the State (Dickson 2014).

For instance, in a recent study in 2016,  it was observed the total Revenue of the 8 Local Governments  which was 23.9 billion in 2007 rose slightly to 48.1 billion in 2013 and dropped sharply to 37.0 billion in 2014  and has been on the decline since  then. In the same vein, rural development index which was 40.33% in 2007 dropped sharply to 21.30% in 2014 and has been on the decline across the 8 Local Governments in the State (Dickson, 2016).

Recently, the Governor, Henry Seriaki Dickson administration, noticing the inability of local governments under the previous administrations to use the funds at their disposal to effectively develop their jurisdictions, with the help of the state assembly, restructured the local administrative system in the state, such that local government care taker chairmen  were appointed for a consecutive period of two years, after which, these are replaced by new individuals as a system of local administration been practiced in the state. Moreover, these local government care taker chairmen (who are unelected officials) are supported by appointed Rural Development Area (RDA) chairmen appointed by the governor for each clan or kingdom in the state.

Yet, notwithstanding these meaningful administrative arrangements, the finance accruing to the local government in all sincerity had not been put into meaningful use. This is evident from the poor state of rural development and quality of life across the eight local governments in the state, as local administrative infrastructural development and quality of life of the rural populace remains extremely poor. This is so because, despite the annual budgetary provisions by both the federal and state governments for the eight local government councils in the state, the local governments have continued to report not only dwindling allocations, but also poor IGR to the dissatisfaction of the grassroots populace.

It therefore, it follows that finance constitutes the major live wire through which Local Governments in the State effectuate their rural transformation objectives and goals, the sharp decline in Local Government finances and rural development across the 8 Local Governments in the State as reported by Dickson (2014) is an indication of the existence of serious challenges to Local Government finances and rural development in the State and which need to be examined, arrested and succinctly addressed. Therefore this work examines the relationship between Local Government financing with interest in the areas of infrastructure for development and quality of life in rural Bayelsa between 1999 and 2016.

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1.3   Objectives of the Study

The general objective of the study is to examine the relationship between Local Government financing and grassroot Development. The specific objectives will include the following:

  1. To show the extent in reflection of various Local Government reforms on the capabilities of Local Government sources of finance and rural development in Bayelsa.
  2. To investigate the extent of challenges faced by Local Government in sourcing for revenue for executing rural development in Bayelsa State.
  3. To examine the extent to which the contemporary Local Government finance impact on capabilities of Local Government for (infrastructural) development defined as quality of life in rural areas of Bayelsa State.

1.4   Research Questions.

For the objectives of the study to be achieved, the following research questions were raised to guide the study:

  1. To what extent have the various Local Government reforms reflected on the capabilities of Local Government to generate finance for rural development in Bayelsa state?
  2. To what extent do Local Governments in Bayelsa State face specific external challenges in sourcing for external revenue for rural development?
  3. To what extent do Local Governments in Bayelsa State face specific internal challenges in sourcing for internal revenue for rural development?
  4. To what extent does the contemporary Local Government finance impact on the capabilities of the Local Government for infrastructural development and quality of life in rural areas of Bayelsa State?

1.5   Research Hypotheses

HO1: The various local government reforms have not enhanced the capabilities of local government to generate finance for rural development in Bayelsa State.

HO2: The most prominent external challenge to local government source of revenue in Bayelsa state is undue state government interference on local government statutory allocations.

HO3: The most prominent internal challenge to local government finance in Bayelsa state is lack of investment in revenue yielding business.

HO4: The contemporary Local Government financing system has undermined the capacity of local government to deliver on development and quality of life as against sources of finance.

1.6   Scope of the Study

The study was delimited to examining Local Government finances especially internal revenue generation between 1999- 2016. The time frame was chosen because the state was created in 1999 out of the old Rivers State and has since then attain an autonomous self-governance towards improving the quality of life of residents within her jurisdiction with successive governments enacting one or more local government policies aimed at improving the lots of rural populace. The study was conducted across the 8 Local Government Councils in Bayelsa State and involved participants from each of the Local Government Councils. Secondly, data such as the FACC Revenue and the internally Generated Revenue accruing to the 8 Local Government Areas in the State was obtained from extent literature and from the office of the Auditor General for Local Government in the State  as well as the office of the Federal Inland Revenue Services (FIRS).

1.7   Significance of the Study

It is expected that the result of this study will be beneficial to a host of governmental and non-governmental organization/establishment and individuals. Specifically, the beneficiaries of the findings of the study will include:

The Bayelsa State Government both at the state and local levels, since the results will not only identify the constraints to revenue generation and rural transformation at the local level of governance, but also how best to arrest the challenges for effective and efficient governance at the grass root level.

The Federal Government will also find the results of this study very significant in understanding the relative financial burden of Local Government Councils in Bayelsa State and their quest to develop and transform their rural environment in the face of daunting social, economic and cultural challenges of modern day governance and democracy.

Government agencies and legislative (Federal and State Government) will also find this research useful in understanding the need for an implementation of legislative framework on Local Government financial autonomy with expressive legal clauses aimed at expanding the finance base of Local Government Councils in Nigeria for effective and efficient rural development.

Personnel of Local Government in Nigeria who are unacquainted with the administrative purview of the Local Government system in Nigeria will find the result of the study useful in broadening their knowledge on the financial constraints of Local Government Administration in Nigeria.

The general public, mostly the rural literate populace will also find the results of this study useful in understanding the major issues bordering rural development in their environment and in relation to the administrative activities of their Local Government Councils.

Finally, the result of the study will also be very useful to other researchers who intend to conduct studies in similar areas by adding to the available bodies of literature on Local Government and Local Government Administration.

1.8   Operational Definition of Terms

Local Government finances: in this study, Local Government finances refer to the income raised by elected local government. It includes local taxation, national grant subventions, local government service user charges, loan capital funding, and private financial partnerships.

Rural development:  is the process of improving the quality of life and economic well-being of people living in rural areas, often relatively isolated and sparsely populated areas

Pages:  180

Category: Project

Format:  Word & PDF         

Chapters: 1-5                                                               

Material contains Table of Content, Abstract, References & Appendix.


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