Local Government Finance in Nigeria: Challenges and Prognosis for Action in a Democratic Era (1999-2013)

Abstract

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 in enabling local governments  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. Despite the fact that the funding of local governments in Nigeria is an important aspect of fiscal federalism and intergovernmental relations, it has suffered setbacks, thus, circumventing development at the grassroots. This ugly trend is usually associated with or provoked by certain underlying factors like overdependence on statutory allocations from the Federation Account, corruption, tax evasion from citizens at the grassroots, creation of non-viable local government councils in terms of the capacity to generate finance internally and effectively utilized it for development purposes, and lack of financial autonomy. 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. Financial viability backed up by effective management; public accountability, fiscal autonomy, staff motivation and servant leadership attitude among politicians are imperatives in building capacity at the grassroots for legitimacy of creation and sustainable development.