Revenue Generation in Nigeria’s Local Government.
In Nigeria, as in other developing countries, the debate on the nature and purpose of local government has been a long and at times better one. The Nigerian political system is a federal one which implies that all three tiers of government should each function to provide good, efficient, and effective services to the people, above others, thing bring a better life to them. Many authors as well as scholars have posited that there is no one theory of local governments but rather the formulation of any theory on local governments will be based on its functions or put in another way, the aspect being studied.
Theories of local government that have been prevalent include:
(1) The Democratic-participatory theory
(2) The efficiency-services theory
(3) The Development Theory
(4) The functional theory
(5) The Resource mobilization theory
The Democratic-participatory theory of local governments holds that local government is a favorable setting for local democracy. Thus, it is seen that this will afford the local citizens the opportunities for political participation at their various levels as well as to educate and socialize them politically. Furthermore, the theory views the local government as that which should be free to make laws for its area without seeking the approval of the national and regional/State legislative bodies and at the same time, partake in the overall decision-making process of the political system.
The efficiency services theory holds that local governments have an obligation not only to deliver services to the local populace but also to do so most effectively and at the highest efficiency rate. The focal point of this theory is that local governments exist to provide services for the local people in general and on the efficient and accountable provision of these services, it must stand or fall. Thus, these theorists, argue that the Democratic and participatory roles are the main functions of the local governments.
The development theory of local government holds that the local government is a veritable instrument of local development and should be able to bring about political and socio-economic development to the local people in the sense that it is that tier of government close to them and well-positioned or placed to reconstruct the infrastructures necessary to improve their life and bring solace and succor to them.
The functional Theory of local government holds that the local government like other tiers of government is saddled with various responsibilities or roles to perform which are both internal and external to it. Internally, for example, it is saddled with such functions as recruitment of staff, their development, general welfare, emolument, and maintenance. Others include the provision of office equipment, stationery, etc. Externally, apart from contending with socio-economic projects, it has such roles as making contributions to national development and donating to charity, and nongovernmental organizations among others.
The resource mobilization theory holds that the Local Government is a veritable source for resource mobilization and like any other Government (Central or Intermediate), it is expected to raise its funds with which to operate and even render some to the central governments. Indeed one of the fundamental responsibilities of any Government is to mobilize enough resources to enable it to provide necessary services and secure its people. No government or any Organisation for that matter can successfully meet its obligation without money. Thus resource mobilization becomes a paramount aspect of any organisation. As Ibrahim Kida earlier puts it, "Finance or money, is a prerequisite which enables any complex organization be it private or public to maintain itself and effectively meet its commitments to the Individuals or Groups of Individuals that consume its output..."
Thus it is clear that for Local Governments to survive, they have to mobilize enough financial resources. However, one thing is to mobilize resources and another is to utilize them efficiently and effectively. Having highlighted these theories, it is important to mention that they are all germane to this paper as it goes without mincing words that to perfect each of them, the local government needs money (finance). For example, to make the people politically conscious and imbibe Democratic values, money will be required. Similarly, to provide essential services and bring Development to the people be able to perform performance-increasing sing functions in the councils, or even mobilize resources will all require money. There is no gainsaying the fact that since 1999 once again there have been democratically elected local governments at the grassroots level their performances have been low and this has been largely attributed to a lack of adequate finance as ever before. In a recent study carried out by the Department of Public Administration, Lagos State University in some selected Local Governments in the South-Western part of Nigeria, it was revealed that there is a general disenchantment with the performances of the local governments and most of the respondents attributed it to lack of finance. However, many people will argue that the reverse is the case. What then is the issue at stake? Do the Local Governments have the money and if not what are the various issues affecting Local Government finances in Nigeria, especially since 1999?
1. Revenue Generation
This is the first issue that readily comes to mind. By definition, Revenue generation implies the amount of money that gets into the coffers of the Local Government from time to time. They come from two major sources and these are:
(i) Internal Sources
(ii) External Sources
Internal Sources
The Internal Sources are those sources from which the Local Governments can raise or generate
funds for their use internally. Funds raised through these sources are generally referred to as Internally Generated Revenue (IGR). The 1999 constitution of the Federal Republic of Nigeria and others before it vests some exclusive rights on the Local Governments to generate funds from these sources for its various tasks. These can be classified into the following eight Heads as
outlined by the local governments themselves.
(1) Various Taxes (Head 1001)
They include:
1. Community poll tax (flat-rate)
2. Development levy
3. Taxes on Special Services such as (Electricity, Water, and Nightguards among others as provided
from time to time.
(2) Rate (Head 1002)
This includes:
1. Tenement
2. Penalty
3. Ground Rent
4. Government (Federal and State) grants instead of tenement rates
(3) Local Licence Fees and Fines (Head 1003)
Under this Head, the revenue sources are as much as 100 (one hundred) and they are grouped under the following subheadings:
General Licence
Bicycle license fee, Canoe license fee, Dog license fee, cart/Truck license fee, Hackney permit fees, Bus/Commercial vehicles fees, Taxi/Motor-cycle fees, liquor license fees, palm wine Taper/Sellers license fees, Native liquor fees, Beka cigarette license fees, Slaughters Hawker permit fees, Wart landing fees, Alternative medicine fees, etc.
Food Control
Slaughter fees, Abattoir fees, Eating House fees, kiosk license fees, Bakery House license fees, Registration of meat van fees, Cattle Dealers license fees, Dried fish/meat license fees, Cold room license fees, Batch license fees, etc.
Security
Auction license fees, Gold Smith and Gold Seller license fees, Hunting license fees, Social Marriage registration fees, entertainment, drumming, and temporary boot fees, control of noise permit fees, Cinema graph license fees, Naming of Streets/House registration fees, Tent of sea/Beach permit fees, mobile sales promotion license fees, Radio/Television fees, Beggars ministration fees, open-air preaching permit fees, social organization registration fees, etc.
Health
Dislodging of Septic tank charges, Night soil Disposal/Depot fees, Registration of Septic tank dislodging license fees, Registration of Night clubs, contractors fees, Impounding of animal fees,
pest control and disinfectant charges, Birth and Death registration fees, Burial fees, vault fees, dispensary and Maternity fees, Laboratory test fees, Earning from. Environmental Sanitation services, etc.
Others include:
General contractor registration fees, Tender Fees, Sand dredging fees, Minor industry license feeds, Trade license fees, Petty Licence fees, Sand Granite, Iron rod and seller license fees, pit sewing licence fees forestry and fuel exploitation fees, sawmill licence fees, felling of three fees, Produce buying fees, Rice/Mill Cassava grinding license fees, Ingredient grinding mill license fees, corn grinding Mill license fees, Brown sugar machine license fees, painting, spraying and sign writing workshop fees, workshop license fees, photo studio license fees, welding machine license fees, Electric Radio, and TV workshop license fees, Wood making/Carpentry workshop license fees, Blacksmith workshop license fees, Battery charges license fees, printing press license fees, panel beater license fees, Vulcanizers license fees, Vehicle spare parts license fees, Cloth driver's license fees, clock-watch repairer's license fees, Registration of laundries and dry cleaner fees, Motor Mechanic and Car Wash Depot license fees, Building materials license fees, Photostat typing institute fees, Block making machine license fees, sewing institute license fees, Hair Dressing/ Barbing salon license fees Advertisement license fees, miscellaneous. Housing/Works Engineering and Services Workshop receipt, Sale of unserviceable store Hire charges, Sales of market Store, Survey and plot fees, Mortgage sublease approval, Customary sight of occupancy fees, commission on transfer of plots, approval of Building plans, etc.
Fines
This includes fines as a result of vehicle/car parking violations, and vehicle/cars towed among others.
(4) Earning from Commercial undertakings (Head 1004)
This includes Market fees, Motor park fees, shops and shopping center fees, cattle market fees,
Abattoirs slaughterhouse fees, proceeds from sales of consumer Agric, Transport services, etc.
(5) Rent on Local Government Property (Head 1005)
This includes: Rent on Local Government Chairs and Canopies, Rent on other Local Government
Buildings etc.
(6) Interest payment and Dividend on Investments (Head 1006)
This includes Interest on Vehicles and Bicycle Advances, Interest on Loans to other Local governments, Interest on Loans to Parastatals and other limited liability companies, Dividends and Interest from other Investments, Interest on Staff Housing, and other Loans.
(7) Grants/Donations
This can come from wealthy Individuals, groups, or industries within the Local Government. It could be specific or general and it is meant to assist the Local Government as the Donors deem fit.
(8) Miscellaneous (Head 1008)
This entails other avenues/opportunities open to the Local Councils from which they can derive some revenue within the local Government. Examples are: Gains from the sale of blocks, Recovery of losses or overpayments, payment instead of notice of resignation, etc.
The above items are the various sources through which the local governments in Nigeria can raise or generate funds or revenues internally and there is no gainsaying the fact that they are enormous.
However, generating funds internally has remained low and become one of the biggest problems plaguing Nigeria's Local Governments over the years.
External Sources
These include:
(i) Statutory allocations from the federation account
(ii) Statutory allocations from the State governments (10% of their internally generated revenue).
(iii) Foreign Aids and Grants.
(iv) Loans from Financial Institutions.
(v) Donations
The statutory allocations from the federation account to the local governments are 20% of the total amount distributed monthly and this has remained so since 1st June 1992. Similarly, in addition to the above, the local governments of a State are to receive 10% of the internally generated revenues of the State Government. Further to this, Local governments are entitled to 30% of the total amount accrued to the value-added Tax (VAT) pool account with the state and Federal governments having 50% and 20% respectively. Other revenues, which are shared with the local governments, include:
Privatization proceeds, GSM proceeds, Fertilizer subsidy and Stabilization fund, and General ecology.
The local governments also have foreign aid and Grants, which help a great deal in Developmental projects, social services, and security among others. The councils can also seek for They obtain loans for specific projects which they must pay back before the expiry of their tenure.
Donations also get to the councils as the Donors may deem fit or are persuaded to do. These are the various external sources of local government revenues for now in Nigeria
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