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The study examined Local Governments Fiscal Autonomy and its impacts in Rural Development in Nigeria with particular focus in Akwa Ibom State. The study maintained that Functionality of local governments is strongly tied to the financial resources available to it. Local governments which were created to provide developments at the grassroots level, finds it so difficult to satisfy such objectives as a result of financial problems due to state interference  on local government internal affairs.

This study analyzed the challenges in enforcing local government financial autonomy in Nigeria. The study adopted Descriptive and Survey research methods and data were collected using secondary and primary sources. The population of the study was drawn from six local governments in Akwa Ibom State. Sixty-seven respondents were randomly selected from each of the communities bringing the total sample size to four hundred and two (402).

Four hundred and two questionnaires were distributed by the researcher out of which three hundred and eighty (380) were retrieved for analysis and to test the hypotheses raised for the study.

Major findings of the study revealed among others that despite the constitution provision for local government as the third tier of government, local governments in Nigeria found it so difficult to function effectively due to insufficient finances, lack of political will on the part of the Nigerian government, as well as inconsistent statutory allocation among others.

Based on the above findings, it was recommended, among others, that the practice of state, local government’s joint account should be abolished, and that local government statutory allocation from the federation account should be paid directly to local government account, rather than State / local government joint account. Also critical attention needs to be paid to the local government financial issues as institutions that play diverse roles in consolidating grass root development in Nigeria.



Introduction    –           –           –           –           –           –           –           –           –           1Statement of Problem –           –           –           –           –           –           –           –           6Objectives of the Study          –           –           –           –           –           –           –           9Research hypotheses   –           –           –           –           –           –           –           –           10Significance of the Study       –           –           –           –           –           –           –           10Scope of the study                  –           –           –           –           –           –           –           11Clarifications of terms            –           –           –           –           –           –           –           –           12


2.1       Conceptual Clarification         –           –           –           –           –           –           –           14

2.2       Review of General Literature –           –           –           –           –           –           –           23

2.2.1    Local Government Development in Nigeria, Historical Perspective  –           –           29

2.2.2    The Vexed Issue of Local Government Autonomy under Nigerian Federation        36

2.2.3    An Overview of local Government Autonomy in Nigeria     –           –           –           42

2.2.4    The constitutional limit to local government autonomy in Nigeria     –           –           48

2.2.5    Strengthening the local government system within the precepts of   –           –

a federal structure      –           –           –           –           –           –           –           –           49

2.3       Review of theoretical Literature         –           –           –           –           –           –           53

2.4       Theoretical Framework           –           –           –           –           –           –           –           58


3.1       Research Design                                                                                                         61

3.2       ResearchArea                                                                                                              61

3.3       Population and Sample Size                                                                                       62

3.4       Sample and Sampling Technique                                                                                64

3.5       Data Collection Technique                                                                                        65

3.6       Instrumentation                                                                                                           66

3.7       Validity of Instrument                                                                                                            66

3.8       Reliability of Instrument                                                                                             66

3.9       Method of Data Analysis                                                                                           67

3.10     Limitation of the Study                                                                                              67



4.1       Data Presentation                                                                                                        68

4.2       Data Analysis                                                                                                              77

4.3       Discussion of Findings                                                                                               86



5.1       Summary of Findings                                                                                                 88

5.2       Conclusion                                                                                                                  89

5.3       Recommendations                                                                                                      90

5.4       Contribution to Knowledge                                                                                        91

5.5       Suggestions for Further Research                                                                               91

REFERENCES                                                                                                          92



TABLES                                            TITLES                                                                     PAGE

3.3       Population and Sample Size                                                                                       62

4 .1: Distribution of Questionnaires                                                                                        68

4.1.2: Percentage of Useful Questionnaires                                                                            69

4.1.3; Demographic Characteristics of Respondents                                                              70

4.1.4    Distribution of Respondents by Age                                                                          70

4.1.5    Distribution of Respondents by Occupation                                                              71

4.1.6    Distribution of Respondents by Marital                                                                     71

4.1.7    Distribution of Respondents by Education Background                                           72

4.1.8    Analysis of respondents from the question: how does Poor

implementation of environmental protection policies aggravate the

negative effect of oil exploration activities in Akwa Ibom State?                             73

4.1.9:   Analysis of respondents from the question: What is the resultant

impact ofcrude oil exploration and production on the environment

and Agricultural Production in Akwa Ibom State                                                      74

4.1.10: Analysis of respondents from the question: How does oil

exploration activity posehealth risk in oil producing communities

in Akwa Ibom State?                                                                                                 76

4.1.11  Distribution of the Observed and Expected Frequencies for hypothesis III             78




Nigeria as a sovereign nation operates on a federal arrangement which encompasses the federal government, state and the local government councils. Onwo (1992) observed that each level of the three tiers of government derives it powers not from the magnanimity of the central government, but from the constitution; each level of government has defined responsibilities assigned to it by the constitution.

The implication of this is that the three segments of governments are mutually interrelated in a unified effort to make life worth-while for the masses. Local governments operate at the grass root and are expected to provide services to their stakeholders. In a federal system like that of Nigeria, local governments are close to the people and hence could effectively alter socio-economic and political conditions within their jurisdictions. Apart from providing and maintaining basic infrastructure, local governments can complement the economic activities of other levels. This of course depends on the availability and proper utilization of funds.

The importance of finance in any administrative setting including those of government machinery at the grassroots level cannot be dismissed just with the wave of the hand. This is because financial issues in most cases occupy the very nucleus of any human relationship in a complex organization which provides social services for the general public or produces goods for profit making. In the case of local government authorities which have specified functions to perform, and social services to provide in their various localities, the place of finance no doubt deserves serious academic attention (Lawal, 2000). 1

Revenue generation is therefore an important issue for local government councils. It is through this activity that councils source the finance for funding their operation, thus to a large extent, determining the quantity and quality of services provided to the generality of people within their domain.

These reason, coupled with the fact that Local government are engines of growth and development, make imperative the need for local governments to map out strategies for improving  revenue generation, emphasizing especially the internal sources which are more flexible, and could be in the total control of the local governments and its chain activities or engagement.

The concept of autonomy in a political sense is the ability of a self-governing unit to regulate its internal activities without intervention from external bodies. Local government autonomy means an  absolute power vested on the local government to exercise responsibilities as the third tier of government  to enable  them perform their constitutional  functions optimally in the  people’s interests.

It is freedom to the Local governments to exercise authority within the confines of the law or constitution without undue interference or restraint from within or higher authority(Ikelegbe, 2005).

The above definition argues for adequate autonomy for Local government within the law for the purpose of performance, which actually guarantees it.Local governments globally strive to meet people’s demands for goods and services in a cost effective manner particularly at the grass root level.

In most federal states, two or more levels of government are created, one at the national level and others at the regional or sub-national level described variously as states, provinces, cantons etc. and at sub-national or local units called the local councils, municipal councils, county, districts, province etc. in such a manner that governmental powers and functions are allocated to these levels of government (Mello,2012).

A federal system of government organization encourages devolution of powers among a central national government and other regional or decentralized government in such a manner that governmental powers and functions are shared among these two or more levels of government, according to each level of government independent and autonomy in their respective spheres by means of a constitutional allocation.

This is a form of devolution of power. Devolution under a federal arrangement seeks to transfer political, administrative and economic authority from the centre to the local communities and further seeks to promote popular participation in decision making, enhances accountability and responsible representation and aims to introduce efficiency and effectiveness in the generation and management of resources for the over-all development.

The definition of local government by the Nigerian Federal Government leaves one with no iota of doubt that it is largely both theoretically sound and service oriented to the people. It talks of representative councils with substantial control over local affairs, for the provision of services and implementation of projects in their areas, to complement the activities of both the State and Federal governments (Awofeso, 2004).

In order to fulfill these important constitutional responsibilities, local governments require huge sum of money, which is usually difficult to mobilize. The primary source of local government sustenance is from Federal Statutory Allocation. It is the livewire of a local government. Section 7 and 8 of the 1999 constitution of the Federal Republic of Nigeria provide for the existence of an autonomous and democratic local government.

It also outlined the sources of local government revenue to include rates, statutory allocations, fines, earning and profits, fees and charges, grants, loans and other miscellaneous sources. The extent to which a local government can go in accomplishing its goals largely depends on it revenue strength.

The history of local government in Nigeria have been that of trial, success and failures, changes and counter –changes all in an attempt to make social, economic and political life happier, healthier, pleasant and comfortable for the people in the rural areas.

The rationale for instituting the 1976 local government reforms by the Federal Government was to stimulate democratic self-government and to provide the local government areas with unique opportunities and challenges for achieving self-sustaining growth and development as a third tier of government in Nigeria. The reform had the objectives of improving life in the rural areas and getting more people involved in the decision affecting them.

Information also gleaned from the reforms revealed that prior to the restructuring of the Local Government system, the Local Government institutions in the country were unstable, weakened excessively by outside control, financial deficiency, shortage of qualified manpower and lack of uniform structure. Given these problems, the reforms noted that the main aims of the restructuring were:

To  increase autonomy of Local Governments and give them more responsibility;To ensure greater popular participation, which was to serve both input and output functions within the system andTo give the local Governments necessary financial backing (Gboyega, 1983).

The above points are not in any way isolated because scholars have  unanimously agreed that local Government are created as a change agent with the primary purpose of ensuring sustainable rural development (Walli , 2008). By so doing, the State governments do not require to exercise absolute controls over Local Governments.

Hence there are check and balances formulated by the Nigerian Federal Government, to facilitate the effective operations of the local government councils (LGCs). Some of such checks and balances are guaranteed existence of Local Governments in section 7 of the 1999 Constitution, financial allocation from the Federation account and involvement of Local Governments in economic planning of the State governments (1999 Constitution).

To enable the local governments carry out its assigned functions, the constitution has authorized the National Assembly of a state to make provisions for allocation of public revenue to local government councils in the Federation within a state respectively.

Local governments also are empowered to generate revenue within their areas of authority, independent of the Federal and State governments, in the course of execution of their assigned functions which is referred to internally generate revenue (IGR).

With these provisions, Local Government typifies a means of speeding up development in the rural areas. As important as this tier of government has been, one will expect the local governments to be politically and financially autonomous at least within the power granted it. But unfortunately council autonomy is only theoretical; while in practice the higher levels of government dictate the pace for council.

There have been various administrative controls over the local government by the state and federal governments. These hinder the realization of the goals of the councils. The continued financial dependent of councils on higher authority impedes the much-talked about local government autonomy.

The major challenge confronting most local government councils in developing countries like Nigeria is that of having a firm financial base to enable them pay for charges incurred for their respective administrative activities. Previous studies have shown that the expected financial base of local government councils tends to become unauthentic given the strengthen sources of internally revenue kept in place to complement the federally allocated source.

It is unusual in Nigeria that most local government councils in the country cannot generate sufficient revenue for their development needs. In fact, the central problem tends to be that of insufficient identifying, as a result of lack of financial autonomy. Mostly, local governments in Nigeria no longer perform their responsibilities simply because of poor finances. The bad financial situation is further aggravated by the prevailing inflationary situation in the country which erodes the value of fund, available to render essential social services to the people.

Given the above background information, this work seeks to contribute in illuminating the actual status of Nigerian Local Government system as regards to community or rural development which is the raison d’etre of its existence. The study will determine whether creation of local government is really for the sake of ensuring grassroots development or mere political compensation for government loyalists. It is in this light that we chose to study the topic.


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