Federal government statutory allocation and grass root government in Anambra east local government area of Anambra state

ABSTRACT: This study examined the relationship between federal government statutory allocation and grass root government in Anambra East Local Government Area. Revenue allocation can be described as a method of sharing the centrally generated revenue among different tiers of government and how the amount allocated to a particular tier is shared among its components for economic development. A sample of 177 respondents was selected from the population using simple random sampling. Data was collected from both primary and secondary sources presented in tables and analyzed using percentages and frequencies. Hypotheses were formulated and tested using Chi square analysis method. It was observed that federal statutory allocations have not had any significant effect on grass root government function in Anambra East Local Government Area, It was also observed that there are problems associated with inter-government fiscal relations facing Anambra East Local Government Area, and there are issues of public financial efficiency and effectiveness affecting grass root government in Anambra East Local Government Area. Following the above findings, the researcher has recommended that There is need to devolve more financial resources from the federal government to local governments. The reason for this recommendation is that the states and local governments are more grass root oriented and the vast majority of Nigerians live in the rural areas where basic amenities are lacking.  Also the local government authorities should not be over dependent on statutory allocation from the federal government, the local government chairman should ensure that machinery be in place to generate more revenue internally to enable them do more development projects.

CHAPTER ONE

INTRODUCTION

• Background of the Study

Nigeria as a sovereign nation operates a federal system of government that is, the federal government, the state government and the local government councils (grass root government). According to Aworom (2012) local government is an essential instrument of national and state government for the performance of certain basic services which can best be decided upon and administered local on the intimate knowledge of the needs, conditions and peculiarities of the area concerned. According to Oxford Advanced Learner’s Dictionary 6th Edition, local government is the organization that is responsible for the government of a local area and for providing services. Scharticles (2014) posited that one of the major justifications for local government in modern times is that it promotes participation by local communities in governmental activities as well as serving as machinery for harnessing local level efforts for development purposes. Local government he said also serves as a bridge and channel of interactions between local populations and the central arena of government. Local government is therefore not sovereign; it is subordinate to the state and federal authorities. Notwithstanding it possesses some considerable amount of responsibility and discrepancy powers over a variety of functions or services.

In Nigeria revenue allocation is taken as the distribution of national revenue among the various tiers of government in the federation in such away as to reflect the structure of fiscal federalism. This issue is so important that in some other countries it has become a national question (Mbanefo 1993, Emenuqua, 1993). For instance Kayode (1993) observed that a satisfactory solution to the question and its solution, this shows that in any nation the stability as a political entity depends to a large extent on revenue location. A democratically elected government can be sustained if only there is an appropriate distribution of nation revenue among state governments themselves. Between 1960 to 1999, several commissions have been constituted by post independent regimes in Nigeria. They are as follows. The Bines commission of 1964, the interim revenue allocation review committee of 1966 under chief I.O. Dena, 1977 Technical committee on Revenue allocation, the Pius Okigbo commission of 1979, the 1981 Revenue Act, the Danijuma commission of 1989, 1990 national revenue mobilization, Allocation and fiscal commission (NRMAFC) of 1990. The NRMAFC) of 2004 has been the platform upon which the three ties of government in Nigeria have been sharing revenue and allocations from the central pool (resources).

There is, however, a grave mismatch between assigned responsibilities and revenue distribution among the federating blocks in Nigeria. Odoko and Nnanna (2009) affirm that the challenges of intergovernmental fiscal relationship in Nigeria hinge on the equity of the expenditure assignment and revenue-raising functions amongst the three tiers of government. This fiscal imbalance is a product of assigning high-yielding revenues types to the central government while substantial and growing expenditures are devolved to the sub-national governments. According to Emenuga (1993), the allocation of revenue to the different tiers of government has not adhere strictly to the expenditure requirements of each tier, thus the federal government has become a surplus-spending unit while other functions, he proposes the determination of a tier’s share through the aggregation of its basic expenditure needs.

The fiscal imbalance leaves states and local governments with no viable option other than to map out strategy for enhancing internally generated revenues beyond allocations from federation account. Kiabel and Nwokah (2009) posits that the increasing cost of running government coupled with dwindling revenue has left various state governments in Nigeria with formulating strategies to improve the revenue base. There are no doubt that efforts have been made by government in terms of reform measures of the 1976 which placed LGs as a third tier of government and made the for the first time to receive revenue from the federation account, likewise the increasing LGs percentage from the federation account from 10% to 20% in 1989 and 1991 respectively and to 20.60% in 2008 (Nwosu, 2015).

Currently revenue generation in Nigeria local governments is principally derived from tax. Tax is a compulsory levy imposed by government on individuals and companies for the various legitimate function of the state (Olaoye, 2008). This tax generated from the local government is usually not enough to sustain grassroots development, coupled with the federal statutory allocation meant for the local government, it is supposed to boost developmental effort at the grassroots, but these allocations are mostly diverted by the state government, with little or nothing getting to the local Government to make any meaningful impact. Over the years, meaningful local government developmental efforts in Nigeria, have suffered a lot of setbacks due to excessive control of the local government by the state and federal governments.

This development has restricted the fiscal jurisdiction of local governments as well as negatively rubbed on their autonomy. As such, the financial resources available to them as a level of government have continued to dwindle, hence, remain grossly inadequate to carry out grass root functions for which they have been created (Nwosu, 2015). The catalogue of problems faced by local governments in Nigeria remained those of inadequate financial and other resources, frequent transfer of functions to and from local governments (BelloImam, 2007). All these, in one way or the other have seriously affected the financial autonomy of local governments in Nigeria, as well as their performances.

• Statement of the Problem

According to the Constitution of the Federal Republic of Nigeria (1999), the functions of the local government as a grass root government includes but not limited to; sanitary inspection, refuse and night soil disposal, registration of births, deaths and marriage acts., maintenance of laws and orders, control of water and atmospheric pollution, information and public enlightment, building and maintenance of health; and maternity centres, provision of scholarship and bursary awards, nursery, primary and adult education; provision of homes for destitute, in firms and orphans; control of beggars or prostitution and repatriation of destitute; utilization of Revenue Generated By Local Government; building of markets and motor parks; naming of streets roads, and numbering of plots and buildings; collection of vehicle parking charges, collection of properties charges and other rates. According to Usman (2014) given the above functions and additional cost of running local government; that is provision of secretariats, staff salaries and allowances rental and buildings, provision of utilities and increasing outlays on maintained and new projects, statutory allocations to the local government together with internal revenues have become grossly inadequate.

The return of democratic government is expected to lead to the practice of a more balanced system of fiscal federalism, more transparency, fiscal accountability and more devolution of power to lower units of government and hence more fiscal decentralization. While a greater degree of decentralization would, no doubt, contribute to greater grassroots participation, generate more local development, increase efficiency and equity, create employment opportunity and promote poverty alleviation, but this has not been the case (Adesoji and Chike, 2013).

As at today, Nigeria has 36 state structure and 774 local governments, including the federal capital territory. in Nigeria, the third tier of government (local government receives about 20% of the national revenue and this significantly affects development at the grass root. As recommended by National revenue and fiscal mobilization (1999) and the constitution of the federal republic of Nigeria (1999), each tier of government is to benefit from the federation account monthly and the percentage of sharing is well known to all Nigerians. For instance, federal government receives up to 45% of the revenue; the state receives up to 30% while local governments receive 20%. It is however sad the despite continuous increase in revenue generation in Nigeria over the years, the expected impact on grass root development has not been realized. Hence the need to examine empirically whether revenue allocation formula adopted in the past had any meaningful impact on grass root development in Nigeria.

Anambra East Local Government Area is not an exception to the problem of inadequate and inconsistent disbursement of statutory allocation coupled with misappropriation and misuse of local government allocations. Its inadequateness in accountability and transparency in disbursement of allocated funds seems to be the reason behind poor unitization of revenue and substantive development. Another problem is that of ineffective financial control, leadership and mismanagement both internally and externally, among others, certain percentage of the statutory allocation has always been deducted by the state government thereby causing the local government to underperform. According to Nwosu (1999) state governments across the country have consistently withhold and make use of  local government allocation, state governments does this through various devious ways, either through the State and local government account or through other spurious means which the local governments cannot ignore or resist. This master/servant relationship has persisted and has crippled local governments across the country. Currently, what we have is local administration and not local government. Also, the current revenue formula (i.e 45% to the federal government, 30% to the state and 20% to the local government) allocates more funds to central government at the expanse of states and local levels where development and growth is needed the most. It is the above problems that militate against the effective revenue utilization for grass root development in Anambra East Local Government Area.

• Objectives of the Study

This major objective of this study is to examine the relationship between federal government statutory allocation and grass root government in Anambra East Local Government Area. Specifically the study will;

1. Examines the effect of federal statutory allocation on grass root government functions in Anambra East Local Government Area.
2. Examine the problem associated with inter-government fiscal relations facing Anambra East Local Government Area.
3. To investigate the issue of public financial efficiency and effectiveness affecting grass root government in Anambra East Local Government Area.
   • Research Questions
4. What are the effects of federal statutory allocation on grass root government functions in Anambra East Local Government Area?
5. What are the problems associated with inter-government fiscal relations facing Anambra East Local Government Area?
6. Are there issues of public financial efficiency and effectiveness affecting grass root government in Anambra East Local Government Area?

• Research Hypotheses

In a bid to facilitate this research and make it more purposeful, the study will test the following hypotheses;

Hypothesis One

H_o: Federal statutory allocations have had a significant effect on grass root government function in Anambra East Local Government Area.

H_i: Federal statutory allocations have not had any significant effect on grass root government function in Anambra East Local Government Area.

Hypothesis Two

H_o: There are no problems associated with inter-government fiscal relations facing Anambra East Local Government Area.

H_i: There are problems associated with inter-government fiscal relations facing Anambra East Local Government Area.

Hypothesis Three

H_o: There are no issues of public financial efficiency and effectiveness affecting grass root government in Anambra East Local Government Area.

H_i: There are issues of public financial efficiency and effectiveness affecting grass root government in Anambra East Local Government Area.

• Significance of the Study

A study of this nature will have both practical and theoretical significance. Practically this study will help Anambra East Local Government Area and other related organizations to adopt measures in the context of effective statutory allocation utilization for efficient grass root development. It will also be beneficial to the Federal and State governments and decision makers who deal directly with the Local Government to make meaningful proposals and suggestion to improve the statutory allocation policies and implementation process in Local Governments in Nigeria.

Theoretically, the study will serve as existing literature to those who want to delve much into statutory allocation and grass root government; it will serves as a source of reference to students for further study on the topic and research work related to the study.

• Scope of the Study

Federal government statutory allocation and grass root government in Anambra East Local Government Area of Anambra state. The participants of this study are delimited to employees of Anambra East Local Government Area.

• Limitations of the Study

In the course of carrying out this study, the researcher encountered some difficulties, the researcher discovered that the resources needed to carry out this research was limited, moving from one library to another. Also the questionnaire had to be typed and administered to selected respondents of the organization not as one thought process, it required the personal involvement of the researcher to motivate the worker to fill the questionnaire, explain certain words and answer. Another constraint is lack of total cooperation from the respondents in Anambra East Local Government Area, who was unwilling to co-operate with the researcher because they felt that they had nothing to gain from the study. Another serious constraint is finance, because of economic difficulties Nigeria is passing through, it was difficult to get enough money to achieve ones crucial desires. A research of this nature involves a lot of fund e.g for typing, distributing and collecting the questionnaire, and other necessary data for the study.  Others, when interviewed refused to disclose certain information relating to their organization for fear of victimization from the authority of the organization.

In spite of all these limitations, however, data collected were able to provide enough insight to the research.

• Definition of terms

Allocation: This can be defined as the process or procedure for allocating things, especially money or other resources.

Development: this refers to the process of developing growth, directed change.

Efficiency: The extent to which a resource is used for the intended purpose; the ratio of useful work to energy expended.

Expenditure: this can be defined as an act of spending or paying out.

Federal: Pertaining to the national government level as opposed state, Provincial County, city or town.

Grassroots: This can be referred to as people or society at the local level.

Local Government: Any form of government whose remit covers an area less than that of the nation, and in some cases less than that of a state.

Revenue: this can be defined as the income generated for some political entity’s treasury by taxation and other means.

Statutory: This refers to of, relating to law, enacted or regulated by a statue.

Tax: this can be referred to as money paid to the government other than for transaction-specific goods and services.

Taxation: this refers to the act of imposing taxes and the fact of being taxed.