LOCAL GOVERNMENT FINANCING AND ACCOUNTABILITY IN NIGERIA: CASE STUDY OF OSISIOMA NGWA L.G.A, ABIA STATE

CHAPTER ONE

INTRODUCTION

1.1. BACKGROUND OF THE STUDY

Public money ought to be handled with the most scrupulous consciousness of honour. It is not the product of riches only but of the hard earnings of labour and poverty. It is drawn even from the bitterness of want and misery. Not a beggar passes or perishes in the streets whose mite is not that mass. The desirability for prudent and judicious management of public funds cannot be overemphasised. Public funds are public trust in the hand of local government officers, as such; they should be efficiently utilised and properly accounted for. This is what has given birth to the issue of financial management and accountability, the various provisions for ensuring efficient and effective financial management and accountability at the local government level. Local government is a form of decentralization of authority called devolution. Devolution of powers was driven by the failure of national economic planning to deliver quality services to users at the local level. This resulted in the design of decentralized structures and the apportionment of resources and power between different tiers of sub-national governments. Alam (2008), noted that decentralization has placed increased responsibility for the delivery of public services and the achievement of the Millennium Development Goals (MDGs) on the sub-national and local governments. This has been the case in federal systems like Nigeria, where state and local governments have sustainability responsibility for the provision of services and infrastructure. In Nigeria, the local government is constitutionally mandated to provide services to the people and security for the citizenry and ensure participation of the citizenry in government. This requires that local governments have under their control, a range of sources of fund to be able to perform the assigned functions. In Nigeria, the local governments have various sources of fund, such as statutory allocations from the federation accounts, local taxes and charges borne by residents of the jurisdiction, grants, returns on investments, etc. The effective performance of the assigned functions by the local governments depends on effective and prudent management of their financial resources. In recent time, local governments have always explained away their ineffective and dismal performance of their functions by inadequate funds. However, it has been observed that poor finance management, rather than inadequate finance is the bane of local governments’ inability to achieve substantial development in their domain (Ojo, 2009). Abubakar (2013) observed that the financial position of local governments in Nigeria has improved considerably due to enhanced allocation from the federation account. Kalawole (cited in Lawal, et. al. 2010:232) observed that the lack of funds was no more a constraint on local government performance, but mismanagement and misappropriation of funds accruable to it. Management of local government finance entails the application of all the management functions of planning, organizing, controlling, etc. in the area of finance. Planning the finance of local governments includes budgeting which specifies the sources and expenditure points. Organizing is the allocation and utilization of funds. While controlling is a measure to ensure that there is no deviation in the set budget during implementation, and timely correction or adjustment to check any deviation.  The paper therefore, attempts a periscope view of the management of local government finance and accountability in Nigeria, in the performance of the constitutionally assigned functions. This is with a view to highlighting its weaknesses and offering some suggestions on how to effectively manage local government finance. These functions as earlier said are provision of goods and services, security of citizens, achievement of MDGs and training ground for political participation.

1.2 STATEMENT OF THE PROBLEM

Organizations whether private or the public sector can only achieve its objectives with the presence of committed management and workers who always consider it vital to carryout activities that will lead to goal attainment. A major problem that exist presently in government accounting system is not only as a result of lack of standards in place but can be traced to the attitudes of the individuals in various government offices which has led to lack of accountability and abuse of delegated authority by the officers in authority, fraud and misappropriation of government funds, no proper knowledge update on the part of the officers, lack of management of non-monetary assets, poor control of human resources, political culture, political competition priority misplacement of government and indiscipline. This is majorly as a result of the fact that government operations have been termed “Non-profit oriented operations” no pressure on the part of these government officers to perform up to optimum expectation hence the need for evaluating accounting reforms and how it affects local government councils in Nigeria. Therefore this study will be examining the local government accounting system of Nigeria, assess the extent to which proper accounts are kept and to providing solutions to the inherent problems identified.

1.3. AIMS AND OBJECTIVES OF THE STUDY

The major aim of the study is to evaluate Local government financing and accountability in Nigeria. Other specific objectives are as follows;

1. To examine the extent to which local government councils have been able to generate and manage their funds with the sole aim of meeting the needs of their people and attaining value for money.
2. To examine the challenges of managing local government finance.
3. To examine the effect of local government financing and accountability on local government development.
4. To examine how actual undertaking of accounting practices differ among the Local government.
5. To examine the relationship between local government financing /accountability in Nigeria and Local government development.
6. To suggest how Local government finance can be properly managed in the benefit of the people in particular and society in general.

1.4. RESEARCH QUESTIONS

1. What are the extent to which local government councils have been able to generate and manage their funds with the sole aim of meeting the needs of their people and attaining value for money?
2. What are the challenges of managing local government finance?
3. What are the effects of local government financing and accountability on local government development?
4. How does actual undertaking of accounting practices differ among the Local government?
5. What is the relationship between local government financing and accountability in Nigeria and local government development?
6. What are the suggested ways on how Local government finance can be properly managed in the benefit of the people in particular and society in general?

1.5. RESEARCH HYPOTHESES

H01: There is no effect of local government financing and accountability on local government development in Nigeria.

 H02:There is no significant relationship between local government financing and accountability and local government development in Nigeria.

1.6. SIGNIFICANCE OF THE STUDY

This study is largely significant because it sought to find empirical answers to questions on the Local government financing and accountability system in Nigeria. The research paper will be of interest and useful to the general public’s the government as well as the governed and also to future researchers in taking a stand on what is prevalent in the country. This research will also serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic.

1.7. SCOPE OF THE STUDY

The study is restricted to Local government financing and accountability in Nigeria: case study of Osisioma Ngwa L.G.A, Abia state

1.8 LIMITATION OF STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Local Government: Is a form of public administration which, in a majority of contexts, exists as the lowest tier of administration within a given state. Local governments generally act within powers delegated to them by legislation or directives of the higher level of government.

Financing: Is the act of providing funds for business activities, making purchases or investing. Financial institutions and banks are in the business of financing as they provide capital to businesses, consumers and investors to help them achieve their goals. The use of financing is vital in any economic system, as it allows the purchase of products out of their immediate reach.

Accountability: The obligation of an individual or organization to account for its activities, accept responsibility for them, and to disclose the results in a transparent manner. It also includes the responsibility for money or other entrusted property.