AN ASSESSMENT OF REVENUE GENERATION AND SERVICE DELIVERY

AN ASSESSMENT OF REVENUE GENERATION AND SERVICE DELIVERY

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ABSTRACT

Every local government in Nigeria desires quality service delivery as it is pertinent to the sustainability of grassroots development. The fundamental factor in achieving quality services, are adequate and reliable of the revenue sources as well as quality human resources that will serve as instrument for formulation and implementation of local government financial resources. This study assessed revenue generation and service delivery in Nigeria, a study of Abuja Municipal and Abaji Area Councils of Federal Capital Territory from 2008 -2013; arising as a result of low service delivery in Abaji specifically in health care and environmental sanitation services. The objective of the study is to make comparative assessment of actual revenue generated by the two area councils and how the revenue sources have affected service delivery. For methodology of the study, questionnaires were administered to sample beneficiaries; oral interviews for selected Heads of Department (Account, Health and Sanitation) and non-participative observation were used to collect primary data. The secondary data were collected through published academic journals, council‟s document (quantitative data), published and unpublished masters thesis. However, the study found that Abuja Municipal and Abaji area councils have disparity in revenue sources, qualitative and quantitative service delivery as a result of level and access to fund generation in Abuja Municipal. Consequently, the study recommended among others that; in achieving level of funding for quality service delivery in Abaji area council as expected by the beneficiaries, the Federal Capital Territory Administration (FCTA) should increase the statutory allocation of Abaji area council, to enable the council improve on its socio-economic service delivery for encouraging taxpayer and attract other investors for commercial purposes. This will also serve as an avenue of boosting the IGR and increase quality and quantity service delivery in Abaji area council of Federal capital Territory.

CHAPTER ONE

INTRODUCTION

1.1   Background to the Study

In 1954, Nigeria adopted the Federal System of Government, which essentially shared the responsibility for service delivery among the three levels of government in an intergovernmental public arrangement. Basic government services such as agriculture support and irrigation, rural roads, health service, sanitary activities and primary education among others, were placed in the hands of lower level government, which then enables the community to be participative members of the society. The ability or capacity of local government to deliver sustainable public services depend on the level to which authority, functions, and financial resources are transferred or given to them vis a vis the scope and weight of their responsibilities. This is referred to as decentralization of authority for public services. The process of decentralizing authority, involves the process of deconcentration and devolution of services.

“Decentralization” is the transfer of authority and responsibility for public services, from the central government to intermediate and local governments or quasi-independent government organizations. The process of decentralization involves, within an appropriate legal framework of political, administrative and fiscal decentralization. Besides, the three components (political, administrative and fiscal decentralization) vary from unitary system of government to federal system of government. Consequently, when administrative decentralization is predominant, the situation has a bias towards deconcentration, or when all the three components are present, we have a state of devolution (Berlin 2009:26).

Deconcentration, is the redistribution of decision making authority, finances and management of responsibilities among administrative agencies of the central government. To those in the Regions, Provinces or Local Government, are under supervision of the central government. Whereas, devolution is the transfer of functions, authority and responsibility for services to Regions/local government to elect her representative, raise funds and have independent authority to make investment decision. This is to say, when governments devolve functions, they transfer authority for decision-making, finance, and management to quasi-autonomous units of local government. In a devolved system of government, local governments have clear and legally recognized geographical boundaries over which they exercise authority and within which they perform pubic functions.

The types of decentralization through the process of deconcentration or devolution represent, different ways of organizing the public sector service delivery. However, the effectiveness of local government in providing public services does not depend on either deconcentration or devolved forms of decentralization per se, but rather on the degree of internal control and/or autonomy enjoyed by the local government authority. But devolution is embedded in the overall political culture of the country and a good understanding of the system in operation, helps to also understand the flow of funds in discharging public services. In a unitary system of government, having strong desire for centralization tends to run decentralization by 3

deconcentration. Countries like France, England and China etc. Contrary to this, Federal system of government provides decentralization by devolution system. In such system, levels of government are supposed to facilitate the functions, finances and development oriented local governments. Examples of countries with federal system of government includes among others, United State of America, Germany and Nigeria. The governments that practice devolution are more likely to discharge public responsibilities than those governments practicing deconcentration. Because, deconcentration is often considered as being the centralizing of public services.

The Constitution of the Federal government of Nigeria, decentralizes public services among three tiers of government. For the Local governments tier, their public functions are set out in the Fourth Schedule of the 1999 Constitution. This system empowers local government to elect their chairmen, raise financial resources and have independent authority to make investment decisions Thus, the Model Financial Memoranda of (2009:81-85) entails sources of revenue to cope with the local governments‟ responsibility and demand of the people. The Financial Memoranda stipulates the generation and proper management of funds so as to achieve the responsibility of local government in terms of service delivery to the people.

In spite of decentralization by devolution of functions, local governments in developing countries specifically in Nigeria are faced with obstacles to enhance public service delivery to citizens. The political and fiscal decentralization of local government autonomy in Nigeria is a myth not a reality of decentralization by devolution structure in the views of (Usman 2008, Agba 2013 and Odoh 2014). The challenge of local government devolution has been an obstacle, to sustainable public services expected from Abuja Municipal Area Council (AMAC) and Abaji Area Council such as: rural roads, health services, sanitary activities and primary basic education etc.

1.2   Statement of the Research Problem

The provision of public services by the government, through the process of decentralization is a necessity for community development. Moreover, the necessity for good health and conducive environment is a resource for everyday life of citizen. This is often influenced by the state of environment and health services provided. Section 20 of 1999 Constitution of the Federal Republic of Nigeria provides for quality health and environment as a fundamental right of all Nigerian citizens. “The State shall protect and improve the environment and safeguard the water, air and land, forest and wild life of Nigeria”. Also, in the Fourth Schedule of the same Constitution, there are functions of local government council among which is the provision of health service and environmental sanitation.

Regrettably, the rural population is seriously underserved when compared with their urban counterpart. Federal Capital Territory (FCT) is a planned city, developed by International Planning Associates (IPA), a consortium of three American firms. The effort is to make FCT one of the most attractive capital territories in the world, through improvement of infrastructure and provision of quality social services to the inhabitants (www.fcda.gov.ng). The environment that engenders good health is being hampered by lack of effective sanitation system such as poor drainages, inadequate refuse disposal and open defecation. Currently, the city is faced with myriad of challenges characterized by unhygienic conditions. Garki village remains one of the unpleasant areas in the Federal Capital Territory (FCT) despite its proximity to some highbrow areas like Asokoro, Garki 2, Area 3 and Area 11. A first time visitor to the village would be welcomed by offensive odour oozing out of gutters, make-shift toilets and other outlets that have suffered prolonged neglect by sanitary authorities (National Mirror Newspaper, February 15, 2013:10).

Services in Abuja Municipal Area Council (AMAC), an urban area, and in Abaji Area Council, a rural area, are incomparable. Observation from the road networks, health services, electrification and pipe born water, sanitary activities, primary education and other socio-economic activities are in low ebb compared to that of the urban centres environment. However, the 2006 population census of AMAC stood at (776,298), while Abaji had over (46,600). With such a sizable population in Abaji Area Council, it is expected to be served with quality services more than any other area council within the Federal Capital Territory from the accruing sources of revenue to the council (internal and external sources of revenue). But this is contrary to what is obtaining in reality and has affected the well-being of the community. Any community with poor service delivery, no doubt affects the socio-economic development of the community, increase rural-urban migration and a reduction of the municipal internally generated revenue (IGR). Thus, understanding the factors responsible for the variations in service delivery between AMAC and Abaji Area Council of Federal Capital Territory becomes imperative. Therefore, this research attempts to provide answers to the following pertinent questions.

1.3   Research Questions

1.   What is the level of funding and how does it affect the quality of service delivery in Abuja Municipal and Abaji Area Councils of Nigeria‟s Federal Capital Territory?

2.   What are the sources of revenue and how has that affected the quality of service delivery in Abuja Municipal and Abaji Area Councils of Federal Capital Territory?

3.   What are the obstacles to effective revenue generation and service delivery in Abuja Municipal and Abaji Area Councils of Federal Capital Territory?

4.   What can be done to improve revenue generation and service delivery in Abuja Municipal and Abaji Area Councils of Federal Capital Territory?

1.4   Objectives of the Study

The main objective of this study is to make a comparative assessment of impact of revenue generation and service delivery in Abuja Municipal and Abaji Area Council of Federal Capital Territory.

Specific objectives of this study to:

1.   Examine level of funding and how it has affected the quality of service delivery in Abuja Municipal and Abaji Area Councils of Nigeria‟s Federal Capital Territory.

2.   Determine the sources of revenue generation and its effect on the quality of service delivery in Abuja Municipal and Abaji Area Councils of Federal Capital Territory.

3.   Identify the obstacles to effective revenue generation and service delivery in Abuja Municipal and Abaji Area Council of Federal Capital Territory.

4.   To determine and recommend ways for improving revenue generation and service delivery in Abuja Municipal and Abaji Area Councils.

1.5   Research Hypotheses

H0: There is no significant relationship between the level of funding and quality of service delivery in Abuja Municipal and Abaji Area Councils of Federal Capital Territory.

H1: There is a significant relationship between the level of funding and quality of service delivery in Abuja Municipal and Abaji Area Councils of Federal Capital Territory.

H20: There is no significant relationship between the sources and quality of service delivery between Abuja Municipal and Abaji Area Councils of Federal Capital Territory.

H21: There is a significant relationship between the sources and quality of service delivery between Abuja Municipal and Abaji Area Councils of Federal Capital Territory.

1.6   Significance of the Study

The study is significant because adequate/quality service delivery is an engine life of a viable local government, to meet the needs of the community. It also allows the community people to be productive members of the society by paying their taxes and supporting governmental projects. In essence, availability and quality services delivery to the people enhances the ability for socio-economic development, check rural-urban migration and ensure integration of council areas into national development.

A careful study of this research is a solution to the obstacles of revenue generation and service delivery in Nigerian local government specifically, in Abuja Municipal and Abaji Area Councils of Federal Capital Territory of Nigeria. Many authors have written on local government and its role in rural/urban development (Ajaegbu 2000, Ibrahim 2011 and Muhammed 2012). Others concentrated on general problems affecting local government services (Abdulraheem 2012 and Agba 2013). Some limited their studies to issues on rural development and problems affecting local government in Nigeria (Akindele 2002 and Pavini 2009). But very few focused on issues of revenue generation and service delivery (Usman 2008, Akwara 2013 and Odoh 2014).

This study is significant as it focused on revenue sources and level of funding in relation to service delivery in Abuja Municipal and Abaji Area Councils of Federal Capital Territory, Nigeria. This is the knowledge-gap that the study intends to cover.

1.7   Scope and Limitations of the Study

Abuja Municipal Area Council (AMAC), an urban area and Abaji Area Council, a rural area of Federal Capital Territory of Nigeria are chosen as the scope of study for this research. This is to make a comparative study of revenue generation and service delivery between urban and rural area councils. The justification for the timeframe 2008-2013, was as a result of increases in Nigeria local government revenue to enhance local government services. To what extent has the revenue sources affected service delivery in AMAC and Abaji area councils?

Specifically, the study examined internal and external sources of revenue generation and aspects of the services delivery such as: Primary Health Care (PHC) and environmental sanitation services of both municipals. The researcher decided to use the two area councils for this study because physically, the pace and level of positive transformation in Abuja Municipal is high to compare with any other area council within the Federal Capital Territory. Moreover, limitation of the study was having access to secondary data in Abaji area council, interview with the chairmen of AMAC and Abaji Area Councils and financial constraint to carry out the study. 10

1.8   Definition of Concepts

The definition of key words in this study is very important for further understanding of the variables stated in the hypotheses. These definitions are conceptualized and operationalized as what the researcher meant in this study.

Revenue Sources: Operationally, revenue sources are all monetary receipt accruing to local government from statutory allocation, grant-in-aid, loan from government or financial institutions, and internal generated sources within a specific period of time. Revenue serves as the livewire for any institutions/organization including local government administration to survive.

Adenugba and Chike (2013:6) define revenue sources as the funds required by the government to finance its activities. These funds are generated from different sources such as taxes, borrowing, fines, fees and statutory etc. Therefore, revenue sources are the total amount of income that accrues to organization (public or private) within a specific period of time.

Level of Funding: It is the sufficiency, availability and sustainability of financial resources provided by the federal and state governments, in the provision of local government services such as; health care, rural roads, boreholes, electricity etc that are satisfactory or acceptable by the community.

Service Delivery:


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