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1.1       Introduction

Many African countries have adopted decentralization as the main instrument for transforming the rural areas. The forms adopted range from a high degree of central control to extensive devolution of powers to local government1.

In Nigeria, Local Government has long been recognized as a veritable agent of local service delivery, mobilization of community based human and material resources, and organization of local initiative in responding to a wide variety of local needs and aspirations2. As the tier of government closest to the grass roots local government is in a better position to create wealth for the rural poor through the initiation of various programmes that will increase local incomes and thereby expand local revenue base. For the local government system to continue to be relevant in the scheme of thing in Nigeria, they must evolve strategies for generating revenue base.

Local Governments in Nigeria in their present form started in 1976 “the guidelines for the 1976 local government reforms in Nigeria (1976) is comprehensive and aptly captures the essential features of local governments. According to the guideline.

“Local government is government at the local level exercised through representative council established by law to exercise specific power within defined areas. Those powers should give the council substantial control over


local affairs as well as the staff and institutional and financial power to initiate and direct the provision of services and to determine and implement projects so as to compliment the activities of the state and federal government in their areas, and to ensure through active participation of the people and their traditional institutions that local initiatives and response to local needs are maximized”.

Part of the explanation for the reform are the problems of inadequate funding

to  local  government,  lack  of  appropriate  structure,  operational  deficiency,

insufficient manpower owing to poor salaries and unattractive condition of

service, corruption, nepotism and politicization of the whole local government


Local government is justified on the ground that it is an efficient agent

for providing services that are local in character. Local government exists to

provide services and it must be judge…by its success in providing services up

to a standard measured by a national inspectorate3”. Because of its closeness to

the  grassroots,  local  government  is  in  the  best  position  to  provide  certain

services  for  more  efficiently  than  the  federal  and  state  government.  Local

government is a veritable instrument for development4.

Local government also serves to promote democracy at the grassroots. This is

the view espoused by the democratic participatory school which argued that

local   government   functions   to   bring   about   democracy   and   to      afford

opportunities for political participation to the citizen as well as to educate and


socialize him politically5. Similarly, the 1976 “guideline for local government stated that one of the main objective of local government is to facilitate the exercise of democratic self-government close to the grassroots of our society and encourage initiative and leadership potential.

Again, the 1976 “guideline for local government reform in Nigeria” states that local government exists for the following developmental reasons:

(1)  To make appropriate services and development activities responsive to local wishes and initiatives by developing or delegating them to local representative bodies, and

(2)  Mobilization of human and material resources through the involvement of members of the public in their development.

Among the many potential roles of local government in the development process are the following6.

(1)  Helping to inculcate in people citizenship altitudes such as consideration, self control, community responsibility and identity.

(2)  Providing basic community services which both improve the quality of people lives and enable the community to generate and attract economic activities, and

(3)  Helping people, especially in the rural areas to organize themselves for the mobilization and effective management of community resources and central government programmes respectively.


However, the aforementioned roles and objectives of the local government to perform have not been easy to meet due to their low financial resourcefulness. This element of finance has remained a problem and has continuously disallowed local government to engage towards the executing their roles expected from them. Identifies finance as exist necessary to break what in his terminology is, “the vicious circle of poverty of local government”. And make local governments relevant in the country’s development process7. Although the financial position of local governments in Nigeria has improved considerable, due to enhanced allocation from the federation accounts regrettably, the assurance of getting regular and substantial allocations from the federation account has made them to lose the incentive to explore new ways and method of boosting their revenue from domestic or independent sources. While statutory allocation remains the main source of revenue for funding development projects of the local level, internally generated revenue (IGR) remains critical for sustainable implementation of wealth creation at the grassroots by local government. The local government shou

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