A CRITICAL ANALYSIS OF THE PROBLEMS OF FINANCIAL MANAGEMENT IN LOCAL GOVERNMENT COUNCILS IN NIGERIA

CHAPTER ONE

1.0     INTRODUCTION

1.1   BACKGROUND OF THE STUDY

Local government in Nigeria has been changed by the constitution of the responsibility or grassroots development and such recognized as the third time of government. There has been a number of national conference and seminars in local government in various parts of the country. All these, one effective system of local government in Nigeria, this study is mortised by the derive to ascertain the reason why in spite  of series of seminars and conference on local government administration especially on financial management in efficiency and Mis-management of resources are still rapid and uncontrollable in local government.

The introduction of 1976 local government reform in Nigeria made more specific duties of government which has contributed in no small measure towards making people feel more of the need for a strong government at the level more result oriented.

       Unfortunately the local government has not been able to achieve most of its adequate financial resources which has been a major problem leading to instability and inefficiency as many local government are incapable of government in their different localities with the introduction of the 1976 reform position of local government system because the system made it possible for the local government to raceme most of their revenue from the federal state government. But the dependency on the statement for therefore it revenue have some notable disadvantages grants from centre. This could affect the cordiality of their service.  In addition of grants from the central government also receive revenue t6hrough internal sources like fees and fines local licenses, rates on local government property interest and dividends retirement and miscellaneous income (slaughter fact etc.). Most often this revenue are not effectively collected and misappropriated out mostly be members of staff responsible for collecting it.

Aboh Mbaise local government is one of the oldest local governments in Imo State. It was created in 1981.

Geographically, Aboh Mbaise has a boundary with delta state in the North; it is bounded by rivers state.

At local government bounding in the North. It has bounding with Aguata local government at the east. It has boundary with Ihelas local government.

Aboh Mbaise local government is divided into three zones namely Enyiato local government, Ngwu local government, and okewuwu local government.

In the light of this therefore research as has been done in three states the financial management in order to final solution in solving them. In an attempt to do this we started with chapter one the introduction, background of the study, statement of the problem, objective of the study, scope of the study, chapter two deals with review of the related literature.

Chapter three deals with the design and methodology. These are subdivided in to areas of the study. Population of the study, sampling procedure. Techniques used instrument, method of data collection and method of data analysis.

Chapter four deals with presentation of and analysis with focus on testing of hypothesis and summary of the result.

Chapter five deals on discussion, recommendation and conclusion of the research implication of the research finding and suggestion for further research.

1.2   STATEMENT OF PROBLEM

The research is concerned with the problem of financial management in Imo State (a case study of Aboh Mbaise LGA) with the local government reform of 1976, local government become recognized as the throatier of government rested with the statutory power to discharge the duties and responsibilities of a government in order to achieve set objective and an efficient accounting system. It will be very difficult for local government management to keep close control of financial transaction, policy formulation mobilization and expending their resources. But things still differ in Nigeria local government because there have been complaints of inefficiency and Mis-management of local government revenue and as a case of Aboh Mbaise local government their case is not different. For example:

1. The council could not execute the proposed project of reconstruction regarding the major road that lead to Aboh to Ahiara and Chokonaeze to Mubutu.

2. They could not develop a good project like schools in Aboh Mbaise.

3. The council Mis-manage our funds while we don’t have electricity in our local government and pipe born water in Aboh Mbaise.

1.3     OBJECTIVE OF THE STUDY

Aboh Mbaise local government has so many financial obligation or function to reform. The research paper is carried out:

1. To find out how the generated revenue is controlled

2. To find out how what brings out the management of Aboh Mbaise local government revenue.

3. In finding out the financial management are being handling

1.4   RESEARCH QUESTIONS

1)How the generated revenue is being controlling by the Aboh Mbaise local government?

2)What brings out the Mis-management of Aboh Mbaise local government revenue?

3)How can the financial management of order are being handling by the top people in the local government.

1.5     SIGNIFICANCE OF THE STUDY

First the research is timely because not such studies have been conducted in the local government because the administration could not embark on development project but came to the chairmanship position for their personal again. It will help the republic chairman and other coming after him on how best to manage the present financial crises that militate against the development of Aboh Mbaise. Despite series of reforms and other attempts made by the federal and various state local governments the problem of financial administration and management exist.

1.6     SCOPE OF THE STUDY

The study covers only Aboh Mbaise local government area since allocation differs a very from local government to local government which depends in the formula for the allocation especially primary pupils enrollment lend mass central. It should be pertinent to role that there is general application of rules and regulation on the local government in Nigeria which they must strictly to. By this therefore what is applied in one local government is applied to the other because of their uniformity.

1.7     LIMITATION OF THE STUDY  

Certain constraints are envisaged in the course of this project work:

1. Time was not enough to get material for the project work.

2. This is lack of statistical data to cover the needed areas

3. There is lack of finance to carry on the debt research work.

1.8     DEFINITION OF TERMS

Is allowing for better understanding of the research. It is considered necessary that some of the term used in the work be defined:

Financial:  In the economic sense is defined as economic decision capable of enhancing social welfare or a resources allocation income distribution and stability aspect. It can also be defined as economic behavior of government into the facts, techniques principles theories rules directing and policies shaping and governing the use of financial resources of government.

Management: It can be defined as a mechanism where by the nature and structure of existing finance can be managed and analyzed to follow existing government policies as directed in the budget. Management includes when the allocation has been shared to various local government the strategies will be how to control the allocation and internal generated revenue to ensure efficiency management of fund.

Statutory allocation: A fund established by the federal government for pulling of extra –budgetary revenue of unexpected home especially from oil exporters. It is also provided sources of fund for emergency purpose.

Tax: Compulsory payment by individuals corporate organization and partnership into the pursue of government for running of its activities.  

Tax avoidance: A legitimate way of not paying tax by engaging in non-taxable activities.

Tax evasion: An illegal way of not paying tax, one is liable to pay to government. It is a criminal offence.

Per capital income: A method of assessing the standard of living in any country. It involves determining potential income per person in an economy.

Multinationals: Large firms in Nigeria that are of the numerous subsidiaries of the parent companies abroad.

Foreign policy: Articulated course of section that defines Nigerians relationship with other country’s and its stand and attitude towards certain international issues.

Budget: An economic tool used by government to estimate its expected revenue and project expenditure over a period of time usually or yearly.

Marginal propensity of investment: That degree of increases in investment due to increase in income.

Inflation rate: The rate or speed at which the general price level are increasing.

Marginal propensity to consume: That degree of increase in consumption level as a result of increase income.

Debt conversion programme: A system initiated by the federal government through the central bank in which the country’s external debts are sold through auction to interested parties.

National rolling plan: A fiscal policy adopted by government especially during 1989- 2000 year which aimed at achieving real economics growth and macro economics , stability in order to fight the problems of unemployment and poverty in the society.