ABSTRACT

This work titled, “Implication of Local Government Autonomy on Rural Development in Ebonyi State” A study of Ebonyi Local Government Area” was aimed at ascertaining the extent to which state interference in the management of local government revenue constituted the bane to rural development in Ebonyi State, examining the extent to which poor financial management practice in the local government hinders rural development in Ebonyi Local Government Area among others. “Fiscal Federation Theory” by Kenneth Arrow in the 1954 was adopted. Survey research design was adopted to study a population of 532 which was reduced to a sample size of 228 using Taro Yameni’s formula. Simple random sampling technique and stratified sampling technique were used. Data for this study were gathered from primary and secondary sources. Questionnaire instrument for data collection was used. For the purpose of analyzing data collected from the field survey, frequency distribution tables and simple percentage techniques were applied while in testing the hypotheses that guided the study, the chi-square(X2) statistical tool was used. This study revealed that State interference in the management of local government revenue has constituted the bane of rural development in Ebonyi State; the financial autonomy of the local governments is being severely interfered with by the state governments principally through the instrumentality of the State Joint Local Government Account. State governments make local government appendages of the state through State Joint Local Government Account (SJLGA) mechanism, among others. The implication being that if the menace persists in the local government system rural development in Ebonyi Local Government Area will be jeopardized; hence, this study recommends that State interference in the management of local government revenue menace should be tackled to enhance effective and efficient service delivery in the rural setting, Local government council management should orient its staffers for proper financial management to enhance rural development in Ebonyi local government area among other.

CHAPTER ONE

INTRODUCTION

1.1  Background of the study

   Since time immemorial, local government autonomy has been a discussing issue among academic scholars cum researchers. Local government in Nigeria is a product of decentralization and is established by law. As a federal state, Nigeria has three tiers of government (federal, state and local) whose intergovernmental relations (which include political, financial, judicial and administrative) are mainly established by the constitution. Each tier is required to operate within its area of jurisdiction, and any action to the contrary is null and void to the extent of its inconsistency with the law. This is meant to guarantee the autonomy of each tier.

 Generally, local government is a form of public administration which, in a majority of contexts, exists as the lowest tier of administration within a country. In a federal system like Nigeria, local government usually occupies the third tier government. Specifically, local government is a unit of government below the central, regional or state levels established by law to exercise political authority through a representative council within a defined geographical area (Olisa, et al 1990). Local government is also conceived as a system of local administration instituted to maintain law and order, provide limited range of social amenities and encourage co-operation and participation of inhabitants towards improvement of their conditions of living (Emezi, 1981). From the foregoing definitions, it is deducible to note a core variable like socio-economic development which is clearly stated in the definitions. Through local administration, the living condition of the inhabitants will be improved. The role of the local governments as vital tool for rapid socio-economic development of rural, and urban centers have taken a central stage albeit without a corresponding access to prerequisite financial resources to meet this expectation.

Socio-economic development means pure and adequate provision of basic infrastructure such as roads, clinics, schools, potable water and other communal initiatives that benefit the people. Local government is the focus of government efforts at promoting development through purposeful combination of the local (peoples) effort/energies with that of government with the objective of improving socio-economic conditions and encouraging political participation is a key factor in rural development. It represents the objective expression of the energies of mobilized rural communities in concrete and tangible projects as mentioned above.  In order to enthrone better local administration, local government has been going through various reforms aimed at strengthening its capacity to effectively operate and play significant developmental roles in national development process (Ogunna, 1996).  However, the current platform for local government administration in Nigeria started with the 1976 Guidelines for Local Government Reforms. The Guideline gave the present local government system its basic structure and functions as a third tier of government within the Nigerian federal government arrangement (Abada, 2007; Ade, 2012). Unlike the previous local government reforms, the 1976 reform conceptualized local government as operating within a common institutional framework with defined functions and responsibilities in line with national development objectives (Saalah and Stanley, 2011). Indeed, before the reform, local government was merely local administration without formal recognition as tier of government (Andrews, 2012).  Very importantly too, the 1976 reform initiated, particularly, the financial and political autonomy of the local government that was further strengthened by the civil service reform of 1988. As well, the provisions of the 1999 constitution as contained in section 7(1) and section 162 (paragraphs, 3, 4, 5,  6, 7, 8) are intended to also guarantee the local government autonomy. The provisions for the autonomy, as they were, are essentially and ostensibly aimed at protecting the local government from unnecessary interference from other tiers of government and to enable it play significant roles in the national development process. However, findings from researches by scholars and observations by practitioners, overtime, point to the fact that the autonomy of the local government is becoming increasingly difficult to realize following particularly, the propensity of the state governments to interfere in the political/administrative and financial affairs of the local governments.

          Over decades today, various strategies and methods have been adopted by the successful government of both developed and developing countries for the purpose of good governance and effort at distributing the state resources and implement them at the local level. The federal structure of Nigeria inhibit local government’s ability to mobilize and use revenue to meet their obligation in sustainable manner (Adeyemo 2005). He further acknowledges that, one of the recurrent obstacles of the third-tier system in the country is the dwindling revenue generation as characterized by annual deficits and insufficient funds for meaningful growth and viable project development. The level of these relationships between and within the nation federating units (i.e federal, State and local government) particularly as it relate to revenue sharing has continually remained issues in the front burner of the nation’s polity. The encroachment of local finance by the state government has negatively affected the performance of local government in terms of its constitutional responsibilities. The setting up of state and local government joint account committee, local government service commission, ministry of local government and chieftaincy affairs and other allied agencies at the state level have made local government financial autonomy a mirage in Nigeria (Wada &Aminu, 2014).  Meanwhile, Finance and prudent management are the bedrock of effective functioning of local government administration. It is against this backdrop that Asiwaju (2010) argues the local government requires finance to perform their statutory functions; the ability of the local government to do this is largely dependent on availability of fund, coupled with efficient management which constitutes the required catalyst necessary for timely execution and completion of their development projects. Awotokun & Adeyemo (1999), however expresses some reservations that; in recent time, lack of funds has often been attributed as the major handicap which had hindered effective and successful execution and completion of many projects at the local government level. However, experience has shown the contrary that low finance and allocation by the federal and delay release for local government funds by the state government is the bane of local governments’ inability to achieve substantial development in their jurisdiction (Okoli, 2013).        

The above analysis in summary, gears towards lending credence to the fact that the encroachment of local finance by the state government has negatively affected the performance of local government in terms of its constitutional responsibilities as noted earlier by (Wada & Aminu, 2014) thereby hindering rural development in Nigeria local government system including Ebonyi local government area of Ebonyi State.

1.2   Statement of the problem

The quest for local government financial autonomy is aimed at reversing State government encroachment into local government administration to enable local government to carry out their saddled responsibility effectively and efficiently. The level at which state government  controls local council’s financial allocation through appointed committees who are loyalist to the State Governors is a challenge to local government administration towards rural development. The local government reforms have been articulated in a bid to correct excessive state encroachment, abuse of powers and the use of undemocratic leaders and care-taker committee to run the local governments by the state governments in Nigeria. Of all local government reforms deliberately executed to address these anomalies, the 1976 local government reform which recognized local government as a third tier, accords autonomous powers to the local councils and reduced excessive politicking of state over local government in Nigeria’s political system. Irrespective of the nature and extent of flaws that may characterize local government financial autonomy in principle and practice in Nigeria, it has, for fairly some time, become an important issue for considerations at the National Assembly as recently done; it has been subjected to various critical discourses.  The foregoing nevertheless, not much intellectual efforts have been deployed in examining the local government financial autonomy as a vehicle for redressing inordinate usurpation of power and adequate finance of local governments by state governments at grassroots politics in the country. Local government autonomy has to do with the area of finance. The issue of State Local government Joint Account has been a thorny issue in Local government State relationship in the Fourth Republic.

     In view of this; the researcher formulated the following questions to guide the study:

1.     To what extent has state interference in the management of local government revenue constituted the bane to rural development in Ebonyi State?

2.     To what extent has poor financial management practice in the local government hinders rural development in Ebonyi Local Government Area?

3.     To what extent will corruption free and local government autonomy enhance rural development in Ebonyi Local Government Area?

1.3   Objectives of the study

The broad objective of this study is to examine the implications of local government autonomy on rural development in Ebonyi State particularly in Ebonyi Local Government Area. The specific objectives of this study include:

1.     To ascertain the extent to which state interference in the management of local government revenue constituted the bane to rural development in Ebonyi State.

2.     To examine the extent to which poor financial management practice in the local government hinders rural development in Ebonyi Local Government Area.

3.     To suggest ways in which corruption free and local government autonomy will enhance rural development in Ebonyi Local Government Area.

1.4   Research Hypotheses

The following hypotheses were formulated to guide the study:

HA1: State interference in the management of local government revenue has constituted the bane to rural development in Ebonyi State.

HA2: Poor financial management practice in the local government hinders rural development in Ebonyi Local Government Area.

HA3: Corruption free and local government autonomy will enhance rural development in Ebonyi Local Government Area.

1.5   Significance of the study

This study will be highly significance, given the enormous crucial role local government autonomy plays in the local government administration towards promoting rural development in Nigeria and Ebonyi State in particular. In view of this, this study will be significant to the government in making adequate policy efforts that will accommodate grants of autonomy to the local government which will enhance effective and efficient performance through good governance.

Similarly, this research will be of immense benefit to the public especially the local government officials in understanding the objectives and role of local government in promoting rural development. Consequently, it will expose the need to be prudent in management because it is bedrock of effective functioning of local government administration that enhances rural development.

Also, this study will be immensely significant in the field of academics since it will serve as a good reference material to future researchers given the dearth of well researched materials on the implications of local government autonomy on rural development in Ebonyi State.

Finally, this study will be highly beneficial to the researcher in understanding the reasons behind the poor rural development recorded in the local government system in the country.

1.6   Scope of the study

This study covers the implication of local government autonomy on rural development in Ebonyi State, Ebonyi local government area in focus. The study also covers the concept of local government and autonomy, the impediment to local government autonomy in Nigeria including Ebonyi state as well as the patterns of state government interference in the local government autonomy and its negative implications towards local government administration that hampered rural development.

1.7   Limitations of the study

However, several factors constrained this research one of which was the absence of well researched materials on the implication of local government autonomy on rural development in Ebonyi State. The researcher therefore had to use available literature on journals, magazines, internet among others.

The limited time for the research was also a constraint since her class work ran together with the period for the research. However, effective time management helped to ensure the success of this work.

Finally, poor attitude of the respondents to the research also hindered the study though the researcher had to mobilize research assistants to make the study a success.

1.8   Theoretical Framework

This study adopted the fiscal federation theory as the basis for this work. The basic foundations for the initial theory of Fiscal Federalism were laid by Kenneth Arrow, Richard Musgrave and Paul Sadweh Samuelson's two important papers (1954, 1955) on the theory of public goods, Arrow's discourse (1970) on the roles of the public and private sectors and Musgrave's book (1959) on public finance provided the framework for what became accepted as the proper role of the state in the economy. Within is framework, three roles were identified for the government sector. These were the roles of government in correcting various forms of market failure, ensuring an equitable distribution of income and seeking to maintain stability in the macro-economy at full employment and stable prices.

          The theoretical framework in question was basically a Keynesian one which canvassed for an activist role of the state in economic affairs. Thus the government was expected to step in where the market mechanism failed due to various types of public goods characteristics. Economics teaches us that public goods will be underprovided if left to private market mechanisms since the private provider would under invest in their provision because the benefits accruable to her or him would be far lower than the total benefit to society. Governments and their officials were seen as the custodians of public interest who would seek to maximize social welfare based on their benevolence or the need to ensure electoral success in democracies. Once we allow for a multi-level government setting, this role of the state in maximizing social welfare then provides the basic ingredients for the theory of fiscal federalism. Each tier of government is then seen as seeking to maximize the social welfare of the citizens within its jurisdiction. This multi-layered quest becomes very important where public goods exist, the consumption of which is not national in character, but localized. In such circumstances, local outputs targeted at local demands by respective local jurisdictions clearly provide higher social welfare than central provision. This principle, which Oats (1972) has formalized into the "Decentralization Theorem" constitutes the basic foundation for what may be referred to as the first generation theory of fiscal decentralization (Oats, 2004). The theory focused on situations where different levels of government provided efficient levels of outputs of public goods "for those goods whose special patterns of benefits were encompassed by the geographical scope of their jurisdictions" (Oats, 2004: 5). Such situation came to be known as "perfect mapping" or "fiscal equivalence" (Olson 1969).

Nevertheless, it was also recognized that, given the multiplicity of local public goods with varying geographical patterns of consumption, there was hardly any level of government that could produce a perfect mapping for all public goods. Thus, it was recognized that there would be local public goods with inter-jurisdictional spill-overs. For example, a road may confer public goods characteristics, the benefits of which are enjoyed beyond the local jurisdiction. The local authority may then under-provide for such a good. To avoid this, the theory then resorts to traditional Pigouvian subsidies, requiring the central government to provide matching grants to the lower level government so that it can internalize the full benefits.

Based on the following, the role of government in maximizing social welfare through public goods provision came to be assigned to the lower tiers of government. The other two roles of income distribution and stabilization were, however, regarded as suitable for the central government. To understand the rationale for the assignment of the redistribution function to the central government, we need to examine what the implications of assigning this responsibility to the lower tier would imply. Given that citizens are freely mobile across local or regional jurisdictions, a lower level jurisdiction that embarks on a programme of redistribution from the rich to the poor would be faced with the out-migration of the rich to non-redistributing jurisdictions and in-migration of the poor from such jurisdictions to the redistributing one. If on the other hand, the powers to redistribute were vested in the central government, a redistribution policy would apply equally to citizens resident in all jurisdictions. There would therefore be no induced migration. The central government is expected to ensure equitable distribution of income, maintain macroeconomic stability and provide public goods that are national in character. Decentralized levels of government on the other hand are expected to concentrate on the provision of local public goods with the central government providing targeted grants in cases where there are jurisdictional spill-overs associated with local public goods.

The next step in the theoretical framework was to determine the appropriate taxing framework. In addressing this tax assignment problem, attention was paid to the need to avoid distortions resulting from decentralized taxation of mobile tax bases. Gordon (1983) emphasized that the extensive application of non benefit taxes on mobile factors at decentralized levels of government could result in distortions in the location of economic activity.

The relevance of the theory to this study to note is the need for true fiscal federalism that will enhance all levels of government including local government without interrupted in any form that will hinder them from rendering their constitutional responsibilities. This is also in the form of lump sum transfers from the central government to decentralized governments. The arguments for equalization were mainly two. The first which is on efficiency grounds saw equalization as a way of correcting for distorted migration patterns. The second is to provide assistance to poorer regions or jurisdictions. Equalization has been important in a number of federations. For example, Canada has an elaborate equalization scheme built into her inter-governmental fiscal arrangements. It should be pointed out however, that recent literature emphasizes the importance of reliance on own revenues for financing local budgets. A number of authors (Weingast, 1995; McKinon, 1997) have drawn attention to the dangers of decentralized levels of government relying too heavily on intergovernmental transfers for financing their budgets.

1.9   Operationalization of the key concepts

·        Local Government: Is a system of local administration instituted to maintain law and order, provide limited range of social amenities and encourage co-operation and participation of inhabitants towards improvement of their conditions of living.

·        Autonomy: In this context means a situation in which each government enjoys a separate existence and independence from the control of the other governments.

·        Rural: Is those parts of the cities that are yet to develop. That is villages and communities that lack necessary social amenities that are needed for standard of living.

·        Development: Is the process in which someone or something grows or changes and become more advanced.