Welfare and Economic Effects of Fiscal Behaviour of Local Governments in Nigeria

Abstract

The Nigerian constitution recognises the local government areas (LGAs) as the third tier of government, and sets aside for it the responsibility of effective public service delivery at the grassroots. In recent times, debates have ensued on the effectiveness of the 774 LGAs in Nigeria. While a polar group calls for scrapping of the LGAs because of their poor or non-performance due to, among others, corruption; some others have advocated for a reasonable degree of autonomy to guarantee effectiveness and accountability in the discharge of their duty. In view of this, the study examines the fiscal behaviour of the LGAs with a view to investigating whether they enhance welfare or not. Also, the paper studies factors that affect revenue drive of LGAs, identifies main sources of revenue and its applications. Both primary and secondary data from Osogbo Local Government Area of Osun State are employed in the study that utilises descriptive and inferential statistical techniques. On welfare, the fiscal behaviour of Osogbo LGA is felt most in education sub-sector, followed by health and sanitation. The results further show that’ low internal revenue generation; political interference and inadequate mobility for tax collection are the primary factors affecting the performance of LGAs. Lastly, the study finds that increased spending on essential services would improve standard of living of people at the local level.

Keywords: Local government, welfare, fiscal actions