Challenges of Managing Local Government Finance in Nigeria

Abstract

Since the 1976 Local Government Reforms that were undertaken to strengthen the local system in Nigeria, several challenges have cropped up, over the years, to impede the performance of local government councils in the discharge of their constitutionally assigned responsibilities. One of such challenges is the dwindling revenue base of local government councils. This paper focuses on how local government councils manage their finances against the background of lack of financial autonomy, corruption, and, undue interference in local affairs, especially in the areas of operation of joint state-local government accounts which gives the state government undue advantage over local governments. The objective of the study to improve understanding of the revenue status of local governments so that the public may appraise the financial challenges faced by the third-tier of government in Nigeria that have adversely affected the delivery of quality services to the rural populace. The methodology used in the study was descriptive qualitative analysis. The findings show that local governments in Nigeria have not been doing well due to lack of financial autonomy, undue meddlesomeness of state governments in local affairs, corruption among local government officials, etc. it is recommended that full financial autonomy should be granted local councils on matters statutorily assigned to them, the joint state-local government councils account system should be abrogated, and honest and transparent officials should be put at the helm of affairs in the local government councils to firm up the local government system in Nigeria.

Keywords: Local government reform; revenue base; financial management; budgeting; local government autonomy