Assessment of the Contributions of Local Governments Finance to Local Governments Budget in Nigeria

Abstract

The study assesses the contributions of local governments finance to local governments budget in Nigeria. Most local governments in Nigeria no longer perform their statutory responsibilities simply because of poor finances accruing from their legitimate revenue sources. The study sets to determine the contribution of allocation from federation account; states’ allocations; value added tax allocation and internally generated revenue to local governments’ budget in Nigeria. The population of the study consists of time series data of all the local governments in Nigeria for the period of twenty years while data for the period of sixteen (16) years were sampled (1999-2014). The parameters like Local Governments Allocation from Federation Account (LGAFA), Local Governments States Allocation (LGSA), Local Governments Value Added Tax Allocation (LGVATA), Local Governments Internally Generated Revenue (LGIGR) and Local Governments Budget Stock (LGBS) in Nigeria for the period under review were used. Statistical Package for Social Sciences (SPSS) version 20.0 software was used to analyse the data while the hypotheses were tested using Linear regression analysis. Results showed that allocation from federation account has significant contribution to local governments’ budget in Nigeria for the period under review. The results further revealed that states’ allocations; value added tax allocation and internally generated revenue have no significant contributions to local governments’ budget in Nigeria for the period under review. The study recommends among others that the ministry of local governments and chieftaincy affairs should ensure strict monitoring and implementation of local governments budget. This is to ensure that allocation from the federation account is properly put to use by the local governments. Also, the local governments in Nigeria should engage the service of tax consultants to aggressively increase their internally generated revenue, in order to increase their budget performance.

Keywords: Assessment; Contributions; Local Governments Finance; Local Governments Budget