Revenue Collection Strategy in the Reformed Local Government

Revenue Collection Strategy in the Reformed Local Government

Many scholars have written on revenue generation in local government.  Sometimes, we hear the complaint that an organistion lacks funds.  What this means is that some action, which ought to have been taken, was not taken because no one took the initiative to make others see that need for action and so no action took place.

However, the literature to be reviewed would include books, journals, newspapers and official documents relevant to the subject matter of the study.

Since the introduction of the local government systems a lot of related work on problems of  revenue collection has been done.  Writing on the revenue of the local authority, Ronald wrath in his book “local administration in West Africa” emphasized alike, areas of tax are unceasing and apparently insoluble problem”.

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In fact tax drive is constantly being used to avoid financial crises, but nowhere are general rate paid regularly promptly and without trouble.  Revenue generation whether at the national level or local level is a type of organizational activity involving leaders and subordinates as revenue authorities and collectors on one hand, and the citizen on the other hand, on whom taxes are levied and collected from.

Protection of lives and property thus became the primary functions of the governments.  To carry out this function, it became necessary for the government to mobilize resources with which to maintain those whose main function it was to protect lives and property within its area of jurisdiction.

The protection of lives and property soon extended beyond the undone requirement of carrying arms.  It became the role of the government to create the conditions within which life and property can be fully enjoyed.  Consequently, government assumed responsibility for encouraging, sponsoring, initiating and actually undertaking the construction of roads, bridges and culverts; provision of utilities such as water, electricity, public conveniences market, motor parks, airports, health facilities such as hospitals, dispensaries maternity homes, educational facilities such as nursery, primary, secondary and tertiary institutions of learning.

To maintain these facilities and utilities, and to effectively and efficiently serve the governed, it became necessary to raise money with which to finance them.  The various contributions made by the governed to the coffers of the government for the purposes of maintaining these utilities and facilities constitute taxed, the processes for their collection are termed taxation, those who do the actual collections are called collectors or revenue collections, and those who pay the tax are called tax payers.


The rational behind taxation and other forms of revenue collection is found in the nature and purpose of government.  The social contract theorist (Thomas Hobbies, John Locke, Jean Jark Ronsseau) believe that the state of nature in which man found himself was unacceptable for various reasons.  He therefore, agreed with other men to set up a government to rule over them.  The task of government was to protect the lives and property of those under it.  The task of the governed was to obey the ruler and carryout his orders.


This means government at the local level exercised through representative council established by law to exercise specific powers within defined areas.  These powers should give the council substantial control over local affairs as well as the staff and institutional and financial powers to initiate and direct the provision of services and to determine and complement the activities of the state and federal government in their areas and to ensure, through devolution of functions to these councils and through the active participation of the people and their traditional institution that local initiative and response to local needs and constitutions are maximized.

It can be seen from the foregoing definitions of local that in spite of variations in details, there are some common features, which could be discerned.  These feature or characteristic, which would be stated as a fact of any local government includes:

(i)      It exists within a defined territory.  That is to say, a local government is a geo-political entity.

(ii)     It is a sub-division of a nation state, n other words, it is both a political and administrative sub-division of a country.

(iii)    It can impose taxes and can incur expenditure.  This means that it has a constitutional power to raise money within its geographical boundary and is authorized also constitutionally, to spend their money so raised.

(iv)    It is relatively autonomous – That is to say a local government enjoys a considerable measure of autonomy on how to manage its affairs, especially in financial and staff matters   subject to limited control from higher tiers of government.

(v)     It has a legal identity.  This means that a local government is a legal entity and cannot only sue but can be sued.

(vi)    It is a subordinate system.  This is both a political and constitutional fact of any local government.  it implies that it is a system of government which is subordinate to both the central government and the state government.

However, it must be quickly added and in fact emphasized that a local government does not merely act as a departmental agent of the central or federal or state ministry as obtains in a local administration system.  As experience has shown however, local government is not a self-sufficient entity and derives its powers from both the higher tiers of governments and from the electorate within its geo-political area.  The power and authority of any local government is therefore substantially controlled and influenced by these facts.

(vii)   It involves the provision of community services.  One basic features of a local government is that it is essentially a means of providing and maintaining essential services for the benefit of locality without watering down the quality of these services or their standards.

(viii)  It is comprised of elected members who manage its affairs.  For any local government to be worth its name, the administration of the local unit must be by individuals popularly elected by the particular community or local area.  This is one of the fundamental distinctions between it and local administration whereby the local affairs of the unit is run by servants or employees of the central/federal or state authority.

(ix)    It involves local scale.  Local government also entails the administration of certain functions on a local scale and to suit local conditions and demands.  But as pointed out in (vii) above such services and functions must not be substandard and must be made to meet specifications of the national or central authority.  The above features represent the basic characteristic of local government in modern political system.  Local government can therefore be said to represent the generally accepted fact of political life that all the functions of government cannot be run on the basis of central administration or regional or state government alone.  If the traditional concept of government is to be accepted ie. If modern government is assumed to be democratic than a system has to be found where the greater number of people in a given nation – state or country should feel the impact of their government.  Since the  majority of the population is most contemporary  states especially in undeveloped societies such as Nigeria, live in rural areas, and communities which are for removed form the seat of the national government, it becomes imperative that a type government be brought “home” to them.  Consequently local government represents both the need for political participation and for administrative convenience, particularly with the view to fat finding, consideration of local variation and needs, etc local government can be summarized to mean the authority to determine and execute matters and issues within a restricted and defined area of a nation-state.  The general functions of local government is partly suspended Nigerian constitution of 1979 gave Nigeria a unique system of local government.  This is because, unlike others before it, it made local government the third tier of government alongside the federal and state tiers.  According to section 7(1) of the constitution:  “The system of local government by democratically elected local government council is under this constitution guaranteed…….

Having guaranteed the existence of local government, the constitution proceeded to assign functions to it.  Section 7(3) states that:  It shall be the duty of a local government council within a state to participate in economic planning and development of the area referred to in sub-section (2) of this section and to this end an economic planning board shall be established by a law enacted by the house of Assembly of the state.  But the functions of local government councils are contained in the fourth schedule of the constitution:  the are as follows:

1(a)   The consideration and making of recommendation to the state commission on economic planning or any similar body on.

(i)      The economic development of the state particularly in so far as the area of authority of the council and of the state are affected and;

(ii)     Proposals made by the said commission or body.

(b)     Collection of rates, radio and television licenses.

(c)      Establishment and maintenance of cemeteries, burial ground and homes of the destitute or inform.

(d)     Licensing of bicycles, trucks (other than mechanically propelled trucks) canons, wheelbarrows and carts.

(e)      Establishment, maintenance and regulation of markets, motor parts and public conveniences.

(f)      Naming of roads and streets and numbering of houses.

(g)     Construction and maintenance of roads, streets, drains and other public high ways, parks, open spaces or such public facilities as any be prescribed from time to time by house of Assembly of the state.

(h)     Provision and maintenance of public conveniences and refuse disposed.

(i)      Registration of all this and deaths, and marriage.

(j)      Assessment of privately owned houses or tenement for the purpose of levying such rates as may be prescribed by the house of assembly of a state, and

(k)     Control and regulations of;

  • Outdoor advertising and hoarding;
  • Movement and keeping of pets of all descriptions..
  • Shops and kiosk.
  • Restaurants and other places of food to the public

The functions of local government council shall include participation of such council in the government of a state as respects the following matters:

(a)     The provision and maintenance of primary education;

(b)     The development of agriculture and natural resources other than the exploitation of minerals;

(c)      The provision and maintenance health services,

(d)     Such other functions as may be conferred on a local government council by the house of assembly.

In order to carryout these function effectively and efficiently the constitution made a number of financial provision for local government councils.

According section 7(6) provides that:

(a)     The national assembly shall make provision for statutory allocation of public revenue to local government councils in the federation; and

(b)     The house of assembly of a state shall make provisions for statutory allocations of public revenue to local government councils within the state.  And to make these provisions operations and constitution under section 149 (4), (5) and (7) provided that: “The  amount standing to the credit of local government councils in the federation account shall be allocated to the state for the benefit of their local government on such term and in such manner as may be prescribed by the National Assembly.  Each state shall maintain a special account to be called “State joint local government account” into which shall paid all allocations to the local government councils of the state from federation account and from the government of the state.  The amount standing to the credit of the local government councils of the state shall be distributed among the local government councils of a state on such terms and in such manner as may be prescribed by the house of assembly of the state.


The sources of local government revenue may be classified into:

(a)     External sources, consisting of general allocations, specific grants from both the federal and state governments, and contributions from other local government and advances from banks in the form of overdrafts and loans raised within Nigeria.

(b)     Internal sources, consisting of community taxes and rates, general rates (such as property, tenement, capitation and commercial services as well as license rents and fees form advertisement, bakery houses hawkers permits, birth and death registration; burial dog, goldsmith, liquor, bicycles; cattle dealers, dane gun, cart and barrow licenses.


(i)      Most important, the chief executives and top management should show more commitment in revenue collection and motivate the revenue staff adequately.

(ii)     The local government should, under normal circumstances, seriously involve the traditional rulers the ward councilors, and agents (ie tax/rate agents) in the enlightenment of the community on the traditional revenue items rather than embark on selfish activities.  They should maintain peace in the communities, and above all, suggest ways of improving revenue generation and collection in their various communities.

(iii)    The government should exploit their traditional revenue items and embark on commercial activities, in order to expand their revenue base.  His Highness, the chief of Dass and Ministry for local government Bauchi State emphasized that; “Local government should be encouraged to invest in the capital of commercial compares where each year they will be entitled to a part of the annual profits”.

(iv)    The public should be educated to appreciate that payment of taxes and rate is a civil responsibility.

(v)     Train revenue staff on public relations and human relation engineering so that they will improve their treatment of members of the public while carrying out their duty of revenue collection.

(vi)    Adequate logistic and security support should be provided for revenue mobilization.

(vii)   Members of the public should be motivated to pay their taxes and rates promptly and willingly.  This of course is the duty of the local government for the most part, and can be done by giving the people value for their money in terms of provision of amenities in the local government area.

(viii)  It is very important to build an accurate data bank of all revenue source to minimize revenue linkage for effective internal control system.

(ix)    Finally, the 20% federal government revenue allocation to local government should be increased to 35% or the additional financial burdens of primary education, MAMSER, Better Life Programme etc, on the local government be removed entirely.


Webster’s defines structure as the arrangement of parts.  In the word of Samuel Humes and Eileen Martin, “the structure of a local government is the framework within which public policy is determined and implemented.  It is the structure of a local government, which enables the institution to reconcile the seemingly contradictory demands for popular government, and effective administration made of it.

Central to the notion of structure is the issue of size.  The structure of a local government is normally an outgrowth of the attempts to reconcile these two competing and often contradictory claims on the institution within a defined environment.s

One great motivation for local government reform in modern times is the attempt on the part of policy makers to build local institutions that approximate as closely as possible the boundaries of the community.  Such as institution, it is argued will generate community aspiration and participation necessary for social development and foster the existence of functionary efficient local institutions.  However, the problem in each case has always been to identify what is the ‘ideal’ community for local government.

Unfortunately, the notion of ‘community’ itself is nebulous and subject to the definitions proposed by the enquirer.  From the viewpoint of local government structure, one student of the subject has suggested the use of twin concepts of the community.  The objectives notion, which emphasize the area dictated by political rationality and the functional efficiency of local government unit.  On the other hand, the subjective understanding of community will be the people’s notion of community, “the areas to which people feel they belong”, or the ‘natural community’.  Most reform efforts try to strike a middle course between these two extremes.

However, in the last sub-chapter we discoursed in detail the functions of local government and its detail the functions of local government and its sources of revenue.  It is important to note that all the statutory and public service functions of local government in Nigeria should be concentrated in multipurpose single-tier institutions called local government with complete and self-contained budgets so that the whole system of local government within any area can identified coasted and co-ordinated.  Where appropriate, specified functions can be delegated by these local governments to subordinate councils to which financial allocations could be made from the local government budgets.

All local revenue would be those of the local governments, all subventions from the latter being expenditure items in their budgets.

The term “tier” is used in this context as meaning a set of local governments with there own identity, powers and sources of revenue established under state legislation and with functions for which they are responsible to the state.  Subordinate councils, which are created by them and derive their funds by allocations from the “parent” local governments do not comprise a separate tier but are parts of the tier comprised of the parent local government.  a tier should have substantial functions developed to it, i.e. it should be made directly responsible for these functions subject to control by state government, as distinct from functions delegated in which case the organisation performing them is merely delegated or agent of the responsible principal.

In order to achieve sufficiently large scales of operations to be able to perform all the types of functions reasonable economically.  Whilst remaining sufficiency local, local governments should as far as possible, 150,000 and 800,000 provided that these limits may be varied in exceptional geographical circumstance, and provided further that there should be no upper limit to the size of local governments covering major towns so as to ensure that each town is within a single unit.

Sample analyses have shown that where total population is significantly less thatn 150,000 – 300,000 overhead costs as well as trained manpower problems are considerable.  Above this range there appear to be few economic of scale (there would be if for example secondary education where local government subjects), but large and sluggish bureaucracy, and distant from the people are the dangers.  There is not much reason for local government if its scale  and method of working do not conform to the main criteria (i.e the definition and functions which local government should perform).  Other factors, such as physical area, are important.  If two large even with small population, remudenceses, from some of the people arises.


Regardless of population, no town or city should be split between two primary local governments.  The whole planning area surrounding a town should be in the same primary local government as the town itself this apply not only to places which have been formally constituted as planning areas, now but those which are likely to be so constituted within the next two years.  Where two or more towns, whether they are actually contiguous or not, are nevertheless, close to each other as to make up a conurbation, the while should with planning peripheries, be in the same local government area.  Urban local government should be exceptional.  No urban area with a population of less than 150,000 should be established by separating it from each surrounding former division(s) and even at that level, the remaining area should not have less than 150,000 inhabitants.  The special requirement of towns within local government areas can best be catered for by subordinate town or ward councils.


At the other end or the scale, local government with less than 150,000 total population are in some cases inevitable especially where population densities are very low, but local governments covering less than  150,000 should be kept as far as possible.  In no state should the average population of local governments be below 150,000.  Only in this way can more sophisticated services be provided.  Very small local governments, apart from their facing financial disadvantages, cannot offer attractive career prospects for well – qualified staff.  Otherwise, one of the fundamental objectives of the reforms, which are to raise the quality of local public services, will not be met.  Poor quality staff are unlikely to provide good quality services.

In all cases where a state government proposes to establish a local government with a total population of less than 150,000, prior clearance should be sought form the chief of staff, supreme headquarters.  This applies to any proposed or existing local governments.  Pending this clearance such creations of small local governments should be regarded as provisional.  Applications for clearance to create or retain small local governments should show reasons not only why some sort of local government today is required in an area with a population below 150,000, but also why his should be a primary local government, i.e. why a subordinate council under a larger local government would not be satisfactory.  The clearance is necessary to ensure that funds allocated are not dissipated on overhead payments for mini-governments instead of using such funds for development.

In conclusion, however, it is not the intention of government to destroy the organic unity of the traditional chiefdoms Emirates or similar institutions.  Where a large traditional emirate or chiefdom is to be subdivided into several local governments, the letter will not become “Emirates” of acquire new traditional heads.  The local governments will be modern functional institutions.  The traditional emirates and chiefdoms will remain, although their functions will be changes to accord with the present day circumstances.  By definition, the traditional institutions are those, which have been accepted and derive their strength over a history of many generations.

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