This study is on the impact of local government finance on efficient service delivery in Nigeria. The study examined the relationship between revenue generation and service delivery. The study used survey research method. The primary data was collected through the use of questionnaire in soliciting information from the respondents about the management of revenue generated and services delivered. Pearson chi-square was used for data analysis to show the relationship between effective management of local government revenue and level of service delivery in the local governments. However, it was found that there is a significant relationship between local government finance and efficient service delivery in Nigeria and there is a significant relationship between internal generated revenue and development in Ojo LGA




Nigeria is the most populous country in Africa, with a population of 170 million, 65 percent of whom live in rural areas. In the pursuit of development at the grassroots, local government was created to provide efficient services to dwellers at the local levels. Everywhere in the world, irrespective of the system of government, local government is created to ensure efficient services at local level. In Nigeria, local government is the third tier of government whose major responsibility is to provide efficient services to the rural dwellers, a service that hinges on proper financing. Local government finance is one of the aspects of public finance. It deals with the generation of revenue, expenditure and utilization of financial resources in order to bring the impact of government closer to the people at the grassroots. Put differently, finance is essential at enabling local governments transform the lives of the rural dwellers through the provision of social services and rural infrastructures like the construction and maintenance of rural roads, markets, schools, health centers, etc. Finance is the heart of the major activities of government. Government units at all levels-national, State and Local are daily engaged in the production and distribution of public goods and services in areas such as agricultural extension, education, healthcare, social welfare, security, all of which involve huge amounts of money. The mobilization of the financial resources or revenue to meet the diverse welfare needs of the people has in effect become an important responsibility which governmental authorities have to shoulder. This responsibility not only includes the generation of revenue but also its allocation among competing needs of the local governments. It is within this context that we can appreciate the task of revenue collection at local government level (Abubakar, 1999).

Finance, otherwise known as money or fund occupies a very prominent position in organisations, be they private or public. Indeed of the many factors that do affect organizational performances, none is greater than finance. Finance is the engine room of all organizations including local governments (Idahosa and Nchuchuwe cited in Olojede, Fajonyomi and Fatile, 2011). It has become imperative in view of the fact that in recent time, since 1976, the role of the local governments as a veritable instrument for rapid development of rural, and even the urban areas have taken a central stage albeit without a corresponding access to prerequisite financial resources to meet this expectation. Interestingly, the sources of funds for this tier of administrative authority have continued to dwindle over the years with the ascendancy of both the central and state as the key actors in the Nigerian political economy. The local government is relegated to the backstage. Adedokun (2012), clearly made this situation explicit by asserting that “the federal structure of Nigeria constraints local government’s ability to mobilize and use revenue to meet their obligation in a sustainable manner”. He notes further that One of the recurrent problems of the three-tier system in the country is the dwindling revenue generation as characterised by annual budget deficits and insufficient funds for meaningful growth and development. Therefore, it behoves the students, scholars and other stakeholders of public administration to tarry, and ponder on how this meagre financial resource could be properly and effectively harnessed in order to enable local governments implement their constitutionally assigned functions and responsibilities. Undoubtedly, Finance and its prudent management are the bedrock of effective functioning of local government. It is against this backdrop that Tonwe (cited in Ojo 2009) argues that local government require 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. Nigeria’s experience in local government administration, whether in military regimes or in democratic era, has clearly shows that local government is faces with daunting challenges in their mandate to promote development and provides essential services to the rural dwellers. Sadly, local government which is statutorily established to be the closest tier of government to the people is not doing its bidding coupled with the fact that resident population in it is denied the benefits of its existence. The failure of the local governments in the area of services delivery has made the citizens to lose their trust in government as an institution. In some areas, council officials are better known for the harassment of citizens than service delivery (Ajibulu cited in Adeyemi, 2013).

In spite of the increase in total amount of funds available to Local Governments from early 1990s to date, their economic and financial profile have been very poor, relative to its development due perhaps to false declarations of statements of revenue by revenue collector‘s and treasury staff, political instability and lack of socio-political philosophy among others. Mope, (2015) argued that in nominal terms, the allocation which stood at N597.2 billion in 2005 jumped to N1, 379 billion in 2008, reflecting a marginal revenue increase of 130.9%. However, some challenges which served as impediments to Local Governments‘ efforts to generate adequate revenue from various sources. Many factors have been identified to be responsible for the inadequate internal revenue effort. Chief amongst them are corruption and weak machinery for check and balances in the generation of revenues. Preliminary survey has shown that the inability of the local governments to provide adequate services to the people within their areas of jurisdiction is attributed largely to inadequate revenues.


According to Ojo (2009) local governments have performed below expectations as a result of poor management. In recent time, lack of funds has often been attributed as the major problem which had hindered effective and successful execution and completion of many projects at the local government level. However, experience has shown the contrary that poor finance management, rather inadequate finance is the bane of local governments’ inability to achieve substantial development in their domain (Tonwe cited in Ojo, 2009). It is common knowledge that local government has the weakest capacity to initiate and manage rural development programme. This is due to the fact that the quality of human resources available at local government level is seriously insufficient. Most of the officials are performing their function without the relevant qualification to perform effectively. As a result, the available resources for accelerated and sustainable rural development are inefficiently utilized for the purpose intended (Ocheni et al cited in Adeyemi, 2013). However, the implication of this according to Ajibulu (cited in Adeyemi, 2013) is that local government is now considered as an extension of state’s ministry. The inherent nature of this problem has caused subservience, a situation where local government waits for the next directives from states government before embarking on any developmental projects. This has made local government an object of control and directives. Hence, it is important to investigate the impact of local government finance on efficient service delivery in Nigeria with a special reference to Ojo Local Government Area (LGA).


The main objective of the study is to examine the impact of local government finance on efficient service delivery in Nigeria. While other specific objectives are:

  1. Investigate the impact of local government finance on efficient service delivery in Nigeria.
  2. To determine the relationship between mismanagement of fund and development at the council level.
  3. To find out the relationship between local government internal generated revenue and development in Ojo LGA.
  4. To provide plausible recommendations and way forwards to the problems of local government finance on efficient service delivery in Nigeria.


The following under mentioned hypotheses will be tested in the course of this research study.


Ho: There is no significant relationship between local government finance    and efficient service delivery in Nigeria.

Hi: There is a significant relationship between local government finance       and efficient service delivery in Nigeria.


Ho: There is a significant relationship between internal generated revenue and development in Ojo LGA.

Hi: There is a significant relationship between internal generated revenue and development in Ojo LGA.


The study provided the basis for developing various ways of improving revenue generation in Ojo Local Governments Area and in other local governments‘ areas in Nigerian. With an improved revenue generation, Ojo Local Government Area (LGA) will be able to meet the demands of the people and will be able to perform their primary functions of provision of essential services more efficiently. The study also revealed the extent to which an improved revenue generation will impact on development generally. The study is an added contribution to the existing knowledge on revenue and service delivery in Local Government and ways oimproving the two. The research will also help other researchers who may wish to carry out research of similar nature.Scope and Limitations of the Study This Project focused on the study of local government revenue and service delivery in Ojo Local Government Area (LGA).


As with any other research, there were restrictions or constraints that the researcher encountered. The limitations of this study include:

  1. Financial constraint: It is an established fact that every research work consumes a lot of money. Therefore, the financial requirement for gathering data, typing of the project subsequently and other related expenditure served as a major constraint to this research work.
  2. Responses while gathering data For some reasons best known to the officials of the Local Government, the authorities were not willing to release some information which is relevant to this research project, even after persuasion and being assured that the information sought will only be used for academic purposes alone. This refusal to release some vital information by the Local Government was as a major constraint to this research work.


ADMINISTRATION: This refers to the government or leadership of a country or state like Nigeria.

SERVICE DELIVERY: A service delivery framework (SDF) is a set of principles, standards, policies and constraints to be used to guide the designs, development, deployment, operation and retirement of services delivered by a service provider with a view to offering a consistent service experience to a specific user community in a specific locality or organization.

FINANCE: The management of large amounts of money, especially by governments or large companies.

FINANCIAL MANAGEMENT: Financial management is defined as the act of total management function concerned with the effective and efficient raising and use of funds. As processes and responsibility, financial management consists of decision making regarding the following major activities among others.

  1. Determination of funds requirement of the organization revenue generation and mobilization.
  2. Seeking and obtaining the right amount of funds at the right time for cash flow management
  3. Deploying available funds to the needs of the organization revenue application and control, and
  4. Giving proper stewardship for funds obtained and utilized (Abubakar, 1999)

Internally Generated Revenue (IGR): This refers to the revenue or money collected by the local government from its internal sources (within the Local Government Area). The internal sources of revenue comprise many major and miscellaneous items aggregated to provide the required fund for financing the enormous functions ascribed to local government as third tier of government (Abubakar, 1999).

LOCAL GOVERNMENT: An Local Government is defined as 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 (including staffing) and institutional and financial powers to initiate and direct the provision of services and to determine and implement projects so as to complement the activities of the state, and Federal Government in their areas, and ensure, through the active participation of the people and their traditional institutions, that local initiative and response to local needs and conditions are maximized (Federal Republic of Nigeria, 1976).

SERVICE DELIVERY: According to this research, service delivery refers to all the goods and services delivered by the local government in responses to the public needs in order to address societal problems. The services here include provision of schools facilities like books and chairs; hospital facilities like beds and drugs; agriculture, farm inputs and machines like tractors, fertilizers and seeds.


This research work is organized in five chapters, for easy understanding, as follows Chapter one is concerned with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and recommendations made of the study.



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