CHAPTERONEINTRODUCTION
Internally Generated Revenue (IGR) is the revenue that the local government generates within the area of its jurisdiction. The primary source of local government sustenance is from Federal Allocation. It is the livewire of a local government. The extent to which a local government can go in accomplishing its goal will largely depend on its IGR strength. The capacity of local government to generate revenue internally is one very crucial consideration for the creation of a local council. But various studies as Akindele and Obiyan,(2002), Ekpo and Ndebbio(1998), have shown that local governments in Nigeria depend solely on statutory allocations from the federal government. In recent times though, there have been dwindling pattern in the federal allocation because most of the federal government revenue is from petroleum proceeds. There is less demand for petroleum in the world as other developed nations of the world are shifting away from petroleum as source of energy to other sources such as gas, solar energy e.t.c. Then the onus lies on the local government to work on their internal revenue efforts to be able to accomplish its goals in the local community. Local governments now face more challenges in terms of struggling to be less dependent on the Federal and the state governments for financial resources. Though, the revenue allocation system mandates that a certain fraction of the Federation Account be allocated to local governments, these funds are not enough to meet expenditure requirements. This is because the size of the account is related to revenue from oil which is subject to fluctuations and the expenditures of local government far exceed available resources. The problem of lack of fiscal transparency as a result of mismanagement of funds, corruption, poor internal control and lackadaisical attitude to government work and property still abounds. The question that comes to mind is that if the statutory allocation is not forthcoming, if oil is de-emphasized in the economy what would be the lot of local governments? How are they to survive if this should occur?
1.1 BACKGROUND OF THE STUDY
Orewa (1986:180), in his book titled “Local Government Finance in Nigeria”, described and discussed various sources of revenue open to local governments and problems in the collection and management of their finance. Such problems are-shortage of trained manpower, ignorance of the councilors over their duties and non-commitment to duty on the part of the staff and councilors alike. Adediji (1979:87) , blames poor internal revenue generation of local government on the following reasons
a. Lack of proper structure
b. Low quality of staff and
c. Lack of mission and comprehensive functional role. According to him, these problems lead the local government into vicious circle of poverty. This is due to the fact that inadequate funding results in employment of low skilled and poorly paid staff. Bello- Iman (1990:134), in the same vein states that “ the major constraint to internal revenue generation in local government is the shortage of well trained and qualified personnel which supposed to serve as tool for collection of taxes and rates at the local level”. According to him, even the few available are not properly trained in efficient budgetary and financial Management systems. Also most of the local governments are short-staffed to carry out their duties”. R.A (1959:89), noted that “poor auditing has contributed immensely to problem of internal revenue generation of local governments”. According to him, “local governments should have a means of ascertaining whether it’s financial operation is properly conducted, this can only be done through audit”. Therefore the research seeks to investigate the impediment of revenue generation in Eket local government.
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