Page 1 of 18

Journal for Studies in Management and Planning

Available at http://internationaljournalofresearch.org/index.php/JSMaP

e-ISSN: 2395-0463

Volume 01 Issue 06

July 2015

Available online: http://internationaljournalofresearch.org/ P a g e | 167

An Evaluation of the Financial Mismanagement of Internally

Generated Revenue in Ife South Local Government of Osun

State, Nigeria

Omoleke Ishaq Ishola PhD1 and Ajayi Adeola2

Departmant of Public Administration Obafemi Awolowo University Ile-Ife, Osun State,

Nigeria

ajayifunso4christ@gmail.com

Abstract

This study focused on financial

mismanagement of Internally Generated

Revenue (IGR) in Ife South Local

Government. It also identified viable sources

of revenue in the Local Government and it

examined problems militating against

effective collection of revenue. This study

was necessitated by the need to ensure

prudent management of revenue in Ife South

Local Government of Osun State, Nigeria.

Primary and secondary sources of data were

utilized for the study. The primary data were

collected through structured questionnaires.

Respondents were selected from career

officers in GL. 03-16 in departments and

units of finance and supplies,

administration, primary health care,

agriculture, town planning and estate

valuation of the Local Government, thus 180

respondents were sampled representing

29.31% of the six hundred and fourteen

(614) staff strength of these departments and

units of the Local Government.

The questionnaires were administered using

descriptive statistical analysis such as

frequency and percentage value.

The study revealed that there are many

viable and non-viable sources of revenue in

Ife South Local Government, the myriad of

problems militating against effective

collection of the revenue and the poor

financial management of Internally

Generated Revenue which aptly explains

why the Local Government could not be

developed.

The study concluded that the share of Local

Government from the statutory allocation be

increased, routine auditing and post- auditing from the supervising ministry

should be encouraged and political office

holders and career officers should ensure

that the financial resources of the Local

Government are managed efficiently and

effectively.

Keywords: Financial Memorandum,

Internally Generated Revenue, Local

Government, Financial Mismanagement,

Statutory Allocation.

1.1 Background to the study

Local Governments in Nigeria are the third

tier of government in the country. According

to 1976 Local Government Reforms, they

have been accorded the constitutional

recognition. They have responsibilities to

provide social amenities to the communities

and they are given power to collect revenue

Page 2 of 18

Journal for Studies in Management and Planning

Available at http://internationaljournalofresearch.org/index.php/JSMaP

e-ISSN: 2395-0463

Volume 01 Issue 06

July 2015

Available online: http://internationaljournalofresearch.org/ P a g e | 168

within their areas to finance the provision of

the services.

There are many sources of Internal

Generated Revenue available to Local

Governments. These include tenement rate,

sign-post tax, television and radio licenses,

motor park rates, bicycle license, hawker

and fence permit fees, hackney permit, poll

tax, slaughter slabs and abattoir fees, liquor

license, investment from poultry farm and

tractor hiring among others.

Despite the myriad resources of revenue

available to the Local Government, many

local councils still fail to tap these revenues

maximally. The reason that can be adduced

for these failures directly competed to the

following: society’s attitudes towards taxes,

usurpation of viable sources of revenue by

the state governments, insufficient trained

staff, tax evasion, avoidance and concession,

poor accountability among others.

Budgeting control, financial memorandum,

general order, guidelines and circulars were

put in place as instruments of ensuring that

the available little revenue to the Local

Government are prudently managed. In spite

of all these, Internally Generated Revenue is

still mismanaged. The reasons given to these

anomalies, rest on total disregard for general

order, guidelines and circulars,

misinterpretation of financial memorandum

to suit personal interest of career officers in

the Local Government. Others are

ineffective budgeting control, diversion of

IGR funds into person use and finances of

federal and state agencies, poor auditing of

receipts and revenue ledger by internal

auditors.

Thus, this study focuses on examining the

financial mismanagement of Internal

Generated Revenue in Ife South Local

Government of Osun State, Nigeria.

1.2 Statement of the Problem

The most important problem confronting

Local Governments in Nigeria and Ife South

Local Government in particular is the

unavailability of sufficient resources for the

provision of basic amenities to the governed.

In essence and often times, the Local

Government depends to a large extent on the

allocation from the federation account to

finance most of her projects. This over

dependency on allocation from the

federation account has affected negatively

all Local Governments in Nigeria and Ife

South Local Government of Osun State is

not an exception. It is against, this

background problems that this study sets out

to examine the financial mismanagement of

internally Generated Revenue in Ife South

Local Government as possible alternative to

inadequate allocation from the federation

account.

1.3 Objectives of the Study

The objectives of the study are to

i. identify the viable sources of

Internally Generated Revenue

available to Ife Local South

Local Government of Osun State.

ii. assess the problems militating

against effective collection of

revenue in the Local

Government; and

iii. examine the financial

mismanagement of Internally

Generated Revenue in the Local

Government.

Page 3 of 18

Journal for Studies in Management and Planning

Available at http://internationaljournalofresearch.org/index.php/JSMaP

e-ISSN: 2395-0463

Volume 01 Issue 06

July 2015

Available online: http://internationaljournalofresearch.org/ P a g e | 169

1.4 Significance of the study

The study is important because the

loopholes in the management of Internally

Generated Revenue at the Local

Government will become opened to Local

Government Administrators.

Also, the study will provide information on

other sources of untapped revenue abound in

Ife South Local Government.

Hopefully, this study would also assist in

formulating solutions to the problems

confronting Local Government revenue

collectors in the collection of revenue which

other researchers and academic could draw

inferences.

2.0 Literature Review

2.1 Concept of Local Government and

Financial Management

Local Government can be defined as

“government at the local level exercise

through representative council established

by law to exercise specific powers within

defined areas. These powers should give the

councils substantial control over local affairs

as well as the staff and institutional power to

initiate, direct the provision of service and to

determine and implement projects so as to

complement the activities of the state and

the 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 institutions, that local initiatives

and response to local needs and conditions

are maximized (Federal Republic of Nigeria;

Guidelines for Local Government Reform,

1976).

Oyediran (1988) also considered Local

Government as ‘‘the government of local

communities essentially by means of local

agents appointed by and responsible to only

the central government”.

Hickey (1966) referred to Local

Government as “the management of services

and regulatory functions by local elected

councils and officials responsible to them

under statutory and inspectorial supervision

of central legislative and executive, but with

enough financial and other independence to

admit of a fair degree of local initiative and

policy making”.

Abubakar (1993) further defined Local

Government as “the governmental or

administrative unit closest to the people or

in general parlance, the grassroots”.

Local Governments are the closest

government administration to communities.

They enjoy political, legal constitutional,

administrative, financial and territorial

power. They help to ensure democracy at the

local level while bringing about socio- economic development in rural areas

(Aluko, 2009).

Adewale (2009) can be defined financial

management at the Local Government level

can be defined as the administration of the

ways in which local council derives its

financial resources, records, restricts and

accounts for their use. In other words, it is

the management of the inflows of funds into

and outflows of such funds council treasury.

He also added that financial management

practices are derived from a number of

sources:

i. The Constitution