Evaluation Of Challenges Of Financial Management In Nigeria Local Government System

Evaluation Of Challenges Of Financial Management In Nigeria Local Government System

Abstract

The third tier of government in Nigeria is known as “Local Government”; it was established to assist the higher tiers of government, i.e., the federal and state, in bringing about effective rural development and good governance at the local level. Financial and physical evaluations of the performance and efficacy of the third stratum of government revealed that this level has underperformed. This investigation examines the challenges of financial management in the local government system of Nigeria. A case study of the Ivo local government council in Ebonyi State was conducted in order to anticipate and discuss exhaustively the factors that impede effective financial management in the Nigerian local government system. It was recommended that local government councils adopt and implement efficient financial administration in order to maximize the use of scarce financial resources. This is necessary for the development of enticing infrastructure and the provision of social amenities, which will in some way improve the standard of living at the grassroots level.

Second Part

Introduction

1.3 Context Of The Study

According to Aborisade’s (2003) definition, financial management in any local government is the art of raising and spending money, which are two of the most important factors for any local government.

Financial management in any local government system is analogous to a vehicle with many parts; if one part, especially the engine, is not properly maintained and guidelines are not strictly adhered to, it can cause damage to the vehicle, which in turn affects the various other parts and prevents the vehicle from functioning, or in relation to our topic, prevents the local government or organization from performing its function. Local government is responsible for ensuring the efficient delivery of services to the public. For any organization to deliver its functions efficiently, a substantial quantity of money is required, and efficient financial management must be implemented.

In accordance with Orewa, G.O. (1991), finances must be managed with care and in accordance with financial regulation. The goal is to evaluate the council’s efforts to generate funds internally to supplement those from state and federal sources, and then to recommend a course of action that will facilitate the improvement of the situation. It is said that resources are limited and that want is unquantifiable. The same can be said of any government, whether local, state, or federal. It is appreciated that the role of financial responsibilities can be fully recognized in achieving other local government objectives.

Again, the issue of participatory democracy cannot be completely consolidated in financial management because it has not been sufficiently researched. Since it is impossible for all citizens to serve in government, representatives represent the majority. The only time the general populace participates in government is when their representatives are held to account for their stewardship. The utmost level of stewardship is fiscal responsibility.

This is necessary because governments exist to promote the well-being of their citizens. Therefore, stewards are always required to do this for the populace, whom they represent.

Finance is the backbone of any functional organization, whose ability to achieve its goals and objectives depends on the efficiency of its financial administration. If our local government’s finances are well-managed, there is no doubt that the organization will not achieve its goals and objectives.

When local government finances are mismanaged, the opposite effect occurs. The depressed state of the nation’s economy contributes to the shortage of funds experienced by local governments. Management is the sum of planning, organization, personnel, directing, leading, and controlling.

According to Pendey (1996), financial management is the management activity concerned with the planning and administration of a company’s financial resources. For any organization to achieve sound financial management, the functions of financial management must be effectively carried out.

This research therefore concentrates on the challenges of financial management in Nigerian local government, with our case study focusing on the Ebonyi State local government council. Additionally, the significance of finance in the Nigeria local government system cannot be overstated due to its contribution to the growth and development of any functioning organization, Nigeria local government included.

1.4 Description Of The Problem

This study was conducted to identify and analyze the council’s low internally generated revenue and the obstacles that impede efficient and effective financial resource management.

This research aims to address the following issues.

Determine the reasons for the mismanagement of local government finances.

To identify those responsible for the mismanagement of local government finances.

To determine whether the local council has appropriated sufficient funds.

To develop strategies to assure proper accountability within the council.

1.3 Research Question.

What obstacles impede effective and efficient local government Finance management?

What are the primary sources of income for local government councils in Nigeria?

What are the repercussions of mismanagement of finances in local government administration?

1.4 Objective Of The Examination

The following shall comprise the study’s purpose.

Identifying the issues or obstacles that impede the financial administration of the Ivo local government in Ebonyi state.

Examine and expose the prevalent effects of financial mismanagement in local government in Nigeria.

Determine the source of local government’s funding in order to fulfill its local responsibilities.

1.5 Significance of the Research.

To encourage additional research.

To assist policymakers.

It is considered literature by the broad public.

This study is of great significance to local government employees because it will shed light on their activities by highlighting their weaknesses and strengths.

1.6 RADIUS OF STUDY.

The investigation was limited to the Ivo local government territory. Nonetheless, the study examined the numerous sources of funding for the local government system in Ebonyi state and Nigeria as a whole.

1.7 LIMITATION OF THE STUDY

Throughout the course of conducting this investigation, numerous obstacles were encountered.

The inability to obtain accurate, current, and relevant data was the most significant limitation of the study.

1.9 Definition Of Terms

Our glossary will emphasize local government, finance, management, financial management, and local government challenges.

LOCAL: This pertains to the specific region you line in.

GOVERNMENT: This is the institution in large societies responsible for making and enforcing collective decisions.

LOCAL governance: This refers to the governance of smaller units within nations or states, typically at the country, town, or district level.

FINANCE: This term refers to the purchase and sale of legal instruments that confer on their proprietors the right to a series of future cash flows.

MANAGEMENT: This is defined as the process of combining and utilizing allocation organization inputs (men, material, and money) by planning, organization, directing, and controlling in order to produce outputs (goods and services) that achieve the desired organizational objective or are the result of the accomplishment of the desired organizational objective.

FINANCIAL MANAGEMENT: This is the aspect of management primarily concerned with raising funds in the most cost-effective and appropriate manner.