An Evaluation of the Effectiveness of Revenue Generation Systems in Nigerian Local Governments: A Case Study of Enugu North LGA
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Background of the Study
Local governments play a pivotal role in grassroots development, yet their capacity to generate adequate revenue remains a recurring challenge in Nigeria. The effectiveness of revenue generation systems directly impacts their ability to deliver essential services such as healthcare, education, and infrastructure (Adeyemi & Babatunde, 2023). Revenue generation in Nigerian local governments involves statutory allocations, internally generated revenue (IGR), and external grants. However, dependence on federal allocations has hindered financial autonomy and growth in these subnational entities.
In Enugu North Local Government Area (LGA), revenue generation systems have historically been fraught with inefficiencies. These include outdated tax assessment methods, lack of digitalization, and resistance from taxpayers due to a lack of transparency (Eze et al., 2024). The rapid urbanization in the region further exacerbates these challenges, as the increased population places additional demands on public services.
Past studies have noted that the inefficiency in revenue systems stems from weak institutional frameworks, inadequate capacity of revenue staff, and corruption (Oluwafemi & Nwankwo, 2025). Furthermore, limited public awareness and participation in local governance reduce the willingness to comply with revenue policies. Addressing these issues is critical for sustainable development in local governments, as effective revenue systems enable them to achieve fiscal sustainability and improve service delivery.
Statement of the Problem
Despite their constitutional mandate to generate revenue, many local governments in Nigeria continue to struggle with inefficiency and underperformance in revenue collection. In Enugu North LGA, these issues have led to poor service delivery, affecting the well-being of residents. Challenges such as inadequate infrastructure, low accountability, and high administrative costs hinder revenue mobilization.
The reliance on federal allocations, which are often unpredictable and insufficient, further complicates matters (Umeh, 2023). Additionally, the lack of modern technology in revenue administration and low public confidence in government institutions exacerbate the revenue challenges in the LGA. While efforts have been made to address these shortcomings, a comprehensive evaluation of the existing revenue systems is lacking. Without this, policies and reforms may fail to address the root causes of inefficiencies.
Objectives of the Study
- To assess the efficiency of current revenue generation systems in Enugu North LGA.
- To identify factors hindering effective revenue collection in the local government.
- To propose strategies for improving revenue generation and financial autonomy in Enugu North LGA.
Research Questions
- How efficient are the existing revenue generation systems in Enugu North LGA?
- What factors contribute to inefficiencies in revenue collection within the local government?
- What strategies can enhance revenue generation in Enugu North LGA?
Research Hypotheses
- The existing revenue generation systems in Enugu North LGA are not efficient.
- Factors such as corruption and lack of technology significantly hinder revenue collection.
- Implementing modern revenue management practices will improve financial autonomy in the LGA.
Scope and Limitations of the Study
The study focuses on evaluating the revenue generation systems in Enugu North LGA, examining both internal and external factors influencing their performance. It will analyze revenue policies, administrative processes, and taxpayer behavior. The study is limited by potential access issues to financial records and the reluctance of stakeholders to provide information.
Definitions of Terms
- Revenue Generation Systems: Mechanisms and processes employed by local governments to mobilize financial resources.
- Internally Generated Revenue (IGR): Income generated by local governments from within their jurisdiction, such as taxes and fees.
- Financial Autonomy: The ability of local governments to fund their activities without reliance on external sources.
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