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Problems and prospects of budgeting and budget implementation in Local

Government System in Nigeria

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African Journal of Business Management Vol.3 (12), pp. 836-846, December, 2009
Available online at http://www.academicjournals.org/ajbm
DOI: 10.5897/AJBM09.301
ISSN 1993-8233 © 2009 Academic Journals

Full Length Research Paper

Problems and prospects of budgeting and budget

implementation in Local Government System in Nigeria
Samuel C. Ugoh1 and Wilfred I. Ukpere2*
1
University of Lagos, Department of Political Science, Akoka, Lagos, Nigeria.
2
Cape Peninsula University of Technology (CPUT), Faculty of Business, Room 22, Commerce Building, P. O. Box 1906,
Bellville, Cape Town, South Africa.
Accepted 30 October, 2009

Local Government has historically provided services of importance to its citizens in rural and urban
areas in Nigeria. These services include provision of basic amenities like water, roads, health facilities,
education, etc. Of late, the role of local government in providing these services has attracted public
concern. Furthermore, it has generated national crisis as a result of increasing rate of poverty among
the rural people. Some scholars view this development to poor budgeting and implementation while
others associate it to the federal and state government’s interference. In this work, we are focused on
budgeting as it relates to the local government in Nigeria. The paper therefore, examines the sources of
finance of the local government and its autonomy considering the nature of fiscal federalism in the
country. It also tries to investigate the difficulties in budget process and implementation in Nigeria with
emphasis on the local government.

Key words: Budget, budgeting, local government, implementation.

INTRODUCTION

The invaluable role of the local government with the interference. Whatever may be the reason, there is
attendant development nearer to the people has become considerable emphasis, possibly an over-emphasis on
a relevant discourse of our time. Rural development is a budgeting in the federal government against the under-
matter of inner emotion. It integrates the people into the emphasis on budgeting practices and procedures in state
plans and policies of government. In fact, it is the one that and local governments in Nigeria.
demands outward visible and tangible manifestations of In this work, we are focused on budgeting as it relates
human well being on the part of members of community. to the local government. The paper therefore, examines
In Nigeria, Local Government has historically provided the sources of finance of the local government and its
services of importance to its citizens in rural and urban autonomy considering the nature of fiscal federalism in
areas which include provision of basic services like water, the country. The work also tries to investigate the
roads, health facilities, education, etc. Of late, the role of difficulties in budget process and implementation in
local government in providing these services has Nigeria with emphasis on the local government. The
attracted public concern. Furthermore, it has generated extent to whether the local government should overcome
national crisis as a result of increasing rate of poverty its problems of interference from both the federal and
among the rural people. Some scholars view this state governments is another concern of this paper. The
development to poor budgeting and implementation while paper is divided into four parts. The first is devoted to
others associate it to the federal and state governments introduction while part two is the theoretical perspective.
Budgeting process and its implementation is examined in
part three. The author has given prominence here
because of the conviction that the way in which revenue
*Corresponding author. E-mail: [email protected], and expenditure are grouped for decision-making is the
[email protected]. Tel: 27-735295587, 27-21-959-6013. most important aspect of budgeting. The last part of the
Fax: 27-21-7615126. paper deals with specific budgeting problems and
 Ugoh and Ukpere 837

prospects. in which the Chancellor of the Exchequer carried to

parliament the statement of the government’s need and
resources. In a simple meaning, it is the documents
MEANING OF LOCAL GOVERNMENT which are contained in the bag-plans for government
finances submitted for the approval of the legislature.
In the simplest language, local government means Thus, a budget is a comprehensive document that
management of the local affairs by the people of a outlines what economic and non-economic activities a
locality. Locality stands for a restricted area like a village, government wants to undertake with special focus on
a group of villages, a town or a city. A town or city, a policies, objectives ad strategies for accomplishments
village or a district are allowed by law to administer their that are substantiated with revenue and expenditure
local services through own direct efforts or their local projections.
authority in a manner suiting local needs peculiarities and The roots of the budget system are linked to the
wishes. In essence, it enjoys an autonomous status emergence of parliamentary control over the crown in
which entitles it to take certain legislative, administrative Britain. Earlier, the kings especially Charles II used to
and financial decisions including Budgeting though under impose taxes for the prosecution of wars and not for any
the conditions and within the limits of law. other thing. Following the revolution of 1688 and the Bill
Agbakoba and Ogbonna (2004:2) define local of Rights in 1689, came the provision that no man shall
government from legal perspective. They see it as: a be compelled to make any gift, loan or benevolence or
political administrative unit that is empowered by law to tax without common consent by Act of Parliament
administer a specific locality. The UN Division of public (Burkhead, 1956). In order to enforce this, the parliament
administration observes that local government is a reserved the right to authorize all expenditures made by
political sub unit of a nation (or in a federal system, a the crown. The extension of parliamentary control over
state) which is control of local affairs, including the government finance also came to embrace the
powers to impose taxes or to exact labour for prescribed supervision of the king’s personal outlays. The civil list
purposes. The governing body of such an entity is was established to separate the expenditures of the
elected or otherwise locally selected (Awofeso, 2005:98). crown from the expenditures of the state. As a result, the
Akpan (1967:50) says a local government implies the annual specified grant control of the crown revenues and
breaking down of a country into small units or localities other modifications made by successive parliaments
for the purpose of administration in which the inhabitants gave the complete financial control of the crown to the
of the different units or localities concerned play a direct parliament. This became the foundation of the budget
and full part through their elected representatives. system.
The most essential attribute of local government is its
representative and responsible nature. It means exe-
cution of local administrative powers must be controlled THEORETICAL PERSPECTIVE
by elected or otherwise locally selected representatives
who are responsible to the local community. The study adopts the functional approach to justify or
Irrespective of the perspective, the following are advance its arguments. The approach is necessary
certain. First, local government is a level of government because local government exist to promote democratic
with assigned legislative and executive powers to ideals which involve giving fair consideration to minority
executes and make policies covering a particular local views while allowing majority views to prevail. Also, it
government area; second, the constitution provides for its gives the citizens the opportunity to fully participate in the
establishment, defines its structures, functions, power affairs of the local council. Indeed, political participation
and sources of revenue; Third, the relationship between through representatives are discussed in the council and
the local government and central or state government is to get feedback are all visible in this approach.
clearly stated in the constitution; Fourth, in a federal state Most theoretical debates on local government
like USA or Nigeria, local government is constitutionally administration have been in the area of development.
recognized as the third tier government while in the Mackenzie (1964:8) notes that there is no normative
unitary state like Britain, local government is an extension general theory from which we can device testable
of central government. hypothesis about what local government is…” Whitaker
Jr. (1970:77) appears to have agreed on this view. He
suggested that “… no obstacle to analysis would arise
MEANING AND DEVELOPMENT OF BUDGET where there are universally accepted functions and
purposes of modern democratic local government but of
The word ‘Budget’ means the money bag or the public course, there are none”. In another argument, Wralth
purse which serve as a receptable for the revenue and (1964:27) argues that it is useful to think of the formative
expenditure of the state (Adams, 1998:104). In Britain for stages of local government in these terms; First, that
example, the term was used to describe the leather bag local government is an ‘organism’ that is, something that
838 Afr. J. Bus. Manage.

cannot be contained for ever or even for very long in a the sources of its being and then proceed through its own
particular set of statutes, rules and regulations but which environment to the point of its own expression and
is constantly adapting itself to new circumstances; fulfillment. These are virtues which can promote direct
Second, that it is related to habits, mode of life and participation and lead to self-help. In pursuing these roles
surrounding. What this scholar means here is that local for rural improvement, the local government helps its
government differs from one country to another or even rural population to identify desirable ends. The real need
within one country. Oyediran (1988:45) shares the same for rural development in the case of Nigeria is to enable
view. According to him, the concept of local government the people achieve desirable socio-economic and political
means different things to different people. changes without disrupting their culture. In physical
Gboyega (1987:14) says that, there are two basic terms, the rural areas are poorly developed and such
classes of local government; the first class attempts to neglect has attracted attention of many writers. The poor
justify the existence or need for local government on the quality of life and low amenity are at the alarming rate.
basic of its being essential to a democratic regime or for Even though, the food resources that support the urban
practical administrative purpose like responsiveness, centres are from rural areas yet the relation between the
accountability and control. The other class of theory see two has been exploitative in nature. Thus, multiplicity of
local government system as contradicting the purpose of programmes and diverse agencies for rural development
democratic regime. demands that orderliness and sanity be restored.
Mill (1975) justifies the establishment of local
government on three groups. First, he maintains that
certain functions of government are characteristically BUDGETING AND BUDGET IMPLEMENTATION IN
local and as such, should be locally administered and LOCAL GOVERNMENT
controlled; second, he believes that local government
gives a valuable opportunity for democratic grassroots The modern budget system has accompanied the growth
decision-making; Thirdly, Mill argues that local councils of representative government and governmental
are more easily held accountable to the local groups than activities. In most countries, the budget system was
central government and its agencies. He therefore, established first at the federal level and then spread to
claimed that the very object of having local representation state and local governments. As earlier mentioned, the
is in order that those who have an interest in common present study is concerned with the Budgeting process at
which they do not share with the general body of their the local government level.
country men may manage that point interests by Before the 1976 local government reforms, the federal
themselves. He attempted to distinguish between local government had no direct involvement in the local affairs.
and general functions of government, even though it is The local affairs were the exclusive preserve of state
difficult because almost all services can have national government. However, for harmonization purposes, the
implications. In the most recent time, the argument of federal government decided to reform the local
Mill has been reapplied by many writers. Prominent government. Federal government did not only create
among them are Bentham, Mackenzie, Laski etc who local government but also provided guidelines for its
argue that participation in local government gives first- establishment. Section 7(1) of the 1979 constitution
hand knowledge and makes administration concrete and recognized the power of the state to establish local
relevant to a locality. government. The 1999 Constitution, section 7(1) also
Thus, local government is effective weapon for recognizes this power. However, the constitution, under
channeling local pressures, anticipating and aggregate of section 8(5) demands that the National Assembly must
local interest, which may not necessarily coincide with the ratify any new local government created by a state
ideas of the central government. According to Mbiti government other wise the process of creating such local
(1975), the local government has a direct role to play in body would remain incipient (Constitution, 1999). This
the induction of social change in its area. In Nigeria for constitutional clause has been criticized and called for
example, the local government councils have had long removal in order to streamline the contradictions in
connections with the provision of support services such sections 7(1) and 8(5).
as roads, pipe-borne water, health institutions and edu- In fact, the clause has been the basis of a recent
cational and agricultural activities. Such tolerable good debate between the National Assembly and the State
road networks have in no small measure succeeded in Houses of Assembly. For instance, some states have
breaking the isolation of many communities from wider wanted to terminate the tenure of local government coun-
society through affording accessibility both to markets cil officials in April, 2002 after putting in three years. The
and farmlands. National Assembly which intervened was of the opinion
The direct perspective participating of community that the tenure should be extended by one year as to
development is one that sees the process as a means of equal the tenure of other elected officials at the higher
meaningful life for people in the communities. Onyeachi tiers of governments. The case was taken to the
(1995) is of the opinion that the community must be able Supreme Court which ruled in favour of the States. As a
to search out its way, drive its mind deep into the area of result, the local government councils were dissolved and
 Ugoh and Ukpere 839

fresh election conducted at the mercy of the States. The Having examined the various sources for revenue open
contradictory clause also account for the non-release of to local government, it is now germane to probe into how
the Lagos State Council funds by the federal government these resources are managed. Financial management in
during President Obasanjo administration in spite of the government generally consists of three major components
Supreme Court’s ruling in favour of the State (Akinboye, (i) budgeting, that is, the process of resource generation,
2006: 234). allocation and managements; (ii) accountability which
aims at honesty and judicious use of public funds and,
(iii) control which provides organizational structures for
SOURCES OF REVENUE effective implementation. Financial management is that
managerial activity which is concerned with planning and
There was no financial backing for local government to control of financial resources. Usually, local government
take off when the 1976 reforms came on board. What the councils translate their services through budget as it has
federal government did was a deliberate effort to fund the to do with financial plan or estimate of proposed income
body and as such, there was frustration in the allocation and expenditure for a particular period normally a year. It
of fund in the wake of the reforms. is the translation in financial terms of government
At present, local government derives its revenue from policies; a fiscal estimation of what government plans to
two sources: spend, where it plans to spend it on and how it intends to
source the funds (Agbakoba and Ogbonna, 2004: 65).
1. Internal source.
2. External source.
JUSTIFICATION OF BUDGET
The internal source of revenue comprises several
miscellaneous items aggregated together to provide the The essence of having governments in all the countries is
required fund to finance the enormous functions ascribed to provide for the security and welfare of their citizenry.
to local government. These include rates, taxes, fines However, this objective is possible when the government
and fees, etc. Truly, the internal revenue is meant to be ensures that various policies and projects aimed at
the most viable for any local body to discharge its fulfilling its economic and social obligations are fulfilled.
constitutional functions. However, this is not the case in The fulfilled obligations could be seen in the areas of
Nigeria. What we are saying here is that most local education, food, security, housing, healthcare, job
governments depend on the allocation grants from the creation and the provision of social amenities. In other
federation account for survival. words, the success or failure of any government is
Thus, the external source of revenue is made up of always measured on the basis of the provision or neglect
federal and state governments’ allocations. It may be of the welfare of the people. The pertinent question is
stated here that 20% allocation from the federation how can the government fulfill these obligations to the
account and 10% from the internally generated revenue citizens? What are the instruments or mechanisms
of the state go to the local government. The prevailing available to the government for the attainment of these
allocation formula from the federation account of the obligations? Answers to these questions find expression
country is: in the budget as may be seen later in this work.

i. Federal government 48.5%.

ii. State government 24.0%. PRINCIPLES OF BUDGETING
iii. Local government 20.0%.
iv. Special fund 7.5%. There are certain fundamental principles that accompany
the budgeting process. This is because of its importance
In sharing the federal grants, the state governments in the overall development of a country. These principles
receive the grants directly from the centre and passes aimed at making the entire process transparent and
them on to the local government. In essence, allocations participatory. They include:
to the local government are paid into the state joint local
government account. The state government rather than i. Comprehensiveness: Budget should be able to contain
releasing the funds as appropriate, often diverted it to all financial estimates that government intends to work
other uses. The federal government did not like the action with. There is need to ensure that no other funds or extra
and as a result, enacted a new act to regulate revenue budgetary expenditure is entertained.
allocation to the local government. The act provides for ii. Clarity: The documents called budget should be very
the establishment of the Joint Local Government clear for the people to understand and be able to make
Allocation Committee to monitor and ensure that all allo- input.
cations made to the local government are promptly paid iii. Regularity: Regularity should be maintained in the
in the state joint local government account (Akinboye, budget process. It means to present budget at a time
2006). suitable to tally with the beginning of every fiscal year and
840 Afr. J. Bus. Manage.

also to last for a specified period. departments to the defense before the various
iv. Publicity: Budget should be given an open publicity. committees of the legislature and debates in the floor of
The reason is that it affects the lives of the people and the Houses, the passage into law and the final
how their wealth is distributed and expend. implementation and monitoring.
v. Exclusiveness: Budgeting should be seen as an Preparation of budget primarily involves identification
exclusive financial process and nothing else. and setting of developmental goals. That is, it involves
vi. Accuracy: There is need to ensure that the revenue setting budgetary thrusts and policies based on the
and expenditure in a budget is correctly estimated. In development plan. In the federal government, the
essence, the estimates should be close enough to reality. responsibility of the president for the preparation and
vii. Adequacy: Budget estimates should represent the submission of budget is well established. At the state
needs of the government and the citizens. Budget also level, it is the statutory responsibility of the governor to
should be able to identify altogether the aspirations and prepare and submit the budget. In the local government,
problems of the government and the economy. the chairman form the government and invariably has
complete control over budget preparation but assisted by
Budget also is an important tool in governance and most the Finance Committee and other department heads.
relevant to the economic policy. It is the second most The process varies from state to state and is largely
important document after the constitution in any nation. It dependent on the amount of autonomy enjoyed by the
signifies that the budget is an expression of the council from the state government. Nevertheless, there is
constitution and statutes of a government which endow a standard that runs across most local governments in
the executive and legislature with designated financial the country. The budget process commences with a call
and managerial responsibilities. Budgeting has been circular from the Executive Committee consisting the
classified into different types. They are: Chairman, the Supervisory Councilors and other officials
(Secretary, Treasurer, Head of Personnel and Legal
i. Surplus budget: It refers to as a situation where the Advisers). They call on all relevant departmental heads to
expected revenue surpasses the expenditure. It has prepare estimates for the coming fiscal year.
been the dream of every government. Subsequently, the Heads of Departments prepare
ii. Balanced budget: It occurs the moment the proposed estimates of expenditure in line with the goals and the
expenditure is equalled to the expected revenue. This estimates of revenue expected as well as the sources
situation, however, is always difficult to attain. In fact, it expected. As soon as this process is concluded, each
requires a high financial prudence and acumen to department hands its own estimate to the local treasurer
accomplish. or finance officer.
iii. Deficit budget: The expenditure is higher than the The executive having gone through the budget esti-
projected revenue in this type of budget. This is where mates present it to legislature for approval. The method
government spent more than it earned. It came with the of approval also varies from one council to the other, that
need to finance government projects despite the non- is, while some require a simple majority, others would
availability of funds. require two-thirds majority for the approval. In every
iv. Supplementary budget: From its name, it means the democratic government, the legislature may approve or
budget made or initiated after the main budget is passed. reject the proposals of the executive and in some cases,
This type of budget is necessary if it is discovered that may modify the executive proposals. In this case, the
the earlier amount appropriated by the Appropriation Act legislature holds the executive accountable. The power of
for any purpose is insufficient; or there is need for the purse came to reside in the legislature in order to
expenditure on a purpose for which no amount has been prevent the executive from imposing willful and arbitrary
earlier appropriated. tax payments on its people. It is an expression of ultimate
v. Development budget: It refers to a budget plan over a legislative authority.
long period of time. It is usually incorporated as part of Having approved by the legislature, the budget is
development plan. forwarded to the state office for local government
committee for a review. This practice varies from one
state to another. In some states, the budget estimate is
BUDGETING PROCESS reviewed before it is sent to the legislative council while in
some others, it is the approved Budget that is sent to the
Budget undergoes some processes before it becomes committee for approval. The essence of the review is to
both a law and an economic tool. Budgetary process ensure that the council budget estimate meets with the
involves all centres, programmes and administrative units laid down procedure and practice. Also, it ensures that
of an entity in the development of periodic budget. It the budget is in conformity with the developmental plans
refers to the totality of the processes a budget passes of both the local and state governments. This is another
through before it finally becomes a document. It involves indication that shows the state has an input in the running
all the executive and legislative processes, that is, of local government council.
collection of estimates from the various government The next level is that of budget implementation. It is a
 Ugoh and Ukpere 841

Table 1. Lagos State Government, Ejigbo Local Council development area approved 2008
budget, consolidated Financial statement.

Estimated revenue 2008 Values

i. Internal generated revenue 18,500,000
ii. Statutory allocation from federal account 542,640,000
iii. Statutory allocation from state account 60,000,000
iv. Value added tax 278,880,000
Total 900,020,000

Estimated recurrent expenditure 190,020,000

i. Personnel cost (council staff) 181,750,000
ii. Teacher’s salary 278,250,000
iii. Overhead cost

Total 650,020,000

Estimated recurrent surplus

Estimated capital expenditure 250,000,000 250,000,000
Budget surplus

crucial stage for both local and state governments. This is PROBLEMS OF LOCAL GOVERNMENT BUDGETING
because money at this point is disbursed to the various
departments for expenditure on overhead costs. Suffice it Many problems have bedevils the local government
to say that the budget proceeds are spent on either Budgeting in Nigeria. As such, they have not been able to
capital or recurrent expenditure. Capital expenditure meet with their statutory obligations of bringing the gains
means the fund spent on developmental projects within of democracy closer to the citizens. Some of these
the fiscal year while recurrent expenditure refers to fund problems include:
spent on overhead cost like wages, rent, etc. Tables 1, 2,
3, 4 and 5 illustrate a typical budgetary process of Ejigbo
Local Council Development Area in Lagos State. Corruption and mismanagement
The significance of the implementation level in the
budgetary process is underscored by the fact that it is the Corruption is one of the major problems facing the local
stage when the council will give flesh to its developmental government. In fact, a mere mention of the local
goals and strategies. Thus, any government that government exudes corruption. The popular myth
effectively manages this level that such government propagated by the council officials is that the councils are
could be said to have achieved its set goals for the fiscal always short of funds. No doubt, the heavy funding that
year. Evidently, most local governments have failed to runs into billions of Naira as seen from the tables may not
excel at this stage due to poor implementation of the be enough because of the high level of corruption in the
budgets. councils. It has also been observed that most local
The budget control refers to the stage when the Budget government councils do not accord adequate regard to
is brought under external control to its performance and the budget process. The fall out of this situation is the
effectiveness. The Bureau of Local Government indiscriminate and unplanned execution of projects. The
Committee usually does the budget monitoring. It is also state governments which would have served as a check
the period of auditing council accounts by the Local are not free from this cankerworm. Evidently, there is
Government Audit Department. It may be pertinent to contract scams in all local government councils in
note here that this department is attached to the state Nigeria. These contracts are inflated and worse still, the
government perhaps to guarantee its independence. projects are not executed and thereby defeating the
However, the extent to this autonomy is everybody’s essence of budgets.
gaze. The role of the state government at this level is
doubtful. This stage, no doubt, should involve the civil so-
ciety within the local government. The involvement of the Skilled manpower
civil society goes a long way to ensure that budget funds
are spent on areas of priorities. Majority of local governments today are manned by officials
 842 Afr. J. Bus. Manage.

Table 2. Lagos State Government, Ejigbo Local Council development area approved 2008 budget: Details of revenue.

Head Sub-head Details of revenue Approved 2008 Approved 2007 Actual Approved 2006 Actual
estimate estimate JAN. - DEC. 2007 estimate JAN. - DEC. 2006
001 Taxes -
Sub-total -
Rates -
002 1 Tenement Rates 6,200.000 6,000,000 3,273,275.55 6,000,000 2,640,176.75
2 Land use Charge - - - - -
1 Towing of vehicles - - - - -
2 Liquor License fees 400.000 400.000 221.100 400.000 215.100
3 Eating/Food Regulation Fees 2,140.000 2.140.000 1.449.200 2.140.000 1.621.350
4 Marriage Registration Fees 200.000 200.000 198.500 200.000 160.800
5 Naming of Street 100.000 100.000 56.000 100.000 35.000
6. Radio/Television License Fees 500.000 500.000 316.650 500.000 250.000
7 Public toilet * Waste Disposal - - - - -
8 Pest Control and Disinfectant - - - - -
9 New Cemetery - - - - -
10 Burial/Vault Fees - - - - -
11 Health Users Charges - - - - -
12 Earning From Environmental Sanitation Services 170.000 170.000 144,000 170.000 85.000
13 Vaccine/Yellow Cards - - - - -
14 General Contractor Reg/Tentacles - - - - -
15 Trade License Fees 2.700.000 2.700,000 1.447.300 2.700,000 1,760,300

who do not possess the requisite leadership and toddlers. society, no matter how vibrant and enlightened,
managerial skills to deliver the gains of cannot achieve anything.
democracy to the people. Section 7(4) of the 1999
con-stitution makes provision that the qualification Lack of civil society participation
for election into the offices of the Chairman and Central/State governments interference
Councilors shall be the same as that of the The level of participation by the people is highly
election into the Houses of Assembly of a state. limited especially the local governments located at The 1999 Constitution confers powers that rele-
The constitution puts the minimum educational the rural areas. The reason is attributed to high gate the local governments to both the federal and
qualification for the election into the House of illiteracy level and the poverty rate. Thus, the psy- state governments. Evidently, this has created
Assembly of a state as school certificate. che of the people is very low. In addition, there is friction leading to the neglect of local bodies. The
However, this principle have not been followed no law that encourages civil society participation council is not given the necessary independence
and as such, made the councils the dumping in governance and also no access to information as practice in a true federal structure. In addition,
ground for illiterates or a starting point for political and participation. In the absence of this, the civil elections into the councils in most states have not
 Ugoh and Ukpere 843

Table 3. Lagos State Government, Jibo Local Council Development Area approved 2008 budget: Details of revenue.

Head Sub-head Details of revenue Approved Approved Actual Approved Actual

2008 estimate 2007 estimate JAN. - DEC. 2007 2006 estimate JAN. - DEC. 2006
1006 INTEREST RECEIVED AND DIVIDEND
1 Interest on accounts - - - - -
2 Dividend from investments - - - - -
Sub-total - - - - -

1007 REIMBURSEMENT/GRANTS
1 Grants from Federal government - - - - -
2 Grants from State government - - - - -
3 Others grants - - - - -
Sub-total

1008 MISCELLANEOUS
1 Identification letters 40.000 - - - -
2 Expenditure recovery - - - - -
3 Others 400.000 - - -
Sub-total 440.000 - 13.141.504.70 - -

1009 STATUTORY ALLOCATIONS

1 Federal allocation 542,640,000 626,000,000 160,884,492.74 408,000,000 542,640,000
2 State allocation 60,000,000 64,000,000 8,590,802.99 64,600,000 -
3 VAT allocation 278,880,000 197,000,000 - 178,000,000 -
4 Special allocation - 173,950,000 91,182,150.60 - -
Sub-total 881,520,000 887,000,000 273,798,951.03 173,950,000 -
Grand total 900,020,000 1,060,950,000 273,798,951.033 - -

taken place more than a year after they were these councils also are too small in size and thus, come to the local councils regularly and the state
dissolved. It shows that democracy in Nigeria have little or no resources from which to generate governments at times divert the allocation to
today is not practiced at the local government level. revenue internally. The internally generated satisfy other areas. In fact, it is in line with this
revenue of these councils is too small to pay the situation that the 774 local governments under the
wages and salaries of their junior staff not to talk aegis of the National Union of Local Government
Finance of embarking on any meaningful projects. More- Employees (NULGE) demanded for succour
over, the 10% of the internally generated revenue during President Olusegun Obasanjo’s admini-
Finance is another area of concern. Most of the of the state that is supposed to be given to local stration. The union was assured for an existing
local councils sources of revenue have been council is not forthcoming. Worse still, the federal constitutional backing in its quest for fiscal and
taken over by the state government. Some of government statutory allocation does not usually administrative autonomy.
844 Afr. J. Bus. Manage.

Table 4. Lagos State Government, Ejigbo Local Council development area approved 2008 budget: Budget overhead cost.

Head Sub-head Details of expenditure Approved Approved Actual Approved Actual

2008 estimate 2007 estimate JAN – DEC 2007 2006 estimate JAN – DEC 2006
2001 OFFICE OF THE CHAIRMAN
02 General services 8,000.000 10,500,000 4,333,615 16,900,000 12,329,450
03 Provision of security 1,700.000 5,000,00 4,475.00 3,500.00 1,500,000
04 Consultancy/Committee 1,000.000 - - - -
05 Conference/Seminars 2,500.000 - - - -
06 Executive statutory allowance 1,500.000 - - - -
Sub-total 14,700.000 15,500.000 8,808.615 20,400,000 13,829,450
672,500 10,000,000 3,644,000
2001A OFFICE OF THE VICE CHAIRMAN - - -
02 General services 2,500.000 8,500.000
03 Ad hoc committee 500.000 -
Sub-total 3,000.000 8,500.000 672,500 10,000,000 3,644,000

2001B INTERNAL AUDIT 2,000,000 2,500,000 755,000 2,000,000 2,382,500

02 General services
Sub-total 2,000,000 2,500,000 755,000 2,000,000 2,382,500

C
2001 INFORMATION UNIT 1,000,000 720,000 631,000 2,500,000 3,895.00
02 General services 6,000,000 2,880,000 3,288,920 1,000,000 260,000
03 Publicity 800.000 - - - -
04 Purchase of newspaper
Sub-total 7,800,000 3,600,000 3,919,920 3,500,000 4,155,000

2001D ENVIRONMENTAL 800,000 5000,000 20,000 - -

02 General services 8,000,000 4,700,000 3,545,000 - -
03 Environmental services 1,000.000 1,800,000 790,00 1,000.000 1,560,000
04 Refuse disposal 5,500.000 1,500,000 1,923.000 - -
05 Cleaning of drains/wastes 10E 3,000,000 - 3,000.000 -
06 Contribution to LAWMA 200,000 - - -
07 Maintenance of public toilet 15,500,000 11,500,000 6,278.000 4,000,000 1,560,000
Sub-total - - - - -

PROSPECTS problems without the supports of both federal and responsibilities without direct intervention by these
state governments. However, the local govern- higher tiers of governments. In the area of budge-
Evidently, local government cannot overcome its ment should be allowed to discharge some of its ting, the whole process should be the responsibility
 Ugoh and Ukpere 845

Table 5. Lagos State Government, Ejigbo Local Council development area approved 2008 budget: Details of capital expenditure.

Head Sub-head Details of expenditure Approved Approved Actual Approved Actual

2008 estimate 2007 estimate JAN. – DEC. 2007 2006 estimate JAN. – DEC. 2006
4001 AGRIC/RURAL AND SOCIAL DEVELOPMENT
01 Agric project 3,000,000 2,000,000 2,000,000 2,000,000 -
Sub total 3,000,000 2,000,000 2,000,000 2,000,000 -

4002 WORKS, HOUSING AND INFRASTUCTURE 6,000,000 33,000,000 - 34,000,000 -

01 Provision of street light 5,000,000 - - - -
02 Construction of new roads 70,000,000 84,200,000 80,535,493.88 78,000.000 49,668,878.51
03 Rehabilitation/surfacing of roads provision of water 6,000,000 11,500,000 720,000.00 20,500,000 -
04 Construction/maintenance of drains 38,000,000 80,500,000 31,103,582.80 80,000,000 80,139,399.00
05 Construction culverts 20,000,000 - - - -
06 Upgrading of cemetery 10E - - - -
07 Construction of public toilet 1,500,000 5,500,000 - 10,760,000 -
08 Regeneration of parks/roundabout 10,100,000 3,000,000 - - -
09 General administration 45,000,000 37,000,000 - -
Sub total 201,600,000 251,700,000 112,359,076.68 223,260,000 129,808,255.30

4003 COMMERCE FINANCE SUPPLY AND COP 2,000,000 1,500,00 - 1,000,000 -

01 Rehabilitation of Markets
Sub total 2,000,000 1,500,000 - 1,000,000

responsibility of the local Chairman and assisted i. General limitations that influence the total Management. The essence is to ensure compliance
by the local Supervisory councilors as well as expenditures. with budgetary requirement and consistency with
others like the Secretary and Finance officer. The ii. Specific limitations which mandate local the local development plan. The review should not
period for budget preparation should be fixed. It governments to fund particular expenditure items. last more than 90 days. Once the budget passes
may be between July 15 and October 15 of the review, it goes to the imple-mentation. It involves
current year. The document should be transmitted The legislative discussion of the budget estimate the release and actual disbursement for funds for
to the local council not later than October 16. The should be able to commence between October 16 the specified functions and projects. The program-
document also must consists of the estimates of and November 17. This would enable the ming of fund disbursement should be the duty of
income and details of the total appropriations to chairman to issue an ordinance on or before the work and financial plan and request of allotment.
cover current operating expenditures and capital current fiscal year. The budget review should At this level, emphasis is placed on prudent
outlays. Also, in preparing the budget, certain commence immediately after the authorization of disbursement of funds. Notably, it is always better
requirements must be followed. These require- the document. The document should be submitted that no cash overdraft is incurred at the end of the
ments which are like a form of expenditure within two weeks, for review by the reviewing fiscal year and due process should be adopted in
control include: office which is the Department of Budget and disbursing fund (that is, appropriate certificate of
846 Afr. J. Bus. Manage.

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