Local government is that level of government nearest to the people. It is said to be corner stone of the government system in any country.
The federal government believes that it is only through an effective local government system that the human and material resources of the nation could be mobilized for local government with its objectives is aimed at standard and stabilizing the function and financial resources at the local government level and to encourage initiatives and leadership potential.

The basic procedure of local government is revenue mobilization and its effective utilization especially more that there is no comprehensive study on sources and uses of funds in the local government.

The current trends of inefficiency and ineffectiveness of the local authorities should be considered with the frame work of available resources.

If the financial resources of the local of the local government are boughant and viable than this will go a long way in communicating strength and solidity to offer superstructure of government authorities.

There are no discipline on the part of the leadership, management and staff of the local government in collecting revenue efficiently and also try to put them into effective use.

In the tight of the above, the researcher major objectives as regards this research work was to identity those source of finance available to local government, their uses and problem associated with their finance in Nigeria using Ezeagu central Local government development Council ad my case study.

The problem associated with sources, uses of local government finance was critically examine in this project.

In handling the above research work primary and secondary data was used. The sources of primary data was by the use of questionnaires and oral interviews, while the secondary data sources are text books.

The analysis of data was based on percentages. It is on the strength of the finding that recommendation and conclusion was made.




The term Local government has been defined by many scholars with different view as regards its development. W.A. Robinson (2000) states that ‘Local government’ involves the conception of territorial non-sovereign community processing the legal right and the necessary organization to regulate right of its own affairs. This I turn presupposed the control, Vis-à-vis participation in state affairs.

According to U.N. Akpan (1999), out of various possible conceptions of the local level development, two have been particularly dominants in Nigeria since the colonial time. The first was christened the indirect rule system and is infact no other than a field administration model.

Gboyega Alex (1998), state that nation wide ordinance establishing the model first in the Northern provinces and later in the southern provinces was promulgated by the colonial government in 1916, two year after the analyation of the Northern and Southern protectorates Indirect rule was actually the rule by the British colonial officials through local chiefs in terms of its philosophy and practice, the emphasis of their model was the colonial regulation of conquered people and so did not encourage popular participation and representation in the native authorities. It was therefore, strictly different from the pre colonial structure of Government which emphasis balance of power and popular participation. Indirect rule distorted these pre-colonial institutions. The model was also not human development although it led to the beginning of a net work of infrastructures of roads, schools and dispensaries, through with the collaboration of native authorities, the colonial central government and missionaries.

Local Government has sources of revenue of their own such as community taxes and rates, Licenses and fees, earnings and sales, Federal and state statutory allocation etc. After the Second World War, the political development between Nigeria and /Britain led to the abolition of the indirect rule system and its replacement which emphasized full grown local government which was effuient particularly and relatively autonomous. The eastern region was the fist to embark on the experiment on 1950 while the other regions followed in 1952. A few years after wards precisely in 1976, the federal military government announced the reforms of the nations local announced the reforms of the nations local government system. Essentially, the reform resuscitated the idea of participatory and autonomous government which have access to resources both internally and externally to improve the social the economic of the various communities. The question as to why there was this sudden change of direction from at the earlier emphasis on local rules through traditional rules and bureaucrat was carefully examined. The request for autonomy becomes administration particularly since 1970’s. The anticipation of the autonomy came through the 1976 reforms. Actually 1979 constitution made the anticipated a reality, thus the period between 1976 to 1979 can be defined as the period when the idea of local government in Nigeria came to include autonomy for the level of government.

However, the autonomy expectedly remained circumscribed because of control Viz; financial, administration, judiciary, auditory and even miscellaneous which the various state governments exercised in local governments exercised in local government. The most prominent control is on rinace which affects local government development.

The term “finance” encompass personal finance, business finance, business finance and public finance.

According to mautia joy (2001) finance was defined as the art of providing the means of payment or as a body of facts, principles and theories dealing with the raising and using of finds by individual, business, firms and the government. Our interest in this project lies in the problems of rising and using of funds by the local government will emphasis of Ezeagu Central Local government development council.

Thus, a Uniform system of local government through the guidelines for the local government went on to identify the executive functions of local government.

According 1999 constitution section 7 sub section 1 (b) (e) (j) (i) (vi) of Nigeria constitution states various ways the local government can source its funds, although these ways has remained grossly in adequate for maintaining capital and recurrent council. Lack of adequate finance and subvention has been of the defects responsible for the indecency.

Until the revenue allocation act was biplated and received in 2002 by the revenue allocation fiscal commission, at he federal government has operated a system of block grants and subventions to local government through state government. Since the money coming from the federal account to the joint state and Local government did not directly.

3. Is there and financial authority of the local government?


To guide research, the following hypothesis was formulated.

1 Ho: The available funds are able to meet the expectations and serve

of the local government.

H1: The available fund are not able to meet the expectations and services of the government.

2. Ho: the fund available to the local government authorities are not

prudently managed.

H1: The fund available to the local government authorities are not prudently managed.

3. Ho: The Local government is under fundered partly. From the

federation account

H1: The Local government is under fundered partly. From the

federation account

4. Ho: There is financial autonomy of the local government.

H1: There is no financial autonomy of local government


The factors militating against a successful performance by the local government authorities may be dual in native. They be managerial and financial in native. They be managerial and financial in native. Finance is an important part of most organizations decision, and a clear understanding of the way in which decisions are made is essential if the role finance is to be seen in its true perspectives.

Finance is very crucial because if influences planning and achievement pf set objectives.

Local government being the level of government nearest to the people is the corner stone of the government system in any country. If the financial resources of the local goal area buoyant and viable then this will go a long way in community strength and solidarity to other super structures or government authorities.

The important of local government in the nation must be recognized. It is not a profit oriented organized. But a service oriented one and this will surely affect its revenue. To respective local governments, federal presence level of government.

It has been notice that the allocation to the local government have not been steady. The flunctuational of the statutory allocation always put the local government of their budgets estimate for any given year. In most financial year the realization on revenue is spent on recurrent expenditure for running the council while little or noting is left for capital expenditure. This accounts for the absence of development projects by various local government will be elaborated in table in chapter four.


Ezeagu Central local Government Development area is one out of seventeen local government area and thirty nine development centers of Enugu state, ie the total of fifty six local government area in Enugu state. It occupies a geographical western position in the state. It is located at Mgbagbuowa and also surrounded by Ezeagu South, East and North West local Government area.


The basic problem of local government includes:

1. The problem of revenue mobilization and its effective utilization.

2. Accountability of funds and properties of the Local government.

3. The problem of effective displine leadership in the local government.


a To examine the problems in local government finance and establish the factors responsible for poor revenue generation and ineffective execution of the local government programs and project.

b. To identify the problems especially as it affect finance with a view of making adequate recommendation for improvement


1. Are the availability of funds able to meet the expectation and services of the local government?

2. Are the funds available to the local government authority prudently managed?

The Significance of this study is there, to find ways of improving local government finance for effective channeling, implantation and executive of the program with in Ezeagu Central local government Council as my area of concern.


Local Government/Authority: The third tier system of government after the state federal government.

* Finance: – A body of fact with the raising of fund by local government authorities it encompass personal, business and public finance.

* Local levies: – these include all the internal source of revenue collected within the local government area.

* Local Government Allocation: The percentage of funds, the Local authorities gets from the national fund.