CHALLENGES OF EFFECTIVE UTILIZATION OF REVENUE IN STATE A CASE STUDY OF PLATEAU STATE

CHALLENGES OF EFFECTIVE UTILIZATION OF REVENUE IN STATE A CASE STUDY OF PLATEAU STATE


 

 CHAPTER ONE

INTRODUCTION

Background to the study

  Inadequate revenue generation and misuse of resources in a developing country such as Nigeria has posed a serious challenge which leads to high cost of living and poor delivery of public goods and services on the part of the government. Most importantly the mismatch of cost of living and internally generated revenue in the country has been heightened in the recent times, thereby resulting to poor state of the citizenry who can no longer afford the cost of goods and services. Internally generated revenue accruing to the three tiers of government in Nigeria is meant to be used in subsidizing the cost of education, food, health services, transportation and electricity for the common man in the country. This major aim is defeated as majority of people resort to self-medication and herbal remedies to avoid high cost of medical services. Due to lack of proper feeding, many fall sick and cannot get medical help even from government owned health centers due to lack of adequate facilities for work. Many parents cannot afford quality education that is now at the mercy of private individuals who wish to recover their heavy investment in the nearest future.

 Over the years, Plateau State has been generating revenue from the federation account and internal sources, but social services delivery is low. It is for this reason that this study investigates the utilization of revenue generated by the State on social service delivery. A few  studies have been carried out on revenue generation and utilization of government budgets. Majority of these studies, such as Adedokun (2016 .), Oriakhi (2013), Baghedo (2012) and Nebo & Chigbo (2015) were on revenue generation and utilization at the Local Government level or revenue generation and utilization at the Federal level. These studies did not relate revenue generation to social service delivery at the state level, except for Oriakhi (2013) that considered the relationship between revenue generation and service delivery in the federation (Federal, States and LGs) as a whole. Most of these studies used exploratory research design. However, this study intends to find the impact of revenue generation and its utilization on social service delivery in a state, specifically Plateau State.

Oladimeji (1985) describes revenue as the total income generated from federal, state and local government. He stated further that what makes local government as constitutional matters is the revenue sharing perspectives. However, Hepworth (1976) describes revenue as an income or funds raised to meet the expenditure. He added further that revenue is a rising resources needed to provide government services. He also stated that there are two

aspect so finance which are income/revenue and expenditure, in other words, the sources of fund and utilization of fund.

Fayemi (2015) defines revenue as all tools of income to government such as taxes, rates, fees, fines, duties, penalties, rents, dues, proceeds and other receipt of government to which the legislature has the power of appropriation. He further classified government revenue into two kinds, i.e. recurrent revenue and capital revenue. The process of sourcing for revenue by governments is called revenue generation.

Revenue generation in Nigeria is principally derived from taxes and non-tax sources or oil and non-oil sources. Tax is a compulsory levy imposed by government on goods, services and income of individuals and companies for the various legitimate function of the government (Olaoye, 2008). When the compulsory levy is on the income of individuals and corporations, it is called direct taxation, whereas where the compulsory levy is on goods and services, it is referred to as indirect taxation. In the same vein, Buhari (2011) states that there are two forms of taxes; direct taxes, which include taxes levied directly on individuals and business firms and indirect taxes, which include taxes levied on goods and services.

Olowononi (2000) broadly defines revenue allocation to include allocation of tax powers and the revenue sharing arrangements not only among the three levels of government but among the state governments as well. Under government's distribution function, it redistributes incomes and resources to promote national unity and equity (Jimoh, 2003). Revenue allocation can be described as a method of sharing the centrally generated revenue among different tiers of government and how the amount allocated to a particular tier is shared among its components for development (Dang, 2013). After collection of their share of revenue generated and allocated by the federation, the three tiers of government add independent (federal government) or internally (states and LGs) generated revenue (IGR) before utilizing the total revenue for the provision of public services via the budgets. The state governments mobilize revenue from within and outside their states.

With the present dwindling of crude oil prices in the global oil market, Nigeria's revenue from crude oil, which is the major source of Nigeria's federation account has materially gone down. The reality is that in recent times the revenue mobilized from the federation account is hardly enough to meet the immediate needs of the states. It is the responsibility of the state governments to look inwards for ways to mobilize more IGR. When these revenues are mobilized through revenue generation and allocated to different sectors of the state through budgeting, the revenues are expected to be utilized to provide social services to the populace.

1 .2    STATEMENT OF THE PROBLEM

The relevance of the    State government   is measured by the quality and quantity services rendered to the  State government and local dweller.

     For State government to render meaningful services, in form of provision of basic amenities, construction and maintenance of roads, creation of employment opportunities for the citizens and pay staff salaries as and when due, money is undoubtedly required.

Without the availability of revenue, a State government  will not only be incapable of serving the people but will undoubtedly crumble. It therefore, follows that for the  state to discharge its statutory functions effectively, it should not only be adequately funded  by the federal government but such fund should be efficiently applied.

One of the fundamental problems in  State government financial administration is the issue of Effective Utilization of Revenue Available to the  state government.  Peatue state   may have tits unique problems that militate against its financial administration. The problem of delay in payment of federal  grants to the  state government, The problems of accountability, Another problem is that of ineffective financial control and management both internally and externally. Also the problem of financial mismanagement and embezzlement of available funds in  the state

Finally, the problem of corruption are the major challenges that militate against the utilization of  state  revenue.  Based on the above challenges the research intended to investigate challenges of effective utilization of revenue in state a case study of plateau state

 

1.3            PURPOSE OF THE STUDY

The  main purpose of this research work is to investigate the Challenges of effective utilization of revenue in state a case study of plateau state

Specifically, the study intended to find out

1.           The study is meant to identity the major revenue sources available to State government .

2.           To ascertain the problems that confront the  state  in utilizing revenue for their services.

3.           To find out whether or not the revenue is adequate for the state expenditure.

4.           To investigate the system of financial control in Pleatue state

SIGNIFICANCE OF THE STUDY

The significance of any human endeavour is measured by its relevance to solving human problems. Therefore, the significance of the study is measure by its relevance to solving the problems of effective utilization of revenue available  to state  governments in Nigeria.

The project will be of benefit, first and foremost to the Pleatue state, as it will expose to them potential sources of generating of revenue internally.

 Secondarily, it will help the  State government to strengthen its financial bases as this study would highlight some identified problem hampering the utilization of revenue in  the state.

Thirdly, it will also be useful to the indigenes of  pleatue state    to co-operate with  other local council administrators to  enable them build a viable State government by paying their taxes and rates promptly.

Fourthly, the project will be useful to various institutions in nigeria, for gaining greater knowledge and understanding of the challenges of effective utilization of revenue available to  state.

Finally, the project will be useful to the general public, organizations, companies etc that may have interest in the project.

Delimitations (scope) of the study:

This is centered on the challenges of effective utilization of revenue available to state in Nigeria but due to the wide or vast nature of Nigeria, the researcher now  Plautue state as a case study to deal with this particular problems in other states in Nigeria.

The study is also centered on the sources of revenue available to  State government   both the internal and external sources of revenue.

Limitations (constraints) of the study: 

In the effort of carrying out this research bathe researcher was faced with the problem of time, finance.

          The researcher being a student, found it difficult to get exeat out of the school premises and the time frame given was so limited in carrying out the research work. Also, the distribution and collection of the questionnaire to  some  staff of revenue generatiron  was not easy for the researcher as the respondents were not always available.

The study was carried out under a lot of constraints. The class work and financial constraints were other limitations which made it uneasy for the materials to be ready available at the appropriate time.

1.6     RESEARCH QUESTIONS

In the effort of carrying out this research, the following questions were formulated:

1.     What are the major revenue sources available to state government?

2.     What are the problems that confront the  state  in utilizing revenue for their services?

3.     Is   revenue generated by Plaetue state adequate for the state expenditure.

4.     What are the system of financial control in Pleatue state


 

 

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