REVENUE GENERATION AND UTILIZATION IN THE LOCAL GOVERNMENT SYSTEMENT: PROBLEM AND PROSPECTS

ABSTRACT

This paper tends to examine the effectiveness of revenue generation and utilization in the local government system, the works is designed to address the issue on the problems and prospects of revenue generation and utilization in Owerri municipal since, the importance of revenue cannot be over emphasized in every aspect of life, it serve as a life wire of every business, which helps the organization to attain its goals for the purpose of clarity, this write up is divided into five chapters. In carrying out this study the researcher distributed questionnaire interviewing some responsible officials. Also hypothesis were formulated and tested using percentage and table analysis from the analysis of finding and test of hypothesis, the researcher made the following major recommendations were made. (1) the inadequate logistics and its problems to Owerri municipal council (2) the need for planning, budgeting and auditing in order to improve revenue generation in Owerri municipal council (3) the need for training and developments of workers in oweiri municipal. (4) the validity of communication system in Owerri municipal council.

 

 

 

 

 

 

 

TABLE OF CONTENT

Title page

Approval page

Dedication

Acknowledgement

Abstract

Table of content

CHAPTER ONE

1.0  Introduction

  • Background of the study
  • Statement of problems
  • Purpose/objective of the study
  • Research questions
  • Significance of the study
  • Scope and delimitation
  • Limitation of the study
  • Definition of terms

CHAPTER TWO

2.0 Literature review

2.1  introduction

 

CHAPTER ONE

The revenue generation and utilization in any local government can hardly be overemphasized. The organization more specially local government is known to have attained or sustained high level of economic growth and development without amply supply of funds and utilization of the establishment people of the locally are use to manage their affairs and achieved the set goals of the council. The above statement explain that local government system are established and expected to perform as well as  carryout specific responsibility in improving  the living standard of their local dwellers.

  • BACKGROUND OF THE STUDY

Revenue has been considered as a significant issue in the economic development of any nation. It’s importance cannot be over emphasized, be it the federal, state or local government. It serves as a life wire of every business which helps the organization to attain its goals. Revenue is of great importance to national planning and development.

The origin of revenue generation and utilization in the local government started with local government reform of (1976) constitution where local government as established to create impact in the generation of revenue for the development of people in the local government area. This (1976) constitution gave the rural people a sense of belonging in the allocation of “national cake,” since Nigeria constitution provides local government authorities with unique opportunities and challenges to achieve self generation of income for economic growth and development Akpan (1985: 43)

Again, the “1985” Nigeria constitution equally provide that local government authorities should benefits from the federal state government revenue to have these supplemented with their self generation revenue. All the efforts are aimed at making local government viable and self reliant.

These are a total of seven hundred and seventy four (774) local government councils in Nigeria including Imo State which has twenty seven (27) local government councils.

These local government areas are trying to generation enough fund to sustain themselves financially in these covers, these are many hindrance on the way to their success ranging from instability and poor condition of the economy, poorly conflicted road for revenue collection, uncooperative attitude of payee, insufficient industrial units, inadequate supply of social amenities etc. these problems standing against revenue generation government including Owerri municipal as a case study.

These problems have stimulated the researcher to move into a great mission through research in order in set up strategies to achieve these goals.

Poor revenue generation will no doubt prevent the council from rendering good services to the public. The researcher work is therefore set to examine the prospect and problems encountered in revenue generation in Owerri municipal and proper solution.

  • STATEMENT OF PROBLEMS

It can be observed that revenue generation is an achieve that needs skilled and experienced head in the since that it deals with several dependent and intendment various such as time, energy and labour. Again due to problem of the limited research of the people to satisfy their living very very well; revenue generation becomes difficult.

These problems includes insufficient industrial unit, poorly consisted road for revenue collection, micro- operative attitude of payee, inadequate

1.4 RESEARCH QUESTION.

  1. What impact has revenue generation and utilization in local government system?
  2. Inadequate revenue generation in local government system does it affect the council
  3. Is improper revenue generation reflects on the productivity in the local government. Supply of social amenities etc.

Therefore, this research work is design to investigate the various problems associated with revenue in the local government under study and proffer possible solution for efficient generation of revenue in Owerri Municipal.

1.3 OBJECTIVES OF THE STUDY

Based on the above, the study is designed to outline the following.

  1. To x-ray some of the problems militarily against revenue generation in Owerri municipal.
  2. To see if increase in revenue generation will aid quality income distribution in Owerri municipal.
  3. To find out if adequately generation revenue will promote economic growth and development of the area.

1.4 RESEARCH QUESTION

The study shames through revenue generation in Owerri municipal. Information was based on both primary and secondary data from board of internal revenue department, ministry of financial budgeting and economic planning department. Other loans without Owerri municipals were also covered in order to obtain sufficient information concerning the research work, more especially the revenue collector without this area.

1.7 LIMTATION OF THE STUDY

Within the period of this work, a lot of hunches where encountered, more especially the revenue collectors within the concern.

It is necessary to highlight in the course of carrying out the research they include. Financial contract.

Tine contract

Nonchalant alluded of revenue officers.

1.5 SIGNIFANCE OF STUDY

This research work is of paramount importance Owerri municipal authority and other similar local government areas because of the role of financial the organization and institutions.

The work will help to advice the researcher knowledge and enable him contributes in finding solution to the problem for which the research is based. The work will also enable to determine the possible course of failure in revenue generation and hereby guiding the government on the steps to take in solving them it will also be of immense benefit to the local government if it takes the findings and recommendations of this research into consideration when making polices and decision concerning revenue generation. This work will be a reference document or further research.

Finally, the research will contribute to the stock of knowledge and stimulate further research into the student matter by students and lecture in the family of and management sciences.

  • DEFINITION OF TERMS

Good research either demands that terms should be defined in right sense where they are used to remove any ambiguous measuring in pursuant of this relief; the following terms are defined as they are used in the study.

Revenue: This is defined as an income of the local government defined from taxes and other sources.

Taxation: This is defined as a compulsory payment made by individual, corporate bodies or institutions to government at institutions to government at internal for its substance.

Internal revenue: Those revenue generations with in the local government in a given, period.

External revenue: Are that revenue generate in a given e.g statutory, allocation from the federation account.

Personal income tax: This is tax which is imposed on individual’s wages, salaries and other earning it is usually progressive. It is also sum total of compulsory payment to government by citizens of certain percentage usually a year.

Statutory allocation: This is the mechanism for the country financial resources among the different tiers of government in the federation with the overall objectives of enhancing economic growth and development, minizing inter- government tension and promoting national unity Nworji (2004: 120).

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Aug 06

CREDIT MANAGEMENT AND THE INCIDENCE OF BAD DEBT IN NIGERIA MONEY-DEPOSIT BANKS

CHAPTER ONE

                                         INTRODUCTION

1.1       BACKGROUND OF THE STUDY

In a modern economy,there is distinction between the surplus economic units and the deficit economic units and inconsequence a separation of the savings investment mechanism.This has necessitated the existence of financial institution whose jobs include the transfer of  funds from savers to investors.one of such institution is the money deposits banks,the intermediating roles of the money-deposit banks places them in a position of “trustees´´ of  the saving of the widely dispersed surplus economic units as well as the determinant of the rate and shape of the economic development.The techniques employed by bankers in this intermediary function should provide them with perfect knowledge  of the outcomes of lending such that funds will be allocated to investments  in which the probability  of full payment is certain.However,in practise no such tool can be found in the decision of the lending banker.Virtually all lending decisions are made under creditors on uncertainty.The risk and uncertainty associated with lending decision, situation are so great that the concepts of risk and risk analysis need to  be employed by lending bankers in order to facilitate sound decision-making and judgement.This statement implies that if risks are to be objectively assessed,lending decisions by the money-deposit banks should be based less on quantitative data and more on principles too subjective to provide sound and unbiased judgement.Furthermore,the banks depend heavily on historical information as a basis for decision making.

Apparently aware of the inadequacies of his decisions base,the lending banker has often sought solace in tangible and marketable assets as security giving the impression that lending against such securities is an insurance against bad debts.this makes the banker complacent with  his loan portfolio.The increasing trend of provisions for bad and doubtful debts in most money-deposit banks is a major source of concern not only to management but also to the shareholders who are becoming more aware of the dangers posed by these debts.Bad debts destroy part  of the earning assets of banks such as loans and advances which  have  been described as the main source of earning and also determines the liquidity  and solvency which generate two major  problems, That is profitability and liquidity, has to earn sufficient income  to meet its operating costs and to have adequate return on its investments.

1.2    STATEMENT OF THE PROBLEMS

The problem for this study is to appraise the lending and credit management policies of a typical Money-deposit bank(the first bank of Nigeria Plc) with a view  of finding the causes,consequences  of bad debts in banks.Year after year,banks suffer much from the part of full loan extended which has  for one reason or the other proved unrecoverable.Banks lose millions of Naira in various  bad debts yearly and despite efforts by bank management, committee of chief inspectors and the bankers committee on the other hand,the wave of bad debts in banks is still on alarming proportion.This is gathered from a combination of literature reviews on the topic.

On the other hand,many banks experienced a lot of bad debts when the new government abandoned the project awarded to the contractors by civilian government.These contractors borrowed to execute the project awarded to them but could not repay the loan,due to government action on reramping the economy thereby abandoning the project.Other experiences were during the time of draught or poor rainfall and pest.These however  led to low harvest  which did not give the farmers enough  time to repay their debt.

Again, experience may arise in respect of lapses on the part of the banks credit officers.For instance, there may be excesses  over approved facility,unformatted facilities and expired facilities not renewed on time.In each of these cases the customer may easily  deny even owing the bank all or part of the amount.Money.deposit banks have always borne the burden alone,but this may not continue in  future as the banks may be unable to take the risk of lending more but when eventually they do,they would seek the best  way  they come out of the risk with a realistic reward which they are clearly failing to achieve at present.

     1.3      THE MAIN OBJECTIVE OF THIS STUDY

To determine and appraise the lending procedure of banks using first bank of Nigerian plc as a case study-with a view to highlighting the effectiveness and adequacy or otherwise  the credit management policy of Nigerian banks in reducing the occurrence and consequences of bad debts.

The other objectives are:

  • To highlight the rate at which inadequate collateral security provision by borrowers increases the incidences of bad debt in Nigerian.
  • To determine whether fund diversion has any effect on bad debt of money deposit banks in Nigerian.
  • To ascertain the extent to which government intervention in lending policies of money deposit banks has influenced bad debts in Nigerian money deposit banks.
  • To highlight the extent to which improper project evaluation influence bad debt of money deposit banks in Nigerian.
    • RESEARCH QUESTIONS

In view of the consequences of bad debt in Nigerian money deposit banks,it is neccessary to formulate some research question which will enable the researcher  formulate statistical  tables for testing hypothesis.

  1. Does inadequate collateral security provision by borrowers caused bad debt in first bank of Nigeria plc?
  2. Does fund diversion have any effect on bad debt of first bank of Nigeria Plc?
  3. To what extent has government intervention in lending policies of money deposit bank influenced bad debt in first bank of Nigeria Plc?
  4. To what extent does improper project evaluation influenced bad debt of first bank of Nigeria  plc?

 

1.5      RESEARCH HYPOTHESIS

The following  hypothesis were drawn as follows.

  1. Ho: inadequate collateral provisions by borrowers does not increase  the incidence of bad debt  in first bank of Nigeria plc.

Hi: Inadequate collateral provisions by borrowers  increases the incidence of bad debt in first Bank of Nigeria.

 

  1. Ho: Fund diversion does not affect bad debt in first Bank of Nigeria

Plc.

Hi: Fund diversion affects bad debts in first Bank of Nigeria Plc.

  1. Ho: Government intervention in lending policies of money-deposit banks

has no influence on first  Bank of Nigeria Plc bad debt.

Hi:  Government intervention in lending policies of money-deposit

banks have direct influence on first Bank of Nigeria Plc,bad debt.

  1. Ho: improper project evaluation has no significant relationship with bad debt in first Bank of Nigeria plc.

Hi:  improper project evaluation has direct relationship with bad debt in first Bank of Nigeria plc.

 

1.6      SIGNIFICANCE OF THE STUDY

It is hardly an exaggeration that the difference between the success and the failure  in the banking industry is in the effective management of the banks loans and advance.Efficient loan management is vital to the protection of assets and the achievements of adequate returns to investment.Though much work abound in the literature  of the techique of lending,the methods of securing such lending and the pitfalls that await the  unwary banker.By comparison it appears to be very  little in point on the subject of loan management and recovery.

A study of this subject will therefore be a welcome addition to the existing volume of banking literature.

Effective loan management recognized that beyond the application of sound banking principles whenever a loan is made,there is need for urgency in appreciating the point when a loan begins to look doubtful,in arriving at a decision as to the appropriate action and in taking that action.This will enable the bank  to at least obtain full payment including accrued interest  or at worst to mitigate the capital loss in the face of increased competition among banks,future profits are likely to be harder to come by and since bad debts are a charge against profits,it is appropriate that we review the methods,proportions and margins of lending to bad and doubtful debts.

Hence the significance of this study to bankers will enable them to appreciate an appraisal  of their lending and control mechanism now that they are expected to lend under tight monetary conditions.The economy as a whole will benefit from the study  because if the level of bad debts is reduced,banks will be left with more profits to enable them make the expected contributions to the development of the economy.

1.7        THE SCOPE OF THE STUDY

In the study of credit management in Nigeria, first  Bank of Nigeria Plc was used for my analysis.All references therefore relate to first Bank of Nigeria plc.

A Six-year period covering 1988-1993 will be studied.

1.8      THE  LIMITATIONS OF THE STUDY

The limitations of this study include some of unavoidable constraints and problems encountered in the process.They are as follows:

  1. i) FINANCE: The problem of finance was not left out in the course of research to this study. This type of study required adequate money and time to enable the researcher visit the  necesssary places for collection of data.Insufficient fund hindered an in-depth study of this research since it was financed from meager pocket money of the researcher.
  2. ii) NON-AVAILABILITY OF RECORDS: This is one of the most important limiting factors in the course of the study.This includes the problems of easily getting the appropriate data due to bureaucracy which hinders the information flow in the country.

iii)  NON-CHALLANT ATTITUDE OF BANK OFFICIALS: The reluctance of bank officials to reveal information on the need for this study,for fear of breach of duty of secrecy to customers exposure of banks administrative short-comings.

  1. iv) IGNORANCE OF RESPONDENT /BORROWERS: Most bank  customers were semi-illiterates  and most often it was very difficult to collect  adequate data required from them.
  2. v) TIME: Since this study is one of the many courses offered by the researcher,the researcher was constrained by time  to carry out an indent research on the study.

 

1.9           DEFINITION OF TERMS

DEBT: This is what one owes to another person.

LOAN: A Loan is a credit arrangement,a security is pledged and must be repaid with interest over a stipulated period of time.

OVERDRAFT:  This is a credit arrangement by banks to their customer to withdraw money over and above that what he has in the account.

DEFAULT:  This means failure to pay one´s debt for credit extended which has fallen due.

HYPOTHESIS:  This is a tentative statement of conclusion.It is a statement of claim which is to be proved right or wrong having been confirmed with facts.

Ho:  Null Hypothesis: the hypothesis that is being tested.

Hi:    Alternative Hypothesis: the hypothesis that will be accepted if the null hypothesis is rejected.

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Dec 19

An Evaluation of the Effectiveness of Financial Statements in Disclosing True Business Performance to Stakeholders

An Evaluation of the Effectiveness of Financial Statements in Disclosing True Business Performance to Stakeholders

Background Of The Study

In trying to meet the requirements of the users of financial statements, instruments like presentations as well as disclosure are being used to communicate performance and financial position of an entity (Choy, 2014). There is still a need for presentation as well as disclosure to be included in the Conceptual Framework in order to have clarity and reducing reporting fraud (Choy, 2014). Abed et al. (2016), Miihkinen (2013), Leaz and Wysocki (2015), Castillar-Polo and Callardo-Vazquez (2016) and Ramirez, Tejada and Manzaneque (2016) are among scholars who agree that disclosure is an abstract concept that cannot be measured in an unambiguous or precise manner. However, Liesegang and Bartley (2014), Alvarez and Barlevy (2015) and Abraham and Shrives (2014) argue that disclosure may be seen as symbolic window dressing, they are of little use to the readers of financial statements. This study sought to come up with level of trust that can be put by various stakeholders in measuring business performance through financial statements in the hospitality industry. The organisation under study shall be referred to as Lester-Lesley Limited in order to protect its name.

The directors of Lester-Lesley in line with the listing requirements and Zimbabwe’s Companies Act are obliged to keep and maintain the accounting records as well as preparing and presenting financial reports for every 12 months of its operations that reflects the state of affairs of the organisation (Choy, 2014). It is understood the Group has consistently applied and agreed to account standards as well as possibly applicable interpretations comes from IASB and IFRIC. For the period under review 2012, 2013 and 2014 all presentations were done in a manner prescribed by International Accounting Standards (IASs) and according to Auditor’s opinion in financial statements for the years under review; the financial reports were fairly and faithfully presented Abeysekera (2012). The financial reports mainly concentrate on the information required by investors, government and lenders because there is a statute requirement for disclosure on issues affecting these stakeholders. Employees, customers, suppliers and public are other stakeholders to the organisation but little or nothing is disclosed that concern them. There is no disclosure on employee policy, human rights policy, environmental matters although in 2014 they just highlighted on organisation’s contribution to the environment, among other intangible assets.

To show compliance and transparency to Lenders and Stockholders, according to annual financial reports for the period under review, the organisation’s directors reported return on equity of 7%, (37)% and (22)%, earning per share of 0.12, (0.8) and (0.28) and gearing ratio of 40%, 53% and 58% for the years 2012,2013 and 2014, respectively (Arvidson, 2011). These are issues that affect owners of equity and lenders, however, nothing was reported which has anything to do with the employee policy for example the retirement policy. At the 2013 workers’ council general meeting, the organisation’s workers council national chairperson argues that the entity should have a clear policy on employee benefits plan, the policy that is understandable to every employee, which clearly states terminal and postretirement benefits (Conway et al., 2015). On environmental policy the entity in its 2014 financial report highlighted that it has water and energy conservation and waste management as integral part of operations and will continue to seek initiatives to conserve environment in line with the Group’s value of Responsible Management (Choy, 2014).

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