Administrative and Financial Management in the Local Government System
ABSTRACT
The main purpose of this study was to examine administrative and financial management in the local government system in Mkpat Enin Local Government Area. Research questions and hypotheses were formulated to guide the study. Related literature was reviewed. Research design for this study was descriptive studies which focused on studying a situation or a problem in order to explain the relationship between variables, and used scientific method which involves observation and describing the situation. The population of this study includes all the local government functionaries and indigenes of Mkpat Enin local government area of Akwa Ibom State. The study adopted probability and non-probability sampling methods through which the representative sample or sample population were employed for the purpose of the convenience of the researcher. The probability sampling technique deployed for this study is the simple random. The instrument for data collection was questionnaire designed by the researcher.
Data derived from the questionnaires were analyzed using frequency tables and simple percentage method and chi-square. The result of the findings revealed that, the success of financial management at local government level depends on the vibrant, efficiency and effectiveness of the treasury department. The finance and treasury department is the pivot department for all financial administrations. Therefore, the success or failure of local government lies on the way and manner the financial management is being administers and maintained. Effective administration and financial management will enhance rapid development at the local government level and ensure efficient allocation of scarce resources, in addition, a sound internal audit unit and control will add value to a good and sound financial management in revenues collections and expenditures disbursement.
Administrative and Financial Management in the Local Government System
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
All over the world, government adopts various strategies and approach for good governance at the grassroots level. The government at the grassroots is called local government. Local government exist through the process of democratisation and full participation of citizens at the grassroots level in decision making. Its establishment is to serve two purposes, firstly, as administrative body for providing goods and services for the need of the citizens within the locality.
Secondly, as a democratic set-up for full representation of community members in decision making at the local government level. Local government plays a vital role in socio- economic development of the grassroots, either rural or urban setting. It is the government that is closest to the grassroots by making governance and service delivery available to citizens at the community level. It also aid the development of the grassroots administratively and politically. According to Sikander (2015), social, political or economic development becomes meaningful and real when it comes from the grassroots which is the lowest society’s level.
Mbieli (2018) stated that no nation can be termed developed when its villages are lagging behind and its cities going ultra-modern. It is the local government that balance the equations between the cities and the villages through developmental programmes in order to achieve public policies. Globally, government has pursued various form of public financial management reforms to enhance local government performance in areas of accountability, transparency, rules of law compliance and service delivery to the generality of the citizens within the community.
Finance is the fuel of any form of administration, either private or public. At the local government level, it constitutes the lubricants for the wheel of good administration. According to Aborishade and Marshall (1981) cited in Hassan (2011), finance is a thread that runs round the cloth, if the thread is pulled wrongly at one end, it will affect the design of the cloth and destroy its beauty. Therefore, finance in any organization must be handled with care and must be disbursed according to laid down rules and regulations.
A sound financial administration is the core of good efficient, effectives and equity which are the guiding principles of financial management. Efficiency is the ability to achieve maximum results at minimise cost, effectiveness deals with expenditure relevance in meeting the management objectives, while equity ensures justice and fair play in all management activities. The overriding factor in local government financial management is the basic operation of financial services in a competitive, efficient and cost effective manner. Besides, the efficient management of local government finances is constrained by the political impunity of state governors and this has undermined grassroots developments (Otinche, 2014).
Financial administration which is the crux of financial management is the art and science of financial planning, coordinating, organising and evaluating of local government financial resources in order to achieve the best objectives, goals and performance targets. The objective of financial management in Local Government aligns with the three components highlighted above. Olowe (2011) defined financial management as the management of business finance in order to achieve business or organisation objectives. The word management connotes planning, coordinating, controlling and monitoring organizational financial resources. At the Local Government level, financial management is the appropriate steps taking to ensure proper revenues generation and further utilisation of such financial resources in line with Local Government objectives, goals and citizen’s expectation.
In Nigeria, the major challenge to local government administration is funds, this has dwindle over times due to economic depression and financial melt-down while in the recent time, this has been aggravated by the event of COVID-19 pandemic that occurred all over the world. This financial meltdown has contributed to the low space of growth and development in local government in areas of socio-economic developments and provision of viable developmental projects. The number of abandon projects in local government due to lack of funds because of mismanagement, misallocation and inefficient uses of funds is enormous, thereby jeopardising the well-being of the citizens within the locality. This poor financial management approach has contributed to the basic failure and inefficiency of some local government in achieving substantial development of their locality, while in recent times, this had led to lack of trust, faith and confidence in local government administration. Besides, the persistent hijack and control of local government statutory allocation and financial resources by some state governors, has also negatively affects the performance of these local governments in carrying out their constitutional responsibilities.
The introduction of state joint local government account has reduced the power of financial autonomy and strength to advanced sustainable development at the grassroots. In some instances, joint account is used to compel local government to engage in joint project(s) with little or no relevance to the citizens within the local government or projects that is outside the immediate needs of that locality.
Wada and Aminu (2014) opined that state and local government joint account allocation committee coupled with much supervision of various ministries and agencies have made the financial autonomy of local government a mirage. At present, most local governments faces the problems of wide gap between citizens’ needs in their locality and the financial resources required for meeting such needs or demands. This gap occurred at times due to population increases; misallocation of functions and revenues; the high cost of standard of service required in areas such as education, health, environment, water infrastructure and others; leakages in internally generated revenues through pilferages, corruption and lack of will of revenue officers; and inefficient machineries to produce and deliver good public goods and services.
As a key players in the provision of fundamental basic public services delivery, most local government in developing countries, faces rapid and chaotic urbanization due to impacts of frequent natural disasters caused by climate change (UN-Habitat, 2015). Also, there has been high level of negative perception of financial management in local governments. This at time, due to inadequate internal control system to checkmate the excessive fraudulent activities on revenue collections and insertion of ghost employees’ names in the local government payroll system, this has resulted in loss and leakages of funds which is tailored towards mismanagement and corruption pertaining to local government administrations. This has resulted into local government failure in its responsibility of meeting citizens’ demands in the provision of public goods and services.
Local Government needs to plan to ensure that enough financial resources are available at all time in order to meet the needs of the Local Government expenditure in achieving the set goals and objectives. Good financial management enhances an effective management and functioning of local government administration. Financial management are beneficial to the local government when financial resources are properly planned and executed in the best interest of the citizens. Finance is very important to any organization whether private or public sector as all expenditures in various department either capital or recurrent rest on the availability of required financial resources.
Finance is an applied field of management and it differs from accounting. Accounting is concerned with measuring, recording and reporting of economic and social activities at the local government level, using double entry principles and control in keeping organisational financial data. Accounting data are historical in nature but could be a better pointer to the future. Accounting is all about timeliness, relevancy and quality of financial information while finance uses accounting information to make economic and social development decision that will achieve the desired objectives and goals. Financial management has become a things of interest to academician, financial managers and policy makers at the local government level, termed grassroots governance.
To the academicians, the focus is how the practice of financial management can enhance financial resources planning and control at the local government level. To the financial managers and policy makers, since most decision at the local government relates to financial resources, better understanding of the theory of financial management along with its conceptual and analytical knowledge in decision making is required.
Financial management in modern day approach has grown beyond revenue collection and payment of expenditure but includes the rigorous financial decision making in areas such as investment, capital budgeting, project management and sound financial control. Therefore, a sound financial management practices in local government will aid long term economic, social, and infrastructural sustainability of local government in Nigeria. This study aims to examine administrative and financial management in the local government system in Mkpat Enin Local Government Area become imperative.
Administrative and Financial Management in the Local Government System
1.2 Statement of the Problem
Local government as a third tier of government was established with specific functions to assist the federal and state governments in enthroning effective rural development and good governance at the grassroots level. However, the local governments system in Nigeria has failed to accelerate socio- economic and human development, mainly because of inadequate funding. Adebayo et al (1973) argues that inadequate funding has contributed immensely to the failure of local governments to perform their primary functions.
Apart from generating funds through local taxes, the major source of revenue is through statutory allocations from the Federal and state governments. To this effect the federal government is mandated to remit 20% from the Federation Account on a monthly basis to local governments through State Joint Local Government Account while each state is expected to pay 10% of its internally generated revenue to its local government councils (Okafor, 2010).
This financial arrangement is often distorted by the lack of genuine autonomy of local governments as their funds are rarely provided state governments. It has been observed that local governments in Nigeria do not have substantial degree of financial autonomy to engage in any meaningful development. Local governments have over the years suffered from the continued whittling down of their powers as state governments have continued to encroach upon what would normally have been the exclusive preserves of local governments and consequently there has been a divorce between the people and government at their most basic levels.
It has also been observed that, there is the lack of development in rural areas on poor financial management, which has over time hampered the completion of public projects, especially those that has to do with the provision of social welfare services. Most public projects in Nigeria are abandoned because of corruption. According to Aghayere (1997) corruption has for a long time has rendered local government administration inactive and devoid of concrete development activities.
Corruption is predominantly wide spread, undiluted and unambiguous in the local government. It is a statement of fact that in the local government system, corruption has become all pervading, unabashed, uncontrolled and persistent. Corruption within the local government system is mainly perfected through; inflation of prices; ghost workers syndrome; award of contracts and subsequent abandonment; and outright payment of huge sums of money to political godfathers, etc.
In enthroning financial prudence and effective management of local government funds, a financial memoranda was developed. The financial memoranda is an internal control mechanism aimed at guaranteeing accountability within the local government system. Due to poor supervision, socio-economic factors, biting inflation and sapping conditions etc, most local governments are not financially accountable and do not adhere strictly to the provisions of the financial memoranda.
The implications of poor management of local government funds cannot be overemphasized. Presently local government councils exist only in name not in service delivery as many local governments lack basic infrastructure such as; electricity, water, hospitals, roads and schools. Mismanagement of resources in the local government has also heightened; poverty, illiteracy, unemployment, crime etc. Therefore, this study administrative and financial management in the local government system in Mkpat Enin Local Government Area become imperative.
