Revenue Generation and Service Delivery in Nigeria’s Local Government System: Evidence from Ankpa Local Government Area, Kogi State (2015–2025)

Abstract

Local government is the third level of the Nigerian federal system, closest to citizens and, according to the constitution, most directly responsible for providing basic services such as primary education, primary healthcare, local roads, water, sanitation, and markets. However, after many years of overreliance on federal government funds and weak systems for generating internal revenue (IGR), most Nigerian local governments are now financially unable to fulfill their obligations. This study examines the relationship between revenue generation and service delivery in the Ankpa Local Government Area of Kogi State, Nigeria, from 2015 to 2025. A mixed-methods approach was employed, involving structured surveys of household beneficiaries (n = 274) and local government staff (n = 28), as well as key informant interviews. The study reveals that Ankpa has several revenue sources that remain largely underutilized, such as a large coal deposit, agricultural produce markets, and commercial transport routes. Seventy-one percent of the staff surveyed rated the local government's revenue effort as unsatisfactory, and 49 percent considered its revenue-generation strategy inadequate. Sixty-eight percent of the staff believed there was a positive relationship between project implementation and community development outcomes. However, because of the study's descriptive nature, this belief cannot be presented as a statistically verified correlation. This perceived link is, in any case, greatly weakened by an expenditure pattern that favors recurrent spending over capital spending, a serious lack of accountability (54 percent of the staff surveyed disagreed that the revenue generated is properly used), and, most significantly, overwhelmingly negative evaluations from household beneficiaries regarding certain services: 90 percent disagreed that the local government helps with irrigation farming, 83 percent thought the fertilizer subsidy was inadequate, and 95 percent rated the performance of the local clinic as ineffective or highly ineffective, with immunization outreach being the only service area to receive a majority of positive assessments (84 percent). The article places these findings within the context of fiscal decentralization theory and the benefit-received theory of taxation, maintaining that the low tax morale in Ankpa should not be seen as a culture of non-compliance but rather as a rational reaction to a clearly visible imbalance in the reciprocal service-delivery agreement, a conclusion that is independently supported by both those who administer the revenue system and by the residents who experience the services it provides. The article ends with a series of recommendations focused on revenue diversification, automated collection, shifting expenditure priorities toward capital projects, and introducing transparency reforms to restore the fiscal social contract between the local government and its residents.