CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The ability for any organization to function well depends largely on a sound public financial management system that is capable of enhancing and fosters private market-led growth while managing fiscal resources prudently to alleviate poverty and the achievement of the Millennium Development Goals. This important new series aims to advance those objectives by disseminating conceptual guidance and lessons from practices and by facilitating learning from one another’s experiences on ideas and practices that promote responsive public governance.
Fundamentally, this chapter covers the introductory part that provides the background of the study for better understanding of local government financial management. The problem of the study is clearly stated as well as the objective of the study is defined, followed by the main research questions that guide the study. As a matter of arriving at conclusive end of the study, this chapter also proposes hypotheses for verification. The significance and scope of the study is also disclosed. The terminologies used are well defined for clarity purpose and to have insight of the study. However, the study is organized according to the prescribed procedures of administrative sciences.
Financial management in local government administrative setting is a public financial management. Unlike financial management in the private sector, public sector financial management is geared towards non-profit oriented services to the public. Therefore, financial management and control in local government perspective is a public financial management (PFM). Public financial management is an essential part of public administration. Hence, effective delivery of public services in the local government level can only be achieved if there is sound public financial management system to ensure accountability and efficiency in the management of public resources. In fact, public resources are critical to the achievement of public policy objectives, including achievement of the Millennium development goals, such as, the 7-points agenda in Nigeria.
Public financial management is that aspect of administrative function that concerns planning and controlling of public financial resources. Thus, the main focus on public financial management is how to efficiently and effectively utilize public resources to meet the needs of the people in an equitable manner. Therefore, to carry out effective delivery of public services in the local government areas, the key issues to be examined, inter alia,involve the quality of the budget process which include degree of discipline, efficiency in revenue mobilization and extent of transparency, accountability and control in the local government administrative system.
In a situation that proper public financial management is not observed, there is always poor implementation of development projects in the rural areas which jeopardize the effort of government good intentions to reach the rural dwellers in various local government areas. Hence, good functioning of public financial management in location government administration requires patriotic governance, so as to move in the right direction of development goals. This implies that the public financial management system should be designed in such a way as to deliver quality services to the rural dwellers in local government areas, most especially in Akwa Ibom state. Besides, public financial management requires that available financial resources should be used for intended purposes that have been decided upon through policy formulation which are to be delivered at acceptable quality.
Ideally, the creation of local government authorities is to extend government functional objectives to the grass root level so that the people in the rural areas will also feel being governed. It is international broad view that many countries in the world, established sound public financial management system to ensure good governance by providing basic amenities for people in rural areas just as what people enjoy in the urban cities. Thus, rural areas are being considered in making decisions on development proposals based on sustainable development principles, ensuring an integrated approach to: recognizing the needs of the people; effective protection and enhancement of the environment; prudent use of natural resources; and maintaining high and stable levels of economic growth and employment. All of these boil down to good public financial management system not only applicable to local government administration alone but also to state and federal governments’ administration. As far as local government authorities receive monthly allocations, collect revenue and incur expenditures, there is need to practice sound public financial management to plan and control available fund for carrying out development goals among other things. Thus, it will go a long way to eradicate poverty in the rural areas. Poverty in the rural areas is not news in Nigerian environment. In order to cope with the challenges facing rural poverty reduction, local government administration must practice an effective financial planning and control so as to make good use of available resources for the benefit of the people. This could be done only if the government of the day looks into: (1) policy and strategy development; (2) rural and agricultural business development; and (3) livelihoods development. In these modern times, things had tremendously changed by rapid growth of technological development all over the world. This has exposed even the rural dwellers to what is known as good standard of living. Today, rural dwellers are also sensitive to basic needs like clean drinking water, electricity, good food, good shelter, healthy environment to live, good health care delivery system, good roads, etc. In other words, rural dwellers are also humans who have the same feelings like those in the urban areas. And most especially, due to creation of new states, some of the state capitals are located very close to some of the rural areas of which the dwellers have the reflexion of city life style.
Reasonably, the practice of good public financial management system by local government administration will enhance speedy development in any rural area of Akwa Ibom state. To allow sustainable development to take place, there must be a proper public financial management system to ensure rightful decision-making, budgeting, implementing, controlling and follow-up. Thus, rural areas would be opportune to have sustainable development for its dwellers to enjoy social amenities.
1.2 STATEMENT OF THE PROBLEM
