What is the primary source of revenue for the local government in Nigeria?

Step 1: Analyze the question The question asks for the primary (main, largest) source of revenue for local governments in Nigeria.

Step 2: Explain the concept Local governments in Nigeria have several sources of income:

• Statutory allocations from the Federation Account (the Federal Government's share, passed down through the Joint Account)
• Internally generated revenue (IGR): tenement rates, market fees, license fees, fines, and so on
• State government allocations (10% of the state's internally generated revenue, per the constitution)
• Grants and loans

Under Section 162 of the 1999 Constitution (as amended), money in the Federation Account is shared among the Federal, State, and Local Governments. Local governments get their share through the State-Local Government Joint Account.

Step 3: Evaluate the options

• A. Taxes: Local governments collect some taxes and rates (such as tenement rates), but these are small and make up only a minor part of their income.
• B. Grants from foreign countries: Not a regular or significant source.
• C. Oil revenue: Oil revenue goes into the Federation Account. Local governments only get a share of it indirectly, so this is not a direct source. The share they receive is covered by option D.
• D. Federal government allocations: Most local governments depend overwhelmingly on their statutory share of the Federation Account. For most of them, it makes up the large majority of their revenue.

Step 4: Answer Local governments rely mainly on federal allocations from the Federation Account.

Correct answer: D. Federal government allocations

Exam tip: Remember "Local governments live on allocations." Whenever a question asks for the main source of revenue for local governments in Nigeria, think of the Federation Account allocation first. Internally generated revenue such as taxes and rates is only a supplement.