Title: Financial Dependency And Local Government Productive Capacity In Delta State Nigeria
Authors: AYITO Maurice Okon; EKORI George Odu; UZUM Emmanuel Kidochukwu & ODITA Anthony Ogomegbunam
Volume: 9
Issue: 11
Pages: 44-63
Publication Date: 2025/11/28
Abstract:
This study examined the impact of financial dependency captured as financial autonomy on the productive capacity of local government authorities (LGAs) in Delta State, Nigeria, over a 25-year period spanning 2000 to 2024. Financial autonomy was operationalized through key indicators: the internally generated revenue to total revenue ratio (IGRTRR) and the percentage of statutory allocation in total revenue (PSATR). Productive capacity was measured using the capital expenditure to total expenditure ratio (CETER), reflecting the extent to which LGAs channel their resources toward long-term infrastructural development. The study adopted an ex-post facto research design, which allowed for the analysis of historical data without manipulation of variables. A census sampling technique was employed, involving all 25 LGAs in the state to ensure broad representation. Data were sourced from official records of the Ministry of Local Government Affairs, and other credible government repositories. Econometric analysis was conducted using OLS regression in E-Views 9.0, complemented by diagnostic tests including unit root, cointegration, multicollinearity, heteroskedasticity, and the Ramsey RESET test. Findings revealed that PSATR, had statistically significant positive effects on CETER, emphasizing the importance of statutory allocations, local expenditure control, and revenue diversification in driving capital investment. However, IGRTRR did not show a significant impact. The study concludes that while internally generated revenue remains crucial, effective expenditure autonomy and diversified funding sources are more decisive for productive outcomes. Policy recommendations include fiscal decentralization, governance reforms, and strategic capacity building.