1.1         Background to the Study

The desire for creating local government anywhere in the world stems from the need to facilitate development at the grassroots level. The issue of rural development has been creating a lot of concern in most third world countries. There has been growing recognition of the importance of rural development as an instrument in the overall development of the contemporary developing world. This is because of the glaring gap between the rural and urban areas in terms of infrastructural, resources distribution, human resources development and employment, which has made rural development imperative (Ogbazi, 1982:2). This imbalance has subjected the rural areas to more disadvantaged economic position. It has induced rural – urban migration, thereby, increasing unemployment situation in the urban areas, while, simultaneously depriving the rural areas of their agricultural workforce.

In Nigeria for instance, the recognition of the above problems, instigated the Federal Military Government in 1976, to take a bold initiative to reform the local government system in Nigeria. The essence of the reform was to bring about stable increase in rural productivity and income, diversification of rural economy and general enhancement of the quality of life in the areas (Federal Republic of Nigeria, 1980:12). In the same vein, the Nigerian Constitution (1999:6) provides that every local government in the country shall participate in the economic planning and development of its own area of jurisdiction. To strengthen this great task bestowed on the local governments, General Ibrahim Babangida, reminded Nigeria‟s that local government were not created to pay salaries only, but to ensure collective participation in governance, motivate physical and economic development, creat the condition for development opportunities and provide social services which can improve the well-being of the rural people (Oyorbaire and Olagunju, 1998:49).

It is pertinent to believe that, the ability of any local government to accomplish such expected tasks will depend on the availability of funds. That is to say that the survival and effectives of this grassroot tier, depend on its financial viability. Hence, Adedeji (1969:96) assertion that the success or failure of any local government will depend on the financial resources available to it. Furthermore, Adedeji (1972:110), opined that local governments in Nigeria are enmeshed in a vicious circle of poverty. The elements of that viciousness include inadequate functions and power, inadequate finance, low caliber and poorly paid staff, poor performance, and transfer of functions to state and federal governments and cumbersome structure. Adedeji stated that finance represents the points at which the vicious cycle may be broken or possibly reversed. In other words Soba and Zaria local governments should not retain in their pursuit for financial buoyancy so as to break the vicious cycle of poverty of the rural populace.

However, it is believe also in some local governments, that inadequate funding of local governments has been the bane of rural development in Nigeria, specifically Soba and Zaria local government areas. For instance, Rowland (1979:138) believed that complete absence of funds for capital development is the major problem of financing local government in Nigeria today, and has been so for some years past.

1.2         Statement to the Problem

Local government in modern day life is responsible for delivering basic goods and services to its local communities in faster, easier and more efficient manner. Local government is the level of government in Nigeria at which the momentum to sustain national development is created.