Author(s): Cordelia Onyinyechi Omodero, Kingsley Aderemi Adeyemo
The study investigates the effect of local government revenues on its capital expenditure responsibility. Following the local government financial autonomy that is being advocated, this study becomes very imperative to strengthen the move to liberate local governments in Nigeria from financial bondage caused by undue state dominance. The research employs data from 1998 to 2018 and causal research design to determine the effect difference sources of local government revenues have on the capital expenditure. The secondary data used is obtained from the CBN statistical Bulletin and World Bank Economic Indicators. The data are collected on local government capital expenditure which is the dependent variable. The independent variables on which data are equally sourced for include: local governments statutory allocation, state allocation, internally generated revenue, value added tax, grant and other income. The multiple regression analysis results indicate that value added tax, grants and other incomes have a significant adverse effect on capital expenditure. At the same time, the internally generated revenue is insignificant but also negatively affecting capital expenditure. The result also discloses that statutory allocation and state allocation is considered positive in influencing capital expenditure of local governments. The study recommends absolute financial autonomy of local governments as the best way of guaranteeing even rural development in Nigeria.