Expenditure and Internally Generated Revenue Relationship : An Analysis of Local Governments in Adamawa State, Nigeria

The aim of this paper is to examine the relationship between expenditure (both Capital and recurrent) and internally generated revenue (IGR) in Adamawa State local governments. The Population of this study is the entire twenty one (21) local governments in Adamawa state. For the purpose of accuracy and reliability on the generalization of research findings the study uses the entire population as the sample size. Panel data was extracted from the Local government's Audited Financial Statements for the period of Ten years (2003-2012). Pooled regression was used for the data analysis. The study finds a significant relationship between government expenditure and internally generated revenue. Capital expenditure and recurrent expenditure on agriculture and natural resources, roads, rural electrification, market expansion significantly influence the internally generated revenue of the Adamawa State's local governments. The study therefore recommends that the Local government authorities in Adamawa State should use their resources with high sense of prudence, transparency and accountability in incurring capital and recurrent expenditure for the development of various sectors of their local economies so as to enhance their internally generated revenue. This will reduce dependency on statutory allocation from the federation account