Local governments in Nigeria are faced with many difficulties in generating adequate finance to perform their constitutional responsibilities; such problems are a cog in the wheel to the smooth running of local government administration. These challenges include dishonesty on the part of officer collecting the revenues such as cases of printing receipts by the officers. This development has hampered the operations of Njikoka local government area of Anambra state. This study therefore examines problems and prospects of revenue generation in Nigerian local government system, with focus on Njikoka local government area of Anambra state. The study is a qualitative descriptive analysis, while data collection was effected through the secondary sources. Systems theory served as theoretical framework of analysis. The findings reveal that despite external and internal sources of revenue to Njikoka local government, corruption and poor governance, public cynicism, lack of qualified revenue collectors and lack of financial autonomy undermine revenue collection. It also demonstrates enlightenment and motivation of revenue collectors are measures to enhance the prospects of revenue collection in the local government. It therefore recommends honest and credible leadership as a panacea for revenue shortfalls in Njikoka local government.