DEVELOPMENT - 25 JUN 2019

How to better fund Nigerian universities

How to better fund Nigerian universities
Public universities charge too little, but also offer low-quality education. Source: BBC, AFP

There are 170 accredited universities in Nigeria; 43 federal, 48 state, and 79 run by private entities. At first glance, this public-private funding split is atypical. In the UK, the government was responsible for only 66% of university research funding in 2014/2015. Likewise, in the United States, home of the world’s highest number of tertiary institutions, universities receive both federal and private funding.  

Look closer, however, and the clean split between private and public funding in Nigeria is unusual.

Nigeria’s public universities rely primarily on government funding, which usually comes to less than 10% of the national budget at the federal level, below the African average and UNESCO’s minimum recommendation of 15%. In contrast, private universities are entirely self-financed, either by founders (churches or wealthy individuals) or high school fees.

How do things look abroad?

American public universities benefit heavily from government funding—they received as much as $83 billion from the federal government and $77 billion from state governments between 2000 and 2012, but also augment their incomes through private financing. A popular method is endowments, assets donated to them to generate investment income used to fund their activities. The story is similar closer to home in South Africa. The government provides less than half of total university funding, often allowing universities to make up the shortfall in increased tuition.

Observing this trend of public-private financing, and given Nigeria’s struggles to fund universities, it seems like a no-brainer to encourage Nigeria’s universities to pursue as diverse a range of financing solutions as possible. With the right mix of public and private funding, Nigerian universities can receive the money they desperately need to elevate the level of university education in the country.

 


The Budget Solution

Now, let’s explore the extent to which public funds can plug the gap.

Nigeria’s 2019 budget is $25 billion, with $1.7 billion set aside for education. In comparison, South Africa has a $118 billion (₦36.7 trillion) budget and $19 billion allocated to basic education. Even if Nigeria increased its education allocation to the top end of UNESCO’s recommendation (20%), it would be allocating just $5 billion to education. How could we achieve this?  

The government would need to take the extra money from some other part of the budget, and with a quarter of the budget dedicated to paying debts, some could argue there aren’t a lot of places to pull that money. But that is only half true.

The problem is not just the lack of funds; it is a lack of will as well. The government proposed $6.4 billion for personnel costs. Reforming and reducing the notoriously bloated and underperforming civil service could free up funds for education. Reviewing the ₦305 billion ($900 million) budgeted for fuel subsidies would also free up more funds for education.

So public funding faces two problems: Nigeria is not dedicating enough of its funds to education, and it does not even have enough resources in the first place. At this point, the government should look to plug the gap by enabling private financing and creating tax-based funds like TETFund, but with a focus on research grants.  

 

The School Fees Solution

Public universities in Nigeria charge notional fees. In 2017, final year students of Education in UNILAG paid ₦15,000. In 2019, final year Law Students at of Obafemi Awolowo University paid ₦30,000.

Such figures pale in comparison to the cost of running universities. The Consolidated University Academic Salary Structure (CONUASS) recommends professors earn a basic annual salary between ₦4 to ₦6 million. If professors were to be paid solely off school fees, it would take the annual school fees of at least 267 students paying ₦15,000.

Let’s look at another expense: power. A Rural Electrification Agency audit in 2017 found that 37 federal universities were using 1,068 generators. If each university used 28 100KVA generators, they could be spending over ₦3 million a month in diesel alone. It would gulp a year’s school fees of 200 students at ₦15,000.

Private universities are not encumbered by school fees increase in the same way. They accommodate a relatively small number of students in comparison to public universities, and they are free to price their fees at a point that allows them to operate successfully. For example, in the 2017/2018 academic session, Afe Babalola University pegged its tuition fees between ₦872,000 and ₦1,747,000.

The relative success of private universities may suggest that the school fees route is the way to go, but it is important to remember that private universities only account for 6% of Nigerian university students. In essence, these schools are still for the elite.

One potential route is price discrimination, perhaps by charging international students higher fees, a practice common in countries from Australia to the United States. However, this practice is most potent in countries with world-renown universities. Unfortunately, only two Nigerian universities (Covenant University and University of Ibadan) feature on the Times Higher Education Ranking of the 1000 best universities in the world.

Of course, Nigeria does not have to go for global students, and can instead try and court Africans. Presently, only 3 Nigerian Universities are in the top 30 in Africa, with 2 in the top 10 so there is still a lot of work to be done. And we do not need to look far to see the effect this can have: Ghana has attracted an estimated 19,000 students and ₦300 billion in tuition from Nigerian students alone. At the University of Ghana, for instance, nationals in the department of humanities paid as much as $276 while international students in the same department paid as much as $4,647.

 

The Donor Solution

We spoke about endowments earlier, and alumni networks and philanthropists have proven a useful funding channel for institutions in many parts of the world.

In 2016, Michael Bloomberg, billionaire entrepreneur and former Mayor of New York, donated $1.8 billion to John Hopkins University while Nike founder Phil Knight donated $500 million to Oregon Health & Science University. In 2016/2017, South African universities received donations amounting to over $1 billion, and in 2015, 35 UK Universities received a million pounds or more from private donations. There are also instances of this in Nigeria, albeit at lower levels of education—an example being the ₦500 million the TY Danjuma foundation has spent since 2009 to help bring quality education to children in Northern Nigeria.

Universities must make a deliberate effort to create structures that build and leverage relationships with alumni. Likewise, systems can be designed to partner with potential donors. By producing high-quality graduates in specific fields, universities can attract the attention and the wallets of industry heavyweights looking to attract the brightest minds. By regularly inviting industry bigwigs to university-wide functions, appointing them to ceremonial offices and offering honorary degrees, universities can also establish engaging relationships.

It is hard to tell how generous Nigerians would be in giving donations to their alma maters, but indicative evidence from thriving Old Boys’ and Old Girls’ networks of longstanding secondary schools suggests some potential. Moreover, even private sector funding would have its limits in the poverty capital of the world.

We all agree on the need to better-fund Nigeria’s universities. The financial realities suggest the need for a concerted effort between the public and private sectors. Anything less than our all would be like pouring more cement on the financial ceiling of Nigerian universities.

 

Follow this Writer on Twitter @ugotalksalot

Ugochukwu Iwuchukwu

Ugochukwu Iwuchukwu

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