DEVELOPMENT - 31 DEC 2018

The struggle to fund Nigeria's Universities

The struggle to fund Nigeria's Universities
Lecture hall at University of Port Harcourt, Nigeria. Source: BBC

Vehicular traffic is stopped on the busy Ife–Ibadan road. Students of the prestigious Obafemi Awolowo University (OAU), in May 2014, have gathered outside the university premises to protest a proposed increment in school fees from ₦7,000 to ₦50,000, and from ₦17,000 to ₦74,000 for fresh students.

Four years earlier, the ₦2,000 acceptance fee had been increased to ₦20,000, sparking protests that caused the university to be closed for three months. A friend of mine, reminiscing about these actions, ragingly describes how she celebrated her birthday twice in one class without repeating.

Most recently, in November 2018, the Academic Staff Union of Universities (ASUU) commenced an indefinite strike, citing inadequate funding of federal institutions and government's failure to fulfil its promises.

The battle for funding between ASUU and the federal government (FG) is old. In 2009, the two parties entered into an agreement in which the government agreed to increase its funding for tertiary institutions. 

 

How much is too much?

As part of that 2009 agreement, the federal government agreed to pay federal universities a total of ₦1.5 trillion and set aside ₦3.68 million for each student in state universities from 2009 to 2011. Of this, ₦1.33 million was agreed per student for 2011.

Let’s think about this; if ASUU’s agreement shows that an average student cost ₦1.33 million in 2009, imagine what the cost of educating a student would be today? However, one of ASUU's aggravations is its unwillingness to allow the government to increase school fees, even though it is clear that the government cannot afford to fund higher education on its own up to the required level.

The FG and ASUU also agree to redirect the Education Fund just to target government higher institutions. Before this, Nigerian companies were expected to pay an education tax of 2% of their assessable profit into an education fund. The fund was established to promote research, staff training, and infrastructural development in federal, state, and local educational institutions.

And initially, the fund was shared among the different tiers of educational institutions, including higher institutions, primary, and secondary schools. However, this was replaced by the Tertiary Education Trust Fund (TETFund) in 2011, which now grants only higher institutions to have access to the fund.

In 2016, the government generated ₦47 billion from the tertiary education tax (TET). But once we compare that to ASUU's ₦1.5 trillion (per the 2009 agreement), it is a drop in the ocean. Meanwhile, ₦542 billion was allocated to the Federal Ministry of Education in 2018, with just ₦5.6 billion set aside for capital expenditure for all the 36 federal universities in Nigeria.

The FG has proposed alternative financing arrangements—private sector financing, student loan schemes, an education bank, but the key brokers in ASUU have been unwilling to come on board with some of the proposed solutions. Both parties have always agreed on the need to increase university funding, but have often disagreed on who should front the cash. 

The fact remains that the Nigerian government has become overstretched in running government universities. With the poor state of Nigeria's finances and the country's nearness to brokeness, it is essential that higher education institutions amend their sources of funding to tailor the research and developmental needs of globally rated universities.

The question remains though: how willing are the FG and ASUU to explore alternative sources of funding for universities? Public universities need to be funded independently, though with government support.

 

Looking Outwards

Universities are developing different ways of funding their operations. One of the oldest methods is through the use of endowment funds, investment funds generated by donations from the public. The universities invest these funds into several investment tools such as real estate and stocks. The catch is that the profit from such investments is usually used for research. In the United States alone, 97 universities have an asset base of over $1 billion.

In 2017, the FG asked the Central Bank of Nigeria to create separate interest-yielding accounts at treasury bill rates for university endowment funds, research grants, and other such similar funds. However, this approach still defies the original motive of the funds, which are meant to be generated and invested by the universities into other investment instruments.

The Nigerian government may also be developing an education bank, which would aid short and long term financing, management of endowment funds, student loans allocation, and fund disbursement from the government to the universities. However, ASUU has resisted the idea, with Mahmud Lawan, a top ASUU official, stating, "The introduction of education banks will do nothing better than enslave students and make them indebted for life.”

And of course, universities have been significant beneficiaries of scholarship grants and funds. In 2017, the University of Pretoria allocated financial aid worth R1.17 billion (₦30.7 billion) to its students, largely thanks to donations from the likes of the Dell Foundation and Discovery Foundation. Also, in 2014, the MasterCard foundation committed $86 million to four universities in Africa.

But for any of these solutions to work, Nigerian universities need to step up in terms of corporate governance and transparency. This would help improve the confidence of donors and investors to look towards investing in Nigeria’s future. With ASUU doggedness to see this strike result in a delivery of their targeted goals, both parties must be willing to compromise to see that the future of Nigerian youths as the focus.

 

Follow @kunmi_kay on Twitter to get his insight. Subscribe here to learn more from Stears Business.

Akinkunmi Akingbade

Akinkunmi Akingbade

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