The Federal Government has finally bowed to pressure, thereby suspending the automatic deduction of 40 per cent from the Internally Generated Revenue, IGR, of tertiary institutions.
The reversal order was given by President Bola Ahmed Tinubu on Friday.
Tinubu spoke at an ongoing 75th Founder’s Day ceremony of the University of Ibadan (UI).
He was represented by the Minister of Education, Tahir Mamman, as the Visitor to the University, describing the policy as ill-timed.
“The 40 per cent IGR automatic deduction policy stands cancelled. This is not the best time for such policy since our universities are struggling,” he declared.
Last week, it emerged that the government was set to begin implementing a 40 per cent automatic deduction from internally generated revenues of federal universities and other partially funded institutions.
The development is coming amid a crumbling economy and poor funding of the nation’s tertiary institutions, with stakeholders expressing concerns about the policy’s negative impact.
The leaked memo from the Revenue and Investment Department of the Office of the Accountant General of the Federation in the Federal Ministry of Finance notified the institutions of the government’s automatic deduction of 40 per cent of its IGR from November.
The letter dated 17 October with reference R&I/2045/T/252, and signed by the Director of Revenue and Investment Department, Felix Ogundairo, noted that the decision, which affects all partially funded government agencies and parastatals, including universities, was in line with the provisions of Section 62 of Finance Act 2020.
“It is important to emphasise that this policy of 40 per cent auto deduction of gross IGR is in line with the Finance Circular Reference Number FMFBNP/OTHERS/IGR/CRF/12/2021/ dated 20 December 2021, limiting the budgetary agencies or parastatals to not more than 50 per cent of their gross IGR and the remittance of 100 per cent of the remaining 50 per cent to the sub-recurrent account. While all statutory revenue lines like Tender fees, contractors’ registration fees, disposal of fixed assets, rent on quarters, etc., shall be remitted 100 per cent to sub-recurrent accounts,” the memo partly read.
Leading up to the new development, President Bola Tinubu had in June signed into law the bill to establish a Students Loan Fund (SLF) to provide interest-free loans to Nigerians seeking higher education.
As a follow-up, Nigeria’s federal government, in the 2023 supplemental budget, proposed the allocation of N5.5 billion for the education loan fund, which was later raised to N10 billion by the National Assembly. The appropriation bill has been passed and signed by the President.
However, some Nigerians claimed the student loan was being prepared as a ground for hiking tertiary institution fees; hence, some now think there is a connection between the two.
Reacting to the development, both the Academic Staff Union of Universities, ASUU, and its counterpart, the Colleges of Education Academic Staff Union, COEASU, have issued official statements asking the Federal Government to remove their institutions from the list of agencies expected to remit 40 per cent of their Internally Generated Revenue.
The Committee of Vice Chancellors of Nigerian Universities has also written a protest letter to the Federal Government, demanding that the government rescind the plan to deduct 40 per cent of the Internally Generated Revenues of federal universities.
The Secretary-General, Committee of Vice-Chancellors of Nigerian Universities, Professor Yakubu Ochefu, said the government could not demand 40 per cent of varsities IGR when it declined to grant them autonomy.
Ochefu noted that universities operate without surpluses, relying primarily on student fees rather than generating profits or revenues, and any enforced deduction would ultimately affect parents.
“If you look at the Act, it didn’t say 40% IGR, but a surplus. So, who determines what is surplus? The Finance Act of 2020 is explanatory, and it is the institution that is supposed to decide and send you the surplus if there is any. But FG says it now wants to deduct it from the source. We have protested and written to the Ministry of Education.
“If they insist, it means they want to ground the universities to a halt. Or we will be forced to add the 40 per cent to what we are charging the end users, and these end users are already complaining. We told the Ministry of Education to write the Ministry of Finance to halt the development. The letter was written on Thursday.
“Ultimately, any decision taken, it is the parents that will bear it. Schools are not commercial activities; they are social entities. Parents will bear it if FG insists on a 40 per cent deduction. For the government to sit down somewhere and equate universities, colleges, and polytechnics as revenue centres, that isn’t possible. They are not funding universities well enough. If you grant autonomy and we are charging the normal rate, then we will give you 40 per cent,” he said.
Shocked by the development, the Academic Staff Union of Universities, ASUU, which called on its members nationwide to prepare for an “indefinite strike” over the failure of the Nigerian government to honour the agreement it made with the union, condemned the directive, claiming it would further impoverish and emasculate the Nigeria University System.
Recall that ASUU had been at loggerheads with the federal government over funding of universities, leading to an eight-month strike embarked by the union last year.
In a communiqué issued by the ASUU National President, Emmanuel Osodeke, on Tuesday, the union explained that universities are not revenue-generating agencies.
ASUU called on government’s relevant institutions to remove universities from the category of government Ministries, Departments and Agencies (MDAs) regarded as revenue-generating centres as it has implications on the affordability and accessibility of education in the country.
“NEC reviewed the implications of the recent directive to Federal Universities to remit forty per cent (40%) of their Internally Generated Funds (IGF) to the coffers of the government. NEC condemns the directive in its entirety because it would further impoverish and emasculate the Nigeria University System.
“For the avoidance of doubt, universities are not revenue-generating agencies because the obligatory fees paid by students are to provide the necessary tools for them to be properly educated.
“NEC calls on the relevant institutions of the state to remove universities from this category of government Ministries, Departments and Agencies (MDAs) regarded as revenue-generating centres because of its implications for the affordability and accessibility of education in the country,” ASUU said.
On their part, workers under the umbrella of the Colleges of Education Academic Staff Union, COEASU, urged the Federal Government to exclude Colleges of Education from the policy mandating tertiary institutions to remit 40 per cent of their IGR to the federal treasury.
COEASU warned that parents would bear the consequences if the government implements the policy, which it described as another strike against teacher education.
The union lamented that the government was initiating a policy to turn Colleges of Education into revenue-generating centres when the critical stakeholders in the education sector were clamouring for increased funding of teacher education, provision of scholarships and bursaries for education students.
In a statement issued on Monday by its National President, Dr Smart Olugbeko, the union stated that the government, by its new demand, would be giving the Provosts no other option but to increase fees payable by students to provide essential services.
According to the union, collections by the Colleges are not IGR but charges meant to support specific services that the government was not providing. It instead called on the Federal Government to improve its funding of Colleges of Education, saying it is a constitutional obligation of social responsibility.
COEASU said it expected the government to understand the implications of the inability of colleges to provide electricity, pipe-borne water, security, laboratory equipment and other relevant recurrent maintenance costs as they will lead to ineffective teaching and learning and, ultimately, student unrest.
The statement partly read: “Our Union notes with enormous reservations the directive of the Federal Government that Federal Colleges of Education should remit 40% of their Internally Generated Revenues (IGR) to the Federal Treasury. There is no basis for applying this directive to the Colleges of Education because revenues collected in the Colleges are meagre charges meant for the discharge of specific services. In other words, Federal Colleges of Education do not generate IGR. What they charge are service charges for student identity cards, health clinic services, hostel maintenance, laboratory equipment, teaching practice, consumables, etc.
“This decision represents another strike against teacher education. At a time when the critical stakeholders in the education sector are clamouring for increased funding of teacher education and provision of scholarships and bursaries for education students, the government is initiating a policy to turn Colleges of Education into revenue-generating centres.
“If the government goes ahead to implement this policy, parents will bear the consequences, and many parents will withdraw their children from schools. We urge the Federal Government to exclude Colleges of Education from remitting 40% of their IGR to the federal treasury as collections made by the Colleges are not IGR per se but charges meant to support specific services the government is not providing. We also call on the Federal Government to improve its funding of Colleges of Education as this is a constitutional obligation of social responsibility.”
Before now, ASUU President Emmanuel Osodeke had insisted that the Federal Government cannot stop funding universities in the country as it is constitutional.
Osodeke spoke in reaction to a statement credited to Minister of Education, Professor Tahir Mamman that the FG would grant full autonomy to universities to explore new ways of funding its activities.
He spoke while appearing on Channels Television as a guest.
“There is no way the Federal Government of Nigeria would say they would not fund public universities because it is there in the law. It is there in the Constitution; look at Section 18 of the Constitution; it says, ‘university, primary, and secondary are free.
“The only problem is that it is not judicable; that’s the only problem, so I said, I don’t think this government, from what we have seen, is going to say we are going to hands-off from university.
“But the autonomy is here, ignited in the year 2003. If we follow that law and allow it to run without interference from the bureaucrats, the university system would be fine,” Osodeke said.
Speaking to Newspot in an interview, Dr Michael Ogbemudia, a Lecturer at Chrisland University, Abeokuta, Ogun State,
described the development as a retrogressive policy that would further put the nation’s public institutions into deep darkness.
Ogbemudia lamented the condition of the education sector in the country, noting that it is in total shambles, while the budgetary allocations to tertiary institutions are begging for help.
Describing the policy as anti-people, anti-education and totally unwarranted, the scholar was of the view that the government should reconsider its position.
He said, “At this critical period in our national life where everybody is clamouring for a little more intervention in the state-owned institutions, a government is coming out to declare a total war; because what I see is a retrogressive policy that will further put our institutions into deep darkness.
“The reason I said that is because every intelligent person, every sensible person, knows and understands that government-owned institutions are already underfunded and are battling several evils.
“And at this point in time, while many people are already clamouring for total autonomy for government-owned institutions, a government is coming out at this period of time demanding such a huge percentage of revenue to be remitted to it. It’s not really clear thinking.
“I mean, what do you make of a government that keeps taking and never gives back. Of course, it’s only a government, such as the Nigerian government, that will continue to seek ways to further stress and put tertiary institutions into a messy state. They keep looking for ways to ensure they frustrate government-owned institutions against what the nation needs, against what the entire citizens wants.
“At this point in time, I really wish the government could come out with a reform that is proactive, that can really reflect the needs of the nation, especially in our tertiary education.
“Why should they make such a demand in a system that is already depleted? I am pained because this affects a lot of people. The ripple effects…we are seeing school fees hiked, we are seeing people who are already pummeled and strained by inflation and harsh economic realities of our nation crying out.
“We are seeing university lecturers going on strike for obvious reasons, demanding for what is right. We are seeing the state of research and academic environment, even physical infrastructure, in these institutions deteriorating.
“And then the government is not addressing it, all they want is to make all sectors generate money for their selfish political gains. And I see no reason for the government to come out at this point in time to make this declaration. It is totally anti-people, it is totally anti-education and totally unwarranted at this critical time of our national life.
“I hope the government can reconsider this policy. Instead of demanding from the institutions, I think they need to give 40% from the budgetary allocations to the institutions owned by the government so that we can have a system that can compete fairly with private sector institutions and international universities.
“What we are really seeing is the privatization of the education sector, which will have adverse effects on people who cannot afford to attend private universities.
“If the government really means well for the nation, they will have a rethink so that common people who cannot afford private universities can have convenience in tertiary learning.
“My submission is that rather than take 40%, we need more allocations to federal universities; we also need more financial investment and support.”
Also speaking on the matter, a media and communication scholar at Peaceland University, Enugu, Nduka Odo, told Newspot that the nation risks producing the right people to run the society if it makes education profit-oriented.
Odoh advised the FG to invest heavily in education if it is interested in generating profit from universities.
He said, “Most countries in the world operate education as a non-profit oriented sector. The mission of education is to produce those who will make the society better through skills and innovation. If we change from that perspective, we will lack the right people to run our society.
“Some countries actually do run education as business. This means that if the FG is interested in generating profit from universities, they should first do what businesses do: invest heavily.
“The ugly part of the government wanting to increase IGR by collecting 40% from universities lies on who bears the burden. The universities will jack up fees and education costs in order to be able to generate enough revenue.
“This will deny most people the opportunity to earn higher education. In turn, our society will lose.
“Nigerians are currently battling economic hardship occasioned by policies from the same government. Now, they’re indirectly adding more loads on the citizens. The question is, what has the FG cut down in its spendings? Nothing.
“On the bright side, taking some revenue will make university administrators sit up and device means to operate. We can do what European countries do – running universities in endowment and free education as found in places like Germany.
“Otherwise, universities should seek grants, endowment, and engage in profitable research and innovation. They can patent inventions.
“Secondly, what does the government intend to do with the 40% IGR from universities? Will they reinvest into education? Or, will it be used for funding religious pilgrimage? Will they use it to build industries?
“The most painful part of this monetization of education is that the students who bear the burden do not have job opportunities waiting for them or a conducive environment waiting for them to start businesses.
“I think the government has run out of ideas on how to generate revenues.”
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