40% IGR deduction sets FG, varsities on collision course

The decision of the Federal Government to deduct 40 per cent of revenue generated internally by public universities will leave the academia worst of, with attendant pushback in the offing, OWEDE AGBAJILEKE reports.

For the umpteenth time, the crisis between the Federal Government and university workers may again rear its ugly head, following government’s decision to commence automatic 40 per cent deduction of Internally Generated Revenues (IGR) of public universities and other partially-funded institutions across the country.

For some observers, the issue is not a matter of if, but when the honeymoon between university teachers, under the aegis of Academic Staff Union of Universities (ASUU), and the Bola Tinubu-led administration would be over.

With the union embarking on 16 strikes in two decades, this new development is coming at a time when the tertiary education sub-sector is struggling for academic stability and credibility.

Recent data indicated that inadequate funding, non-payment of outstanding salaries, poor infrastructure and lack of motivation have forced about 50 per cent of lecturers to seek greener pastures abroad, while 80 per cent of those remaining are preparing to leave.

Bone of contention
The bone of contention is the memo from the Federal Government announcing the implementation of 40 per cent deduction of universities IGR, alongside other partially funded public institutions.

This, The Guardian learnt, is in line with the finance circular with reference number FMFBNP/OTHERS/IGR/CRF/12/2021, and dated December 20, 2021.

Addressed to heads of universities, the document announced that effective this November, universities will have 40 per cent of revenues generated internally, and deposited in their accounts, deducted automatically by the government via the Treasury Single Accounts (TSA).

A letter to the universities dated October 17, 2023, by the Accountant-General of the Federation, Mrs Oluwatoyin Madein, titled: ‘Implementation of 40 per cent automatic deduction from internally generated revenue of partially-funded Federal Government institutions,’ and signed by Director of Revenue and Investment, Office of the Accountant-General of the Federation, Felix Ore-ofe Ogundairo, read: “I am directed to inform you that the Minister of Finance and Coordinating Minister of the Economy, has approved the implementation of a 40 per cent automatic deduction from IGR of all partially-funded Federal institutions in line with the provision of section 62 of finance Act, 2020, effective November 2023.

“Agencies/parastatals to spend 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. All statutory revenue lines like tender fees, contractor’s registration fees, disposal of fixed assets and rent on quarters shall be remitted 100 per cent to the sub-recurrent account.

“Consequently, all partially funded agencies/parastatals must align their budget requirements and ensure total compliance with the provision of section 62 of finance Act 2020, and finance Circular 2021,” Ogundairo stated.

Falling short of UNESCO’s recommendation
Investigations by The Guardian revealed that 33 years after the United Nations Educational, Scientific and Cultural Organisation (UNESCO) recommended that member nations should earmark four to six per cent of their Gross Domestic Product (GDP) or 15 to 20 per cent of annual budget to fund education, Nigeria’s allocation to the sector has been below the recommended benchmark.

Data obtained from Macro Trends revealed that Nigeria’s education spending has been on single digit in the last 13 years. A look into 2010, 2011 and 2012 budgetary provisions for education showed that 6.17 per cent, 7.88 per cent and 8.55 per cent went to the sector respectively. In the same vein, 2013, 2014, 2015 got 8.68, 9.04 and 9.26 per cents budgetary allocations.

In 2016, 2017 and 2018, education received 7.9, 6.1 and 7.1 per cents of the respective years’ budgets. This rose to 8.4 per cent in 2019, plummeted to 6.5 per cent, 5.7 per cent and 5.4 per cent in 2020, 2021 and 2022, before soaring to 8.2 per cent in 2023.

The figures are a sharp contrast to what obtained in other parts of Africa. In 2022 for instance, while South Africa education spending was 19.75 per cent – a 1.33 per cent increase from 2021; Namibia spent 24.71 and 27.3 per cents in the sector for 2022 and 2023, respectively, even as Algeria recorded double digits for nine consecutive years, between 2013 and 2022.

ASUU, CONUA, others react
The principle of the presidential prerogative of mercy invoked by President Tinubu, while approving the partial waiver of the ‘No work, No pay’ order for ASUU members, and the 40 per cent IGR deduction has been likened to giving with one hand and taking away with the other.

The proposed deduction has also highlighted the issue of accountability of revenues generated by tertiary institutions with some stakeholders submitting that higher institutions rake in so much from exorbitant school fees and non-proprietor funding sources like endowments, without proper accountability. They also cited interventions from the Tertiary Education Trust Fund (TETFund) – a government agency that supports higher education in Nigeria – to buttress their argument.

“TETFund provides grants and loans to universities to help public universities improve their infrastructure, purchase equipment, and pay faculty salaries. Other sources of funding for federal universities include endowment funds, which are invested funds that generate income for the universities, and special projects grants, given to the universities to support specific projects.

States also contribute some funding, and the universities also raise money through donations from individuals, corporations, and other organisations. They are just crying wolf,” a parent, Tajudeen Momoh argued.

There are also concerns that this could be far-reaching and lead to further tuition hike as universities would seek alternative means to recover the deductions.

Another worry is that this could set a bad precedence, as sub-national governments would beam their searchlight on the coffers of state tertiary institutions.

ASUU and a breakaway faction, Congress of Nigerian University Academics (CONUA), expressed worry over the new development.

In an interview with The Guardian, the ASUU Chairman, Nasarawa State University, Keffi chapter, Prof. Samuel Alu, described the decision as “draconian, barbaric, and demeaning,” urging parents and other stakeholders to resist the policy.

Alu lamented that at a time stakeholders were expecting the Federal Government to meet UNESCO’s benchmark for funding of education in the national budget, the administration was deepening its hands into the coffers of higher institutions.

The academic predicted that if the policy is not reversed, public universities would go under within two years.

“It does not show that the Federal Government wants public institutions to survive. It is a deliberate attempt to ensure that public universities go under. A situation where ASUU and other well-meaning Nigerians are agitating for proper funding of the educational sector, rather than do what we are asking them to do, you are bringing out a policy that will take 40 percent of IGR.

“To me, it is as good as coming out to say public universities should stop existing in Nigeria. Because it does not make sense in any way that a university that is struggling to stand despite the meagre IGR, government is deepening its hand to take 40 per cent from it. I am not a prophet, but I can say that in the next two years, public universities will cease to exist.

“I think parents and well-meaning Nigerians should rise to the occasion. It is not an issue for ASUU alone, we are talking about raising the budget for education to at least 26 per cent, but government is talking of 40 per cent of what the institution is trying to generate to sustain itself?”

In the same vein, CONUA National President, Dr Niyi Sunmonu, explained that implementing the policy without granting universities full autonomy is like putting the cart before the horse.

“Our position is that universities already have a lot to deal with, with respect to funding issues.

Effecting this policy at this time when universities are yet to achieve financial stability will cripple them. The government should shelve this plan until financial stability is achieved in Nigerian universities,” he stated.


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