FINANCING TRENDS AND EXPENDITURE PATTERNS IN NIGERIAN UNIVERSITIES

CHAPTER ONE

INTRODUCTION

1.1      BACKGROUND OF THE STUDY

Education in Nigeria is funded by different sources. The main source of revenue for all sectors of the economy comes from public funds through taxation. It is reported that education funds are distributed amongst primary, secondary and tertiary education, in the order of 30%, 30% and 40% respectively Balami (2003). The public funding includes provision of teaching materials, teachers’ salary, scholarships, loans and grants. What really gives the government funds are Federal taxes, duties on petroleum product, import and export duties (Hinchliffe, 2002). Currently, private establishment contributes about 20% to the national economy.

Education in Nigeria is characterized with so many lapses and that is the reason Academic staff union of Universities keep embarking on strikes. One of the reasons why they embark on strikes is inadequate funding of Universities.

Higher education in Nigeria comprises Universities, polytechnics, institutions of technology, colleges of education that form part of, or are affiliated to, Universities and polytechnic colleges, and professional, specialized institutions (IAU, 2000). These Universities could either be Federal, state or private Universities.

Diverse reasons have been tied to the financing of education in Nigeria, and this has made the practice of Federalism in Nigeria questionable. There have been cases of imbalances in the funding of Universities across Nigeria; coupled with different moves made to resolve these differences. A clear example was between I960 and 1991 were about sixteen changes were made on the constitution to resolve these imbalances.

The demand for higher education by Nigerian parents, individuals and students are due to some reasons. Higher education in Africa is the largest form of education system, and not withstanding this, it still has not admitted all qualified students who sought for admission (Ajayi T, and Alani R.A 1996). For instance in the academic years, 1990, 1991, 1992 only 14.3%, 16.71% and 12.73 % of the applicants were able to gain admission through the Joint Admission Matriculation Board.

Saint et al (2003) reported in their study that the cost of managing a Federal university amounted to $210 million in 1999; and the funds were provided by the Federal government. As a result of the increase in the number of students admitted and devaluation of currency, tuition fees for students dropped from $610 to $360 between 1990 and 1999- with obvious implication for educational quality. However, agreements between the Federal government and the university lecturers on salaries and teaching inputs have increased to a much healthier $ 1,000 per student annually.

Revenues allocated to Federal Universities are from different sources, the Federal Government (84%); income generation activities (7%); and various student fees (9%) even though no undergraduate tuition fees are charged.

It is observable that while Federal university receives 80% of their recurrent cost and more than 70% of their capital bill picked up by the Federal Government, state Universities have not been that privileged (Okebukola, 2002). He added that less than 10% is allocated to state Universities for capital expenses and about 25% for overhead.

The Federal government of Nigeria maintains a no tuition fees for students in Federal Universities, while students of state Universities pay tuition and hostel fees. The policy of the Federal government banning the charging of tuition fees in Universities was enacted in May 2002, due to the fact that the then 24 Federal Universities thought of charging students in order to make up for the cost of running the Universities. The government carries out this responsibility because it has the duty of providing qualified Nigerians free university education. Before the enactment of this degree, tertiary institutions thought of placing tuition fees ranging from N24, 000-58,000 per semester.

The government through the body in charge of Universities NUC authorized all Universities to internally generate 10% of their yearly funds through revenue diversification (Odebiyi & Aina 1999: vii, 36). In line with this, it is reported that less than 30% of the Universities are able to meet up to 10% of their recurrent funds as directed (Okebukola, 2002). The list of Universities that have done this are: Igbinedion university, Okada (100%), Madonna university, Okija (42.9%), Enugu state university, Enugu (41.3%), Bowen university, Iwo (32.7%), University of Maiduguri (26.8%), Ambrose Alli university, Ekpoma (22.5%), Ogun state university, Ago-iwoye (21.6%), Ladoke Akintola university, Ogbomoso (20.3%), Federal university of tech., Tola (16.4%), University of Lagos (16.3%), Federal university of tech. (Owerri 12.9%), and University of Ibadan, Ibadan (11.4%).

However, Education Tax Decree No. 7 of 1993 enacted that 2% of profits from registered limited liability companies are allocated as education revenue on the ratio of 50: 40: 10 to higher, primary, and secondary education respectively. Universities, polytechnics, and colleges of education benefit from the allocation to higher education according to the ratio of 2: 1: 1 respectively (Ajayi & Alani op cit.).

Sequel to say that all Federal Universities receive a higher percentage of allocation from the Federal government, through the National Universities Commission (Hartnett, 2000: 1); In addition, the Federal Universities are expected to follow the procedures of NUC in its budgeting and expenditure formula which is 60 percent total academic expenditure; 39 percent for administrative support; and 1 percent for pension and benefits (Hartnett, ibid. 7).

Generally, Universities are funded by four sources, which are: funds from state and Federal government which is 98 percent of the recurrent costs and 100 percent of capital costs, hostel fees which is about 1% of the total operating costs of institutions, contributions in form of grants from commercial organizations and interest earnings on short-term bank deposits and rents of university properties (Ogunlade, 1989: 522). Aside from the aforementioned, there are other sources of funding for higher education in Nigeria to include fees/levies, gifts, community participation, consultancies/research activities, endowments and assistance from international organizations. For instance, World Bank financed a US$ 120 million project titled: Federal Universities Development Sector Operation (Odebiyi & Aina 1999: 28-29; Babalola, J.B., Sikwibele, A.L., & Suleiman, A.A. 2000).

However, this is the purpose of this study, to examine financial trends and expenditure patterns in Nigerian Federal Universities.