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.