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Benedict O. Emunemu
Alternative Strategies for Sustaining the Revenue Base of
Tertiary Institutions in Nigeria
Benedict O. Emunemu
Introduction
According to the revised National Policy on Education (Federal Republic of
Nigeria, 1998), tertiary education is the education given after secondary
education in universities, colleges of education, polytechnics, and
monotechnics including those institutions offering correspondence courses.
Accordingly, the goals of tertiary education, among others, shall be to:
contribute to national development through high level relevant manpower
training; develop and inculcate proper values for the survival of individuals to
be self-reliant and useful members of society; and acquire both physical and
intellectual skills which will enable individuals to be self-reliant and useful
members of the society. It has been universally recognized that education is
the driving force for national development and economic growth. The
National Policy on Education (FRN, 1998) remarked that the teaching and
research functions of the higher educational institutions have an important
role to play in national development, particularly in development of high-
level manpower. Productive labor force is most desirable to ensure growth of
a nation.
The belief that education is an engine of growth rests mainly on the
quantity and quality of education in any country. Again, the NPE as well as
the Constitution of the Federal Republic of Nigeria (FRN, 1999) clearly
stated that education is a government affair in which free education is to be
provided by the government to the citizenry at all levels as and when
practicable. The objectives of education in Nigeria are situated within the
context of the broad national objectives of “building a free and democratic
society; a just and egalitarian society; a united, strong and self-reliant nation;
a great and dynamic economy, and a land full of bright and full opportunities
for all citizens” (FRN, 1998). It is against this background that the public
sector (government) was convinced that education must be provided by her
for all the citizens. In Nigeria, education falls within the ambit of the
Concurrent Legislative List, which implies that both the federal, state and
local governments can participate in the business of providing education for
the nation. Educational programmes that are provided by the schools are to be
consumed by the individuals, society and the government as a whole. The
public sector is the major provider and financier of education in Nigeria since
Revitalization of African Higher Education
91
the take-over of schools in the mid 1970s. According to Olaniyan (2003), this
was based on the assumption that it is only the government that can
effectively provide education appropriately given the externalities that are
associated with it.
Be that as it may, the continued dwindling resources of government
since the early 1980s have put much strain on the funding of education
(especially tertiary) in Nigeria. One of the greatest problems facing higher
education in Nigeria is that of gross under-funding. The problem of under-
funding and over-reliance on government funds remains a clog in the wheel
for the governance of higher education in Nigeria. Government priority to
education is still very low, while funding of tertiary education by the
government is declining fast! According to Aina (2002), the Structural
Adjustment Programme (SAP) subsequent to Nigerian economic crises has
further shrunk government funding of tertiary education. She went further to
state that other contributory factors to the under-funding of tertiary education
include lack of adequate planning, proliferation of universities and other
institutions of higher learning, and ad hoc expansion of enrolment, academic
versus non-academic employment ratio, among others. The inadequate
funding of higher education has, no doubt had calamitous effects on teaching
and research, while institutions of higher learning have been forced to embark
on income generating projects in order to source for alternative funds.
Consequent upon the financial constraints of most of the tertiary
institutions, the infrastructure are dilapidated and inadequate, and students
face difficult conditions for learning in terms of overcrowded classes and
hostels, inadequate library and laboratory facilities, inadequate water supply,
irregular electricity supply, and dehumanizing living conditions by both staff
and students alike. In many public institutions of learning, students are found
standing outside the classrooms receiving lectures, as their population has
outstripped the classroom spaces that are available.
Against the poor and inadequate funding of tertiary education in
Nigeria, the central question being asked is “will private funding attract
university’s missions”? For instance, what will be the implications of
privatizing some of the existing institutions of higher learning (especially
universities), and even encouraging the establishments of more institutions of
higher learning? No doubt, privatizing higher (university) education has
grave implications for the quality of education received, and the cost of such
education. It may in fact reduce people’s (especially the low-income groups)
access to higher education in the long run. This means that higher education,
especially university education, must remain a “public good” for the low
socio-economic class to have access to it. The implications of alternative
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Benedict O. Emunemu
sources of funding for tertiary institution governance thus become a central
focus of this paper.
Conventional Sources of Funding Tertiary Institutions
Be that as it may, it will be pertinent, at this juncture, to highlight the
conventional sources of funding available to institutions of higher learning
before proffering alternative strategies for sustaining the revenue base of
tertiary institutions in Nigeria.
1) Government Subventions (Grants): Government grants and
subventions constitute a very substantial proportion of the finance
that is available for use by institutions of higher learning in Nigeria.
Institutions of higher learning that are publicly-owned depend on the
owner government for funding. According to Akangbou (1987), this
method of funding education is usually very important because, in
most, if not all countries, education is seen as a social service and
governments allocate a sizeable proportion of their annual budgets to
the provision of and financing of education. These grants could be
capital or recurrent grants. The former (capital), when paid to
institutions of higher learning, is meant for the erection or
construction of new buildings, carrying out of major repairs of old
structures and the purchase of hardware, school equipment such as
laboratory equipments, etc. The principle that underlies the granting
of the subvention is the same, except that the amount of grants does
change from year to year. Recurrent grants on the other hand, are
used for the payment of teachers and non-teachers’ salaries and
allowances and the purchase of other educational goods and services.
2) Donations and Endowment Funds: Another source of financing
institutions of higher learning in Nigeria is through donations and
establishment of endowment funds. These donations are made by
corporate organizations especially Multi-National Companies
(MNCs), communities and individuals who are eager to contribute to
the upliftment of higher education in their states or nation. Most of
these donations are essentially free willing gifts in cash or kind to
institutions of higher learning. Such donations have been remarkably
quite small. However, in the past, substantial (foreign) grants were
received from organizations like the United Nations Educational
Scientific and Cultural Organization (UNESCO), the United Nations
Development Programme (UNDP), the Ford Foundation, the
Rockefeller Foundation, the Carnegie Foundation, the German
Revitalization of African Higher Education
93
Academic Exchange Services (DAD), Canadian International
Development Association (CIDA), etc. These grants were mainly
geared towards aiding programmes in the Universities, especially
Postgraduate studies and staff development. Unfortunately, these
grants actually declined in the 1970s when Nigeria’s oil wealth gave
the impression that such aids were no longer necessary. Also
following the face-off with the United Nations over non-democratic
principles in governance and a bad record of human rights violations
when Nigeria was under military dictatorship, many of such
organizations have had to withdraw their funds, and stopped
supporting researches and programmes in institutions of higher
learning. Be that as it may, a handful of these international
organizations, following the dawn of democratic governance in 1999,
have reinstated their commitment to the financing of higher
education in Nigeria. Organizations such as MacArthur Foundation,
the World Bank, the Commonwealth of Learning (COL), British
Council, and the United States Agency for International
Development (USAID), etc, are quite notable. It is important to note
too that most of the established Non-Governmental Organizations
(NGOs) in Nigeria and around the globe equally contribute
substantially to educational development in Nigeria. In the recent
times, many corporate organizations have also been seen to be
financially supportive of higher education in Nigeria. On the other
hand, endowment appeal funds are a recent introduction to assist
educational establishments in executing their developmental plans.
Institutions of higher learning in Nigeria have, in the recent, been
launching endowment appeal funds, but unfortunately, very little
have been realized from these launchings.
3) Tuition Fees/Levies: When students attend school or university, they
are likely to be asked to pay for the teaching they are going to
receive. When such payments are made, we say that tuition fees are
paid by such students. Usually, tuition fees may not be the only
payments made by students, they may have to pay levies for such
purposes as examinations, laboratory use, development, uniform,
municipal fees (for water and electricity consumption), hall
maintenance fees, non-refundable admission deposits, etc. All these
are possible forms of sourcing funds from students. Such fees
represent a small percentage of the total institution’s income,
especially in the publicly owned schools. More importantly, there has
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Benedict O. Emunemu
been a general government embargo on the payment of tuition for
undergraduate programmes in all federal-owned institution of higher
learning.
4) Government’s Education Tax Fund (ETF): The Education Tax
Fund was established through the Education Tax Decree Number 7 of
1993 which compelled companies operating in Nigeria, which have
up to 100 employees on their pay roll to contribute 2% of their pre-
tax earnings in any one year to the Education Tax Fund (ETF) for the
funding of education. The ETF has so far made its presence felt in
many institutions of higher learning across the country through the
construction and/or rehabilitation of new classroom blocks, hostels,
staff office complexes, laboratories, etc.
5) Internally Generated Revenue: In response to the government
mandate that each university must generate at least 10% of its total
revenue, each university has now embraced vigorously, commercial
ventures, and linkages with the productive sector. Most universities
are now involved with running commercial ventures of different
kinds, ranging from hotel services, primary and secondary schools,
publishing, consultancies, sales and marketing, including petrol
stations, supermarkets, bookshops, farms, etc. However, this method
of financing shows that it is still very insignificant.
Alternative Sources of Revenue for Tertiary institutions
From the foregoing, it is apparent that tertiary institutions cannot continue to
depend essentially on government subventions for their operations, as the
government meets only about 40% of the required total recurrent expenditure,
and this hardly caters for staff salaries. Therefore, activities such as research,
staff development as well as social and recreational programme would
virtually all but be grounded. For the tertiary institutions to attain greater
heights, therefore, it cannot continue to rely on government subventions
alone. Indeed, the institutions of higher learning must aim at generating from
other sources nearly all that it needs, at least, in the long term. At this
juncture, it will be pertinent to proffer some alternative strategies for
sustaining the revenue or financial base of tertiary institutions in Nigeria.
These alternative strategies include the following:
1. Universities and other institutions of higher learning should
endeavour to sell the products of their researches and the available
expertise (in form of services) through competitive project bidding
Revitalization of African Higher Education
95
and consultancy. In fact, institutions of higher learning should take a
more aggressive posture in commercializing innovative research
findings.
2. Institutions of higher learning should also strive to explore joint-
venture participation with private sector operatives in diverse areas of
endeavour. In other words, tertiary institutions should establish
partnerships with the private sector, more so that the latter are
essentially the major consumers of their products. A current and
worthy example of such partnerships is the University of Ibadan
Schlumberger Learning Centre; a collaboration between the
University of Ibadan and Schlumberger. The council of the
University approved and provided funding for the building and
Schlumberger equipped it. Schlumberger carries out research
activities in the Centre and the University community has access to
the facilities the company has provided. This, obviously, is a win-win
relationship for all parties involved.
3. Of comparable importance to the financial strength of public
universities and other tertiary institutions are “private giving” in form
of private support and endowment funds. Tertiary institutions should
embark on aggressive fund-raising campaigns with greater private
sector participation. In a similar manner, institutions of higher
learning in the country should pursue vigorously its endowments.
Endowments are contributed funds, held and invested by the
university in perpetuity, whose proceeds are dedicated for a particular
purpose such as supporting a distinguished faculty member (an
endowed professorial chair), a student (an endowed scholarship or
fellowship), or perhaps an academic program. Generally the
benefactor’s name is associated with the endowed activity.
4. All institutions of higher learning in the country should develop a
strong and vibrant relation with their alumni/alumnae within and
outside the country; as well as other groups of people like former
faculties and staff, visiting scholars or associates and friends of their
various institutions; corporate bodies and individuals. The
alumni/alumnae are veritable sources for such institutions to seek
alternative sources of revenue, since most of them are prime movers
of the economy at home and abroad. Tertiary institutions may
organize Home-coming programmes for such groups of people on an
annual basis. Such forums should be used essentially to source for
funds from the alumni/alumnae.
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Benedict O. Emunemu
5. As part of seeking for alternative sources of revenue for higher
education in Nigeria, tertiary institutions should equally seek for
sponsored research funding from both the government (federal and
state), as well as industrial sources, for their faculty members.
Bearing in mind that the outcomes of such researches would be of
high benefit to the government and the industrial/corporate
organizations, the support derived from such ventures would go a
long way in ameliorating the sufferings of the academia in their quest
to find sponsorship for their researches.
6. Tuition fees should be re-introduced to all undergraduate
programmes in Nigerian universities as well as other institutions of
higher learning in Nigeria, as opposed to the present situation
whereby tuition is made free. However, this can only be achieved, if
and only if, universities are granted full autonomy by the
government. This will enable them to take decisions on sensitive
matters affecting them like the issue of tuition payment. With the
sharp reduction in government subventions to these institutions, and
the seemingly enrolment upsurge in the universities and other
institutions of higher learning, the institutions are left with no choice
but to introduce tuition. The payment of tuition will make students to
appreciate the value of education and also imbibe in them the spirit of
hard work. Consequently, there will be an improvement in the overall
quality of higher education.
7. Universities, especially, could also increase their resource or
financial or resource base by embarking on an aggressive but
efficient programme expansion. This could be done by developing
professional, masters and doctoral programs in selective, high
demand disciplines and career fields that create opportunities for
economic development. The University of Ibadan, through its
Postgraduate School, is currently adopting this line of approach, and
the level of success is very overwhelming.
8. Universities and other institutions of higher learning in Nigeria could
also increase their resource base by engaging in Part-time teaching
through the operation of Open and Distance Learning (ODL)
programme. Such programme will attract a critical mass of people
who were not privileged to have a regular university education. The
ODL programme can also be complemented with e-learning courses,
the success of which will be greatly dependent on the provision of an
effective and efficient Information and Communications Technology
(ICT) base. Again, the University of Ibadan is also blazing the trail
Revitalization of African Higher Education
97
with the establishment of a Distance Learning Centre (DLC), which
is currently running both degree and sub-degree programmes in
various fields of study, especially in the humanities, social sciences
and mathematics. If properly managed, this certainly will be a
veritable source of income generation for the university.
Conclusion
The financing of the university–the structure of its internal costs, the pricing
of its educational products, and the acquisition of the resources necessary to
support its activities–has become the center of a national debate. The rising
costs of higher education during a period of stagnant or declining public
support and the consequent increases in non-tuition fees have triggered great
concern about both the access to and quality of higher education. Nowhere is
this debate more intense than in public universities, where most of the
nation’s students are educated. The ever-increasing costs of universities and
other tertiary institutions should not be surprising in view of the exponential
increase in knowledge and the growing educational needs of our society. The
demands upon our public universities and other tertiary institutions continue
to increase, with the population of undergraduate students growing once
again, while the needs of adult learners are expanding rapidly. Government
expects public universities to provide the basic and applied research so
important to economic growth in a technology-driven economy. The needs
for professional services in areas such as health care, engineering, law, and
extension all continue to grow. Yet, government is less inclined to provide
the funding increases necessary to allow public universities to respond to
these growing needs of a knowledge-driven society in the face of other social
priorities such as crime and health care. Beyond this issue of public priorities
is a continuing struggle to assign the values of higher education to the public
vis-à-vis the individual, by asking the classic questions of “Who benefits?”
and “Who pays?” As a nation we seem to be in the process of replacing an
earlier social contract that views higher education as a public good, benefiting
society at large and hence deserving of public support, with a view of a
higher education instead as primarily an individual benefit that should be
financed through the market place. It seems clear that the financial challenges
to the public university require a serious rethinking and possibly even
restructuring of all of its financial activities, from asset acquisition and
allocation to financial management to cost containment:
• Universities need to explore new financial models that strive to build
far more diversified funding portfolios, less dependent upon state
appropriations that enable public universities not only to increase the
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Benedict O. Emunemu
resources available for academic programme support but moreover
provide resilience against the inevitable ebb and flow of state
support.
• Universities need to build adequate reserve capacity, both in the
budgets of operating units and through endowment accounts.
• The allocation and management of resources, the containment of
costs, and the adoption of efficiency measures common from
business such as systems re-engineering and total quality
management are important strategies.
• But perhaps most significant is an entirely new approach to financial
management, responsibility, and accountability that will enable the
public university to thrive during a period of constrained public
support.
• Public universities and other tertiary institutions must break free
those traditions that depend heavily upon generous state
(government) support, and instead manage their financial affairs
much as private universities and institutions of higher learning. They
must become more entrepreneurial and proactive, seeking both the
resources and the autonomy that will allow them to thrive in spite of
the vicissitudes of public funding. In a sense, they must become
privately financed and privately managed public universities and
institutions of higher learning.
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