The policy of 40 percent auto-deduction of gross IGR is in line with the Finance Circular with reference number FMFBNP/OTHERS/IGR/CRF/12/2021 dated December 20, 2021.
The circular limits the annual budgetary expenditure from IGR of the partially funded federal government.
The information was contained in a letter that was issued by the accountant-general of the federation, Mrs Oluwatoyin Madein, to the universities titled ‘Implementation of 40% automatic deduction from internally generated revenue of partially funded federal government institutions.’
The letter on implementation of the policy dated October 17, 2023 and addressed to vice-chancellors of universities was approved by the minister of Finance and coordinating minister of the economy, Wale Edun.
It was signed by the director of Revenue & Investment in the office of the Accountant-general of the Federation, Felix Ore-ofe Ogundairo.
Ogundairo said, “I am directed to inform you that the Honourable Minister of Finance and Coordinating Minister of the Economy (HMF&CME) has approved the implementation of a 40% auto deduction from the Gross Internally Generated Revenue (IGR) of all Partially Funded Federal Government Institutions in line with the Provision of Section 62 of Finance Act, 2020 with effect from November, 2023.
“Agencies/parastatals to not more than 50% of their gross IGR and the remittance of 100% (hundred percent) of the remaining 50% (fifty percent) to the Sub-recurrent Account. While all statutory revenue lines like Tender Fees, Contractor’s Registration Fees, Disposal of Fixed Assets, Rent on Quarters, etc shall be remitted 100% (hundred percent) 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.”
The federal government had hinted that it was granting universities full autonomy to explore sources of financing their activities.
The minister of Education, Tahir Mamman disclosed this in Abuja. The aim is to grant full autonomy to the universities as part of the government’s effort to create new means of funding tertiary education.
Already, controversy is trailing the policy which approved 40% auto deduction from the Gross Internally Generated Revenue (IGR) of all Partially Funded Federal Government Institutions and payable into the federation account.
A letter addressed to some institutions from the office of the Accountant-general of the Federation, which was obtained by LEADERSHIP showed that the minister of Finance and coordinating minister of the Economy has approved the implementation of 40% auto deduction from the Gross IGR of all partially-funded federal government institutions.
The letter was addressed to some federal universities and other institutions across the country.
However, LEADERSHIP estimates that federal universities such as the University of Abuja, which approximately generate up to N1.4 billion yearly, will be remitting to the federation account an amount within the range of N560 million or more when the 40 percent.
It would be recalled that during the review of financial records and documents by the Senate Public Accounts Committee (SPAC) in February 2022, the committee observed that the university generated the sum of N2,413,787,645.48 internally in 2016 and 2017.
Although as of the time of filing this report the authorities of the university of Abuja failed to provide us with the latest IGR of the institution when contacted, the yearly revenue generated internally in the University, according to the committee, was N1,463,097,604.13 in 2016 and N950,690,041.35 in 2017.
However, key players across the education sector have kicked against the policy, saying it will strangulate their activities and also deprive them of embarking on major infrastructure and critical projects that would put the institutions at par with its counterparts elsewhere.
The president of ASUP, Anderson Ezeibe, who confirmed that the union has seen the memo, said it was really unfortunate and one of the contradictions inherent in the perception and operations of tertiary education institutions.
He said, “It is a contradiction because the government clearly views these institutions as revenue generating agencies/agents of government.
“Yet the same institutions are dying of paucity of funds and dilapidated infrastructure. The same institutions cannot meet basic needs and obligations to keep them running.
“Of course, it will adversely affect the operations of the institutions as it will further pauperize them and demotivate them too.”
Ezeibe urged the government to relook the students’ loan scheme, stressing the need for a robust conversation on the direction of the education system in Nigeria.
“How can you give loans to the students to pay their fees, collect 40% of the fees immediately from the same students through this ridiculous policy and refuse or reduce the funding of the same institutions on the basis of the fees paid by the students? This will cripple the loan scheme as the institutions will continue to suffer,” he added.
Meanwhile, the National Association of Nigerian Students (NANS), zone C, has described the decision as dangerous to the tertiary education system.
The coordinator of NANS Zone C, Comrade Anzaku Shedrack, who spoke in an interview with LEADERSHIP, said academic institutions may have only one option left to charge more fees in order to boost the IGR, thereby increasing the number of school dropouts.
Hs stated: “Federal government that does not adequately fund universities is now demanding 50% of what the universities generate from IGR.
“It’s simply madness. Universities are merely managing to survive; recently they introduced some fees/charges to enable them function. Now government wants equal share from the little collected. Two things will happen automatically:
“Universities will not be able to function well (UniAbuja receives a meager N12m monthly subvention from government with which to operate. N12m!). After remitting 50% of IGR to government there will be only little left with which to operate: pay for light, water and diesel; do maintenance of hostels, classrooms, lecture theatres; buy consumables for laboratories and workshops, pay impress, pay allowances for casual workers, etc.
“The only option left is to charge more fees in order to boost the IGR. This way, students and their parents will suffer; some will certainly drop out.”
According to him, the directive by the minister is dangerous, counterproductive and hence unacceptable.
When contacted, the Bursar of the Nnamdi Azikiwe University (UNIZIK), Awka, Anambra State, Gozie Egwuatu, said the institution remits to the federal government every kobo that accrues from the statutorily approved internally generated revenue (IGR) 0sources.
He named such statutory revenue windows from where IGR accrues to the federal government to include tendering fees and charges on hiring of the university’s properties.
He also said the institution does not have students’ loan scheme.
The UNIZIK bursar revealed that the only charges students pay to the university are for their personal services which the institution runs for the students at a cheaper cost compared to what they will pay if they were to go and get such services for themselves.
He said such services include medical care and laboratory services, adding that the amount charged by the institution is normally arrived at between the university management and parents of the students.
The Bursar stated that due to the rising costs of virtually every service nationwide the university has been finding it difficult to provide such services at the agreed levies.
Egwuatu stated that in line with the policy of the federal government for all its institutions, “tuition is free” for the students in the university.
He lamented that the federal government was not giving any subvention to the university for overhead expenses, saying “it has been difficult for us in running the university “.
Meanwhile, efforts by LEADERSHIP to get the estimated derivable annual revenue of the Abubakar Tafawa Balewa University (ATBU) proved abortive, as neither the vice Chancellor, Prof Mohammed Ahmed Abdul’azeez, nor the varsity PRO Zailani Bappa agreed to respond to his request.
The varsity’s PRP said Sunday was not a working day, and that he should let him be in office to access the revenue figures of the university.
But the Student’s Union Government president of Abubakar Tafawa Balewa University (ATBU) Bauchi, Sen Wakili Dauda Abdulrahman, said that the policy of deducting 40% from the revenues (IGR) accruable to the ATBU, Bauchi, can have several implications for students and the student union.
On the impact of revenue deduction on student services, Abdulrahman explained that such a significant reduction in university revenue could potentially affect the quality of services provided to students, especially in the areas of facilities, infrastructure and academic resources.
The SUG president told LEADERSHIP: “If the university faces a revenue shortfall due to this deduction, they may consider raising tuition fees to compensate for the loss. This could directly impact students by making education more expensive.”
According to him, financial strain on students such as tuition fee increase can place a financial burden on students, making it more challenging for some to afford their education.
“The deduction of 40 percent from the university’s revenues (IGR) can potentially affect students’ loans and would negatively pose repayment challenges. Higher student loan amounts can lead to greater debt burdens upon graduation. Students who have taken out loans may find it more challenging to repay their loans due to the increased debt load”.
On students’ union, funding and budget, the SUG president said a reduction in university revenue may lead to budget constraints, which could impact the funding allocated to student union activities and initiatives, hence limiting the ability of the student union to organize events, programmes, and services for the student body.
Abdulrahman further explained that a decrease in funding might affect the quality and availability of services and resources that the student union can provide to the student body.