The Vice Chancellor of Olabisi Onabanjo University (OOU), Ago-Iwoye, Ogun State, Ayodele Agboola, has joined his counterparts in other universities to appeal to the Federal Government not to abolish the Tertiary Education Trust Fund (TETFund).
Professor Agboola made this appeal on Wednesday while speaking to journalists on the sidelines of the university’s 34th convocation ceremony in Ago Iwoye.
His appeal comes amid ongoing debates from stakeholders regarding the tax reform bills before the National Assembly (NASS).
Section 59 (3) of the Nigeria Tax Bill (NTB) 2024 states that only 50 per cent of the development levy would be made available to TETFund in 2025 and 2026, while the National Information Technology Development Agency (NITDA), the National Agency for Science and Engineering Infrastructure (NASENI), and the Nigerian Education Loan Fund (NELFund) would share the remaining percentage.
It also outlines that TETFund would receive 66.67 per cent in 2027, 2028, and 2029 years of assessment but zero per cent in 2030 year of assessment and thereafter. Also, it outlines plans to phase out TETFund entirely by 2030, redirecting all education tax proceeds to NELFund.
NASENI is a federal agency established to promote science and technology across the country. TETFUND is primarily to support the funding of public tertiary institutions, while NITDA promotes information technology across Nigeria. They are all funded through taxes imposed on businesses operating in Nigeria.
Concerned about this move, Agboola suggested that instead of replacing TETFund with NELFund, both should be allowed to operate pari passu, as they serve different purposes.
He highlighted TETFund’s role in assisting government-owned higher institutions at both federal and state levels through infrastructure development and staff capacity building. In contrast, he noted that NELFund was established primarily to provide students with access to non-interest loans.
According to the vice chancellor, TETFund and NELFund serve distinct purposes and should coexist. While TETFund supports government-owned universities in infrastructure development and staff capacity building, NELFund provides interest-free loans to students.
He stressed that abolishing TETFund would be counterproductive, as it has played a vital role in developing modern university infrastructure across Nigeria, including at OOU. “Most of the modern buildings in the Nigerian universities, including OOU, were built through the assistance of TETFund,” he noted.
Regarding the extension of TETFund funding to private universities, the vice chancellor argued that it would be inappropriate since private institutions are profit-driven and should not receive support funded by taxpayers.
Concerns raised
Various zones of the Academic Staff Union of Universities (ASUU) had raised concerns over FG’s move to stop funding the education sector through the Nigeria tax reforms bills 2024 before the NASS.
The zonal coordinator of ASUU-Kano zone, Professor Abdulkadir Muhammad, told a press conference in Kano that “the move to kill TETFund through the tax reforms” is a clandestine attempt by the FG to invariably abolish the fund and replace it with the newly established NELFund.
Similarly, the zonal coordinator of the Benin zone of ASUU, made up of nine universities in Edo, Delta, and Ondo states, Professor Monday Igbafen, expressed that TETFund may go into extinction if NASS passes the tax reform presented by the executive arm of government.
Also, chairman of the Sokoto zone of ASUU, Professor Abubakar Sabo, faulted the tax reform bills, maintaining that suffocating the funding source of TETFund to run NELFund would destroy public education in the country. “The only source of funding is from TETFund, so when you destroy it, you have destroyed public universities,” he stated.
Professor Sabo alleged that some members of the ruling class “want to destroy public universities and ensure that the children of the poor remain slaves.” He also expressed anger that stakeholders including ASUU, vice chancellors and pro-chancellors among others were not consulted within the educational sector before the bills were sent to the NASS.
The former Nigeria Labour Congress (NLC) President, Comrade Ayuba Wabba, had also cautioned the government against plans to scrap TETFund, saying such a move would have devastating consequences for universities and other tertiary institutions in the country.
According to him, scrapping TETFund would return Nigerian universities to zero level, as the national budget is already inadequate to meet their needs.
Presidency
Contrary to the concerns raised by stakeholders, the Presidency last December clarified that the tax reform bills do not suggest that NASENI, TETFUND, and NITDA will cease to exist in 2029 after the passage of the bills, but will change how they are funded.
President Tinubu’s spokesperson, Bayo Onanuga, explained that these agencies are funded through budgetary provisions with company income tax and other taxes paid by the same businesses that are being overburdened with the special taxes.
He clarified that the proposal, as contained in Section 59(3) of NTB, only seeks to consolidate some of the earmarked taxes imposed on companies and replace them with a single tax to be shared with the key agencies as beneficiaries in a phased manner until 2030.
The time frame, according to him, offers ample opportunity for the affected agencies to explore other funding sources in addition to budgetary allocations in line with the constitution and international best practices.
“It is a misrepresentation of facts to conclude that changing an agency’s funding source amounts to scrapping it. None of the countries leading globally in education, science, engineering, or information technology have similar earmarked taxes.
“The government imposes major taxes, be it income tax, consumption tax, or other taxes, to channel resources to its areas of priority at the time. Imposing a separate tax to fund an agency is an aberration that has yet to yield results despite the huge burden on businesses. The tax bill seeks to address this problem,” he said.
TETFund, NELFund
TETFund is an intervention agency set up to provide supplementary support to all levels of public tertiary institutions with the aim of using funding alongside project management for the rehabilitation, restoration, and consolidation of tertiary education in Nigeria.
The agency was originally established as the Education Trust Fund (ETF) by Act No. 7 of 1993 as amended by Act No. 40 of 1998 (now repealed and replaced with the Tertiary Education Trust Fund Act 2011).
The main source of income for the Fund is the two percent education tax paid from the assessable profit of companies registered in Nigeria. The Federal Inland Revenue Services (FIRS) assesses and collects the tax on behalf of the Fund. Most of the modern buildings in government-owned tertiary institutions were built through the assistance of TETFund.
On the other hand, NELFund is a student loan initiative established by the FG to break financial barriers in higher education through the provision of interest-free loans.
President Bola Tinubu on 3 April 2024 signed the Student Loans (Access to Higher Education) (Repeal and Re-enactment) Act into law. The new law addresses flaws in the 2023 Act, including issues related to loan purpose, eligibility criteria, application procedures, repayment provisions, and loan recovery processes.
