By Adeyemi Adekunle
The Nigerian National Assembly is currently deliberating over ambitious tax reform bills poised to transform the funding dynamics of the nation’s tertiary institutions.
The proposals, championed by President Bola Tinubu, target the existing special tax privileges enjoyed by the Tertiary Education Trust Fund (TETFUND), the National Agency for Science and Engineering Infrastructure (NASENI), and the National Information Technology Development Fund (NITDF), redirecting significant resources to establish a robust Student Loan Fund.
The ramifications of these reforms promise to be monumental, particularly as they aim to consolidate educational funding under a singular umbrella, leaving many stakeholders within the educational sector apprehensive about the future of their financial support.
The proposed tax changes have incited a flurry of reactions from various quarters, especially as the legislative process unfolds amidst a backdrop of already heightened economic concerns in Nigeria. Critics argue that the reforms could undermine the financial stability of existing educational and technological agencies, while proponents assert the necessity of redirecting funds towards a generation of students in need.
Key amongst the objectives of the proposed bills is the gradual phasing out of certain levies that currently benefit TETFUND, NITDF, and NASENI. Existing laws impose a 3% tertiary education tax that higher-earning companies contribute to TETFUND, alongside a 1% levy for the NITDF and a 0.25% charge for NASENI from commercial enterprises.
Yet, these reforms pave the way for a more centralized allocation of resources toward student education, as they aim to consolidate these separate levies into a single 4% charge on relevant profits by 2025, with a scheduled reduction leading to a complete cessation of these funds by 2030.
The timing of these proposed changes raises eyebrows, considering that TETFUND, which primarily finances infrastructure projects and faculty development in public universities, received over N800 billion in the 2024 budget alone.
Advocates for TETFUND warn that the termination of its financial lifeline could spell disaster for ongoing university projects and initiatives.
“The realities on the ground are stark,” states Dr. Amaka Nwosu, a lecturer at the University of Lagos. “If TETFUND’s funding is compromised, the quality of education and infrastructure in our universities might take a severe hit.”
Governor Babagana Zulum of Borno State echoed these concerns during a recent interview, suggesting that the proposed reforms threatened to dismantle significant educational support structures. He argued that the absence of TETFUND, along with other agencies, would fundamentally change the academic landscape, potentially leading to a decline in educational standards.
However, government officials have sought to reassure the public, clarifying that the reforms do not intend to eliminate these agencies entirely.
Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Reforms, along with the Chairman of the Federal Inland Revenue Service (FIRS), has stressed that while the funding model may shift, direct government approvals for budgetary support will continue to sustain the existence of these agencies beyond 2030.
Amid the tension surrounding the proposed reforms, there’s a palpable sense of urgency regarding the establishment of the Student Loan Fund.
This fund is intended to provide comprehensive financial assistance to students across Nigeria, particularly those from disadvantaged backgrounds, who may otherwise find it difficult to pursue higher education.
As the government projects an increase in allocations to the Student Loan Fund—from 25% of the developmental levy in the initial two years to a staggering 100% by 2030—faith in the plan’s execution is a prevailing concern.
Proponents argue that this shift addresses the critical issue of student financing which, in recent years, has failed to keep pace with inflation and rising educational costs.
“This is a necessary evolution in our approach to education financing,” asserts Adebayo Oluwaseun, an education policy analyst based in Abuja. “By prioritizing student loans, we are giving students the opportunity to access higher education, which is essential for the nation’s development.”
Yet critics remain skeptical—many fear that the new system may not adequately cover the financing needs of students, given the historical challenges surrounding student loans in Nigeria. The critical question remains: can the government execute this ambitious transition without disenfranchising the very entities that have provided crucial educational support for years?
While the discussions surrounding educational funding reform continue, the impact of the proposed tax changes will resonate throughout Nigeria’s academic institutions, shaping the landscape for generations to come.
Experts predict that the success of this initiative hinges on clear communication and strategic planning between the government, educational institutions, and the student bodies they serve.
