Public university education funding has been a major problem in Nigeria and a source of constant conflict between the Federal Government and notable academic and nonacademic pressure groups in the country. On several occasions the conflicts have been poorly managed, leading to months of industrial action by the union. This has had negative impacts not only on the Nigerian students in terms of delayed academic calendar but also on the overall economy due to incessant halt in university activities that have indirect economic impacts.
The ongoing face-off between the Academic Staff Union of Universities (ASUU) and the Federal Government has been over seven months and still counting, and there seems to be no end in sight. Concerned stakeholders have been challenged to seek permanent solution to the problem of funding to public universities and the incessant ASUU strike.
Based on the foregoing, the Association of Capital Market Academics in Nigeria (ACMAN) during its recent webinar on sustainable funding for universities has described the capital market as a viable and veritable platform where sustainable funding could be raised for both private and public universities in Nigeria. The capital market presents long-term funding opportunities that could be leveraged to raise high-volume capital for projects in the universities through issuance of bonds, experts suggested at the webinar.
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Speaking at the webinar, Mr Suleyman Ndanusa, former director-general, Securities and Exchange Commission (SEC) and former pro-chancellor of Ibrahim Badamosi Babangida University in Niger State observed that at a time of huge financial crisis and national budget deficit, funding challenges for universities could only get worse, except urgent efforts are made to develop new value propositions and creative sources of funding in line with modern economic trends rather than the traditional source of funding. According to him;
“Nigerian universities can raise straight project tight bonds for students’ accommodation, alumni bonds/projects can be packaged to attract alumni investments, while new infrastructure can be funded through impact bonds.
“Instead of waiting for alumni members to give free money for projects, you can entice members with a bond they can invest and get returns but at the same time, creating resources for the university to do projects” he noted.
On his part, Oluwole Adeosun, president, Chartered Institute of Stockbrokers (CIS) noted that over-reliance on government direct funding is the cause of continuous lockdown of Nigerian universities, like the ongoing ASUU strike. According to him, while other competing priorities like health and infrastructure compete for government funding amid dwindling revenue, new funding initiatives for universities must to be developed to nip the current funding challenges with university education in the bud. According to him;
“The federal government should have the political will to exploit the capital market because it has the capacity to provide the much needed fund. I can tell you that there is N14 trillion of capital funds that is just placed in federal government bonds, then you borrow the entire funds that should have been used for development.
“Go to Chile, it is the pension fund that funds infrastructural development in Chile where we took this model of pension fund from. But here, 70 to 80 percent of the N14 trillion is directed at non-yielding projects. That is not where it should be. It should be tied to specific projects and those projects will pay themselves up over time.”
Speaking on new funding initiatives, Mr Adeosun said the capital market, in terms of issuance of government-backed university bonds on the stock exchange, would generate large amounts of money over time to finance different types of infrastructure in the universities.
Furthermore, universities can key into SUKUK as a viable source of funding for requisite research and development. This was suggested by Kabiru Dandago, federal commissioner of tax tribunal and former finance commissioner in Kano State, who also urged the government to refrain from seeing SUKUK as a debt instrument, but rather as an investment tool which can be utilised in advancing capital projects in Nigerian universities.
Universities can also go for an endowment fund which can be used to raise large amounts of funds that can be invested in capital projects usually in the capital market, Solomon Adebola, vice chancellor, Adeleke University, Osun State, said. He explained further that the endowment funds are usually placed in four main categories, including restricted endowment funds which can be invested in specified areas as dictated by the donor of the fund; unrestricted endowment funds which are to be used strictly at the discretion of the university; term endowment fund where the principal, not just the interest, is utilised after a specified period as given by the owner and the donor; and quasi endowment fund used to fund a specific purpose as given and dictated by the donor of the fund. According to him;
“Universities can also place commercial papers to raise funds in capital markets as specified by SEC and the regulations. They can invest in blue chip shares of corporate bodies and such shares are not to be kept in but could be held when the values have been seen to hold up and effectively optimised.
“We should note clearly that the funds that are generated must be re-invested in things like construction of hostels for students, in which case this will bring many more students and therefore raise more money in terms of school fees from the school and that can be used for other things” he added.
Seth Akutson, former vice chancellor, Greenfield University and first vice president, ACMAN, noted that ownership and management structure of universities play a key role in their ability to easily secure capture investment through the capital market. This often give most private universities better leverage since they are well placed to run as a business. He suggested that rather than engage in the technical aspect of running a business, universities can outsource their businesses to business experts who can run them efficiently and make profits while they focus on their academic and research activities. These outsourced businesses can then approach the capital market and get funding for such businesses on behalf of the universities.