THE IMPACT OF EDUCATIONAL EXPENDITURE ON THE ECONOMIC DEVELOPMENT OF EKITI STATE. (A CASE STUDY OF TETFUND)

ABSTRACT

           The main objective of this research is to determine the impact of TETFUND in Ekiti State government funding on education. The study examined the impact of TETfund Interventions in Ekiti State Educational System and its implications for sustainable development with special attention on University of Nigeria, UNN (Ikere-Ekiti Chapter). The study finds that TETfund Interventions in Ekiti State Tertiary Institutions particularly UNN (Ikere-Ekiti Chapter) have impacted positively on the infrastructural and human development of the institutions; the implications of this for sustainable development are also positive. This research work made use of primary Data which were sourced from different correspondents within various educational institutions within Ekiti State. It is concluded that the intervention of the special education intervention body (TETFUND) has significant impact on the educational and Economic development in Ekiti State. This is due to the fact that more money has been spent in maintaining and building new and more educational facilities over the years. The study recommends amongst others, a reduction and/or total elimination of unhealthy bureaucratic bottlenecks involved in accessing TETfund; utilization of honest and competent contractors in executing TETfund projects and involvement of donor agencies to assist governments in funding tertiary education in Nigeria. This, if tenaciously adhered to, will launch Nigerian Universities to a better footing.It is also recommended that the State Government should support and encourage the activities of TETFUND within the state and that government should increase her funding in educational sector especially on the capital component to boost educational growth in Ekiti State. Knowing fully well that Education remain a substantial source of income to the state.

CHAPTER ONE

INTRODUCTION

Background of the Study

Education funding comes from different sources. The major one for all levels of government is public revenue from taxation and proceeds from crude oil. Education funds are reported to be distributed among primary, secondary and tertiary educational levels in the proportion of 30%, 30% and 40% respectively (Balani 2003). The public funding includes direct government expenditure (for teachers’ salaries and instructional materials) as well as indirect expenditure in the form of subsidies to households such as tax deductions, scholarship, loans and grants. It also includes payment for education tax fund (ETF) mainly for capital expenditures. Other sources of fund that are enjoyed by the Nigerian government has are federal taxes and duties on petroleum, profits from imports and exports which form the revenue of the federal account and the centrally collected value added tax (VAT) introduced in 1996.

The Nigerian government was able to finance education sector considerably, as a result of huge wealth generated from the sales of oil, whose discovery brought fundamental changes to the economy of Nigeria. The government of Nigeria allocated large amount of the huge wealth made from the sale of oil into expenditures in various sectors including education. Government’s ultimate objective according to NPE situation thereafter engendered indiscriminate establishment of institution and increased student enrolments mention a few. According to Nwankwo (1992), enrolment in higher education increased from 14, 468 in 1976 to 176,700 in 1996. The pace at which education had grown in Nigeria particularly since political independence is unparallel elsewhere among African nations (Adesina 1982).

It is widely acknowledged that, education is an important determinant factor of economic growth. Prominent classical and neoclassical economists such as Adam Smith, Romer, Lucas and Solow emphasized the contribution of education in developing their economic growth theories and models. The main theoretical approaches of modeling the linkages between education and economic performance are the neoclassical growth models of Robert Solow (1997) and the model of Romer (1998). Apart from the theoretical aspects, numerous empirical studies have focused on the issue of education and economic development. According to Ismail (2008), education is considered as a long term investment that leads to a high production for a country in the future. In fact, economists argued that advanced education sector will certainly lead successfulness of a country’s economics and socials development. Therefore, most of the developed and developing countries emphasize the enhancement of educational sector. Nigeria has no exceptions in developing and enhancing its educational system in order to be a world class country (Ibrahmim and Awang, 2008). Nigeria’s commitment in developing its educational sectors has been tremendous. This can be seen from Nigeria’s annual budget allocation. Nigeria has allocated significant amount of budget for education sector and it keep increasing for each budget session. What can be learnt is that, from 1989 there have been consistent increases for Nigeria’s educational budget allocations. Despite the financial turmoil that badly affected Nigerian economy in which had devaluated Nigeria currency, government’s allocation for the educational sector has never been reduced. In fact it has been increasing. Emphasizing on educational sector has been successful as it plays important roles in achieving National development agenda and contributed to a country’s economic growth. Sheehan (2001) listed some direct benefit that country’s gain from education. This includes increases in productivity, labors’ income, country’s economic growth and literacy rate. In addition, education could also improve efficiency of income allocation as well as labor’s mobility and transfer in accordance to work demand of trained workers.

The national consciousness of the significance of education in Nigeria formed the basis upon which education expenditure became a matter of serious consideration. Since 1960 to date one of the major problems facing educational sector is low investment in the infrastructural, research grants and learning aid especially in the public schools. For several years now, educational industry has suffered tremendous neglects arising mainly from the ineptitude of education administrators at the various levels of government in Nigeria. According to Ukeje (2010) “the problem of education is not only in terms of the economic factor of increasing demands in the face of decreasing resources but also in terms of political considerations.

On the foregoing promises, this research stands to present a framework in which policy interventions can be hinged in order to ameliorate the problem of poor financing and inconsistencies in the federal government’s and Ekiti State’s educational expenditure pattern in Nigeria.

Essentially, the major sources of funding for the Tertiary institutions in Ekiti State is the State government monthly subvention and internally generated revenue which comes basically from school fees. The inadequacy of this source of funding has recently compelled management of the Tertiary Institutions to increase school fees. As a result, many indigent students were forced to drop out while enrollment of students of Ekiti State origin has subsequently declined. Nkwede (2009) pointed out that Tertiary education in the contemporary Nigeria has focused itself at the cross-roads in the wake of continued lack of funding from the traditional sources even when it is explicitly clear that education is one of the most viable and biggest industries in almost every modern economy.

Inadequate funding has resulted to poor infrastructural facilities, teaching/learning facilities; library, research, etc are also in very short supply. The problem of funding is however, not peculiar to Ekiti State Tertiary Institutions. As noted by Mgbekem (2006), cited in Oscar (2012), the major challenge facing the management of Tertiary Institutions like university, Polytechnics and Colleges of Education system in Nigeria, is inadequate funding. Besides, Ajayi and Ekundayo (2006), also remarked that the Nigerian government over the years, has not been meeting the United Nations Educational, Scientific and Cultural Organization (UNESCO) recommendation of 26% of the local budget allocation to Education Sector. In view of this, the Tertiary Education Trust Fund (TETFUND) was established as an intervention agency under the Education Tax Act No. 7 of 1993, (ETF, 2011). UNN (Ikere-Ekiti Chapter) had its first allocation of TETFUND Intervention in 2000 (TETfund Special Invention Project, 2000).

The Tertiary Education Trust Fund (TETFUND) formerly Education Trust Fund (ETF) is a product of a challenge posed to ASUU by Government in the early 90s. Government then challenged ASUU to propose ‘other’ viable sources of generating funds that could be used to save tertiary education in the country through interventions and extra budgetary supports. ASUU worked out a detailed policy formulation and managerial structure of ETF (TETfund) which formed part of FGN/ASUU Agreement of 1992.

Although at its initial conception, the ETF intervention was intended to be a special intervention in Tertiary Education only, the Military government enlarged its scope to cover all levels of Education – Primary, Secondary and Higher Education. The intervention of the ETF did not make the intended significant changes in the education system at any level.

In 2011, the ETF Law was repealed. The Tertiary Education Trust Fund (Establishment Act, etc.) Act was enacted as a transformative intervention agency for rehabilitation, restoration, and consolidation of the tertiary education in Nigeria.

Statement of the Problem 

Alternative source of financing education explored by the federal government is the Education Trust Fund (ETF) established in 1995. ETF ensures that companies with more than 100 employees contribute 2% of their pre-tax earnings to the fund. Primary education receives 40% of this fund; secondary education receives 10% and higher education 50%. Primary education has also in the past decades receives from the Petroleum Trust Fund (PTF) for capital expenditure and provision of infrastructural materials.

Despite all alternatives, the infrastructure and facilities remain inadequate for coping with a system that is growing at a very rapid pace. Due to poor financing, the quality of education offered is affected by poor attendance and inadequate preparation by teachers at all levels. Physical facilities such as libraries, laboratories, modern communication and information technology equipment have to be provided.

It is in the interest of this, that the researcher, wish to critically analyze the impact of other alternative educational funding method most especially TETFUND and its footprint on the economic development of Ekiti State.

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Updated: 28th September 2017 — 9:58 pm

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