ALTERNATIVE FUNDING POTENTIALS OF UNIVERSITIES IN SOUTH-EAST AND SOUTH-SOUTH NIGERIA

Abstract

This study was carried out to investigate the alternative funding potentials of Nigerian universities. The alternative sources of funding available to Nigerian universities that could  be  tapped  for  financial autonomy due  to  ownership, age  and  location of the universities were explored. This study adopted a descriptive survey design. Five research questions were generated and five null hypotheses were formulated to guide the study. A total of 1376 respondents made up of 1358 academic staff and 334 heads of academic and administrative units drawn from 3 federal, 3 state and 3 privately owned universities in South-East and South-South, Nigeria made up the sample for the study. An instrument named Alternative Source of Funding Potentials of Nigerian Universities Questionnaire (ASFPNUQ) was developed, validated and used for the study. The internal consistency reliability estimate of the questionnaire was determined using Cronbach alpha method. The internal consistency reliability estimates for sections B to D are .92, .82 and.78 with an overall reliability of .87 respectively. The data obtained were analyzed using mean and standard deviation to answer the research questions; Analysis of Variance (ANOVA) and multiple  regression  analysis  were  used  to  test  the  hypotheses  at  0.05  levels  of significance. The major findings of the study were that federal, state and private universities differ significantly on the alternative sources of funding available that can be tapped for financial autonomy and the direction of the difference was significant across

the federal, state and private universities; significant differences exist among 1st, 2nd and

3rd  generation universities in the alternative sources of funding available that could be tapped for financial autonomy and there are similarities between the first and second and

third generation universities; significant differences exist among universities located in urban, semi-urban and rural areas in the alternative sources of funding available that

could  be  tapped  for  financial  autonomy  and    the  direction  of  the  difference  was significant  across the  urban,  semi urban and  rural universities; there  are  significant

differences in the problems which federal, state and private universities encounter in tapping or exploiting the alternative sources of funding available for financial autonomy

with similarities existing between the federal and state universities and significant difference existing between the federal and private universities; significant differences

exist among federal, state and private universities in the strategies that could be adopted to enhance the exploitation of alternative sources of funding for financial autonomy and

the  direction  of the  difference  was  significant  across  the  federal,  state  and  private universities as regards the strategies universities could adopt to enhance the exploitation

of alternative sources of funding for financial autonomy. A major educational implication of the  findings was that  federal,  state and private universities could adopt  different

strategies in tapping sources of funding for financial autonomy and this suggests that the

National Universities Commission, in approving universities, does not only bother about

the physical facilities but also the sources of funding available that can be tapped for financial autonomy. It was thus recommended that emphasis should be given to availability of strategies for tapping sources of funding for financial autonomy before the approval and accreditation of universities by the National Universities Commission and that uniform minimum standards should be maintained in federal, state and privately owned universities not minding their age and location.

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CHAPTER ONE

INTRODUCTION

Background of the Study

Nigerian universities are the ivory towers of the nation’s educational system. Investment in education has become internationally recognized as an investment par excellence for human development and eradication of poverty. Acquisition of university education is seen as the major way of human formation which mainly drives the economic growth of a nation (Yusuf,

2010). This, perhaps, is in line with the submission of Odunaike and Oyesiku (2008) that continuous pursuit of knowledge and intellectual formation is basic to wealth creation of the society through well packaged university programmes.

One of the major problems facing university education in Nigeria is inadequate funding. For many years, enrolments have increased more quickly than the government’s capacity to maintain. The system has not had the financial resources necessary to maintain educational quality in the midst of significant enrolment expansion. For instance, Nwabuisi (2008) reported that in 1999, only 11.2% of the national budget was allocated to universities, which was reduced to 8.3% in 2000; 7.0% in 2001; 5.9% in 2002 and as low as 1.83% in 2003.  Though national budget allocated to universities was raised to 7.10% in 2004; 7.76% in 2005; 8.2% in 2006;

6.07% in 2007; and 13.00% in 2008, it has continued to decrease as years roll by.   This has hampered education delivery, monitoring, inspection and other quality assurance activities. The prevailing fiscal constraint therefore encouraged federal government’s willingness to deregulate the higher education sector and allow private participation in the provision of the much needed tertiary education.

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Quality  university education according  to  Tawari (2002)  and  Okoroma  (2006)  is  a function of adequate funding. It  has become obvious that  Nigeria’s neglect  of the United Nations Educational and Scientific Organization (UNESCO) funding formula (26% annual budget)  is  detrimental to  the  nation’s  developmental aspiration.  This  neglect  has  already precipitated  crises  in  the  entire  education  system.  University  education  is  worse  affected because effective teaching and research are not taking place (Okoroma, 2006). The setback in the financial capability of the system coupled with the escalating demands that out-stripped capacity   has not only posed problem of university sustainability as strongly evidenced in the decline in quality and standard, ageing of facilities, increase in personnel cost, problem of access and human capital flight (otherwise known as brain-drain) but equally has challenged the competencies of the university administrators (Ogunu & Ogbuehi, 2004; Adesina, 2005).

One of the strategies that have been articulated and practised elsewhere to address the problem of poor funding is to seek alternate source(s) of funding, which according to Ogunu and  Ogbuehi (2004)  include  university entrepreneurship, university  industry collaboration, strategic fund raising progammes and university community relationship. To restore standards and quality in university education, Nigeria may have to depoliticize education.

Governments have made efforts at addressing this problem. For example in 1993, Education Tax Decree was enacted to provide 2% of the profits of companies registered in Nigeria to be collected by government   and paid into a fund called the Education Tax Fund (ETF) now ( Education Trust Fund). This fund is disbursed according to the ratio of 50: 40: 10 to higher, primary and secondary education respectively (Dawodu, 2010; Okuwa, 2004). The Education Bank established by decree No. 50 of 1993 that  replaced the defunct Nigerian

Students’ Loan Board harnesses private sector resources for the funding of education (Chuta,

1999).

Despite increase in funding from over N11 billion in 1999 to over N90 billion in 2008, funding still remains a major challenge (Yusuf, 2010). The insufficient funding by government suggests the need to seek for potential alternative source(s) of funding that could be tapped by universities for financial autonomy, if institutional performance in teaching and research is to be enhanced.

Suggestions have been made by some researchers (Olanrenwaju & Olugbenga, 2007) for re-introduction and deregulation of tuition fees in Nigerian universities. The belief of these researchers is that school fees have been identified as the most popular way of financing education around the world. School fees represent 23% of higher education income in the United States, 20% in Australia and 36% in Japan (Olanrewaju & Olugbenga, 2007).

However, no matter how cautious Nigerian governments have been in introducing tuition fees in federal universities because of the seemingly harsh reactions it may generate from the student body, their parents and the society at large, the amount students are made to pay as school fees is on the increase every session. One may wish to note that even the much students pay as fees contributes only about 5% of the university revenue, which is very insignificant to the financial needs of these universities. Therefore, to take a cue from what has happened in the western countries, there is need to determine the alternative funding potentials of universities in Nigeria, particularly South-East and South-South, Nigeria. The people of South East, South- South and South-West Nigeria value education most, and therefore could be a good place to carry out  a study on the alternative funding potentials of universities. Alternative funding

potentials refer to areas or sources of funding which universities can tap to achieve autonomy in funding. They will be seen as alternative sources of funding which are yet to be explored.

In exploring the alternative funding potentials of universities, the likely factors that can influence the perception of the administrative and academic staff of the universities such as ownership, age and location of the universities need to be addressed. Ownership of a university has to do with the proprietorship of the university. Ownership of a university may be crucial in relation to alternative sources of funding potentials. Ownership of universities in Nigeria is in two  categories: private and public universities. Under the public are the  federal and state universities. The primary motive of the private universities could be to make profit; unlike the public ones which may focus more on the welfare of the people they serve. Nevertheless, the public universities are expected to endeavor to become financially self supporting as their running costs are concerned due to government withdrawal or paucity of annual subventions to them (Akanda & Azike, 2007). One wonders whether differences exist among the federal, state and private universities on alternative sources of funding available that could be tapped for financial autonomy.

The age of the university has to do with the number of years a university has existed or lasted. The National Universities Commission (NUC) ranked universities into 1st, 2nd  and 3rd generation universities based on the year of establishment of the university and the quality of academic  programmes  during  the  1999-2000  NUC  accreditation  exercise.  One  may  be interested to find out if the year of establishment of the university such as first, second and third generation universities would have any significant influence on alternative sources of funding potentials available for financial autonomy.

Location of the university is also another factor that may influence the availability of funding sources. Economic experts suggest that the location of a business determines to a great extent the magnitude of profitability. Thus, a university that is located in an urban area or state capital is more likely to attract other profit oriented ventures than those located in semi-urban and rural areas. Anyanwuochi (2010) corroborated this position when he pointed out that the survival of any firm to an extent is determined by its location or site. The extent to which location of university, either  in urban, semi-urban or rural areas  influences the alternative sources of funding available for financial autonomy in such a university needs to be properly investigated.

Another area that has been of interest to researchers is the issue of problems which universities encounter in tapping or exploiting  alternative sources of funding available and strategies universities could adopt to enhance the exploitation of alternative sources of funding for financial autonomy. A study was carried out by Conraths and Smidt (2005) on the regulatory barriers to income diversification in universities in European countries. The finding of the study revealed that  a  crucial barrier  to  income diversification in  most  European countries  is  the regulatory framework: universities are subject to limitation set by law that prevents them from exploiting their potential and developing income generating activities.

The problems that are encountered by Nigeria universities in financial management practices of some state universities were identified by Nte (2006) as: expenditure without authorization; fraud and falsification of certificate; defects in internal control system; professional negligence by the account officers or some of the signatories to institutions account; outdated financial regulations; expenditures or approval of expenditures without approval by council and award of contracts (for political support within and outside the institution).

The quantitative analysis as well as the site visits by Weiner (2010) on how to achieve financially sustainable universities in European universities as a strategic approach to embedding income diversification in the institutional strategy indicated that one of the institutional key success factors is for the diversification strategy to be rooted and embedded in the overall academic strategy and mission of the institution. The finding of the present study may reveal the extent  strategic  approach and  leadership  would  enhance  the  exploitation of the  alternative sources of funding potentials of universities in south-east and south-south, Nigeria.

Statement of the Problem

Investment  in  university  education  has  become  internationally  recognized  as  an investment par excellence for production of high level manpower and eradication of poverty. Acquisition of university education is seen as the major way of human capital formation which mainly drives the economic, political and social growth of a nation. For universities to function effectively and achieve expected goals, they must be adequately funded. However, one of the major problems facing university education in Nigeria is inadequate funding (Nwabuisi, 2008). For instance, Nwabuisi (2008) reported that in 1999, only 11.2% of the national budget was allocated to universities, which was reduced to 8.3% in 2000; 7.0% in 2001; 5.9% in 2002 and as low as 1.83% in 2003. The national budget allocated to universities has continued to decrease as  years  roll  by.  For  many  years,  enrolments  have  increased  more  quickly  than  the government’s capacity to maintain. The resultant effects include frequent crisis in the university system, industrial action by academic and non-academic staff, students’ uprising and secret cult activities. Government has declared that the burden of providing university education is too much and  has called on the private sectors of the economy and other stakeholders to get involved in funding of university education. Thus, the federal government of Nigeria, through

the  National  Universities  Commission  encouraged  the  universities  to  look  for  alternative sources of funding. This is especially important as the demand for academic staff autonomy may require financial autonomy. For universities to achieve financial autonomy in running their affairs, there is need for a survey of alternative funding potentials of the universities in Nigeria. Nigeria must face the reality of economic and financial circumstances by taking cue from what is  done  in  some  western countries  like  the  United  States of  America  and  Britain  where universities depend less on government and provide their own fund (Olanrenwaju & Olugbenga,

2007). This would only be achieved in Nigeria when universities focus on identifying their alternative funding potentials and tapping them.

Therefore, the problem of this study put in a question form is: What are the untapped alternative sources of funding apart from government grant available to Nigerian universities that can ensure financial autonomy?.

Purpose of the Study

The main purpose of the study was to determine the alternative funding potentials of

Nigerian universities. Specifically, the study sought to ascertain:

1.  The alternative sources of funding available to federal, state and private universities that could be tapped for financial autonomy.

2.  The differences that exist in the alternative sources of funding available to 1st, 2nd and

3rd generation universities that could be exploited for financial autonomy.

3.  The differences that exist in the alternative sources of funding available to Nigerian universities located in rural, semi-urban and urban areas for financial autonomy.

4.  The problems which federal, state and private universities encounter in tapping the alternative sources of funding available.

5.  The strategies which federal, state and private universities could adopt to enhance the exploitation of alternative sources of funding for financial autonomy.

Significance of the Study

The significance of this study is derived from both the theoretical and practical basis of alternative funding potentials of some Nigeria universities. The study would be of immense importance to the Federal Ministry of Education, National Universities Commission, State Ministries of Education, Private owners of universities, Administrative staff, academic staff, students and researchers when published.

The findings of this study have relevance for systems theory. The system theory is very relevant to educational management because the entire educational process is in a system. The major characteristics of an open system such as the  input, process and output exist  in the management of resources in universities. The inputs are the human and non-human resources. The human resources consist of academic and non- academic staff and students. The non-human resources comprise the equipment, facilities and funds for the running of the University. It can be postulated that the University functions as a system and the inputs which come in the form of human and material resources are processed and managed to achieve the output in terms of provision of manpower needs of society and service delivery. The systems theory sheds lights on the alternative funding potentials of selected universities in south-east and south-south, Nigeria since it highlights the characteristics of an open system such as the input, process and output that exist in the management of resources.

The federal ministry of education could use the findings of this study to motivate and highlight alternative sources of funding to federal, state and private universities. The National Universities Commission, state ministry of education and private owners of universities could

use the findings of this study to organize conferences, seminars and workshops on alternative sources of funding in the federal, state and private universities.

The findings of this study are of importance to researchers and academia’s as it will provide empirical evidence on alternative sources of funding potentials that could be tapped for financial autonomy in universities and also provide information upon which future research in the area will be based.

Generally, results of this study would reveal the alternative funding potentials obtainable in these universities such as other sources of fund that could be exploited for financial autonomy in the universities in the south-east and south-south geopolitical zones of Nigeria. In addition, the findings  of the  study  will  bring  out  problems  universities could  encounter  in  tapping  the alternative sources with the strategies that could be adopted to enhance the exploitation of the alternative  sources  available  in  universities in  the  south–east  and  south-south  geo-political zones of Nigeria. Such findings will inform future planning for greater effectiveness and staff reorientation if need be. The findings will therefore make the university leadership to be more committed  to   sensitizing  the   members  of  the  university  community  on  the   need  for diversification of sources of funding in order to achieve financial autonomy.

Scope of the Study

The study covered the alternative funding potentials of universities in South-East and South-South, Nigeria. Specifically, the study was de-limited to three federal, three state and three private universities located in South-East and South-South geo-political zones of Nigeria to determine the extent ownership of university; age and location influence their alternative sources of funding potentials. The study also covered the problems which federal, state and private universities encounter in tapping the alternative sources of funding available as well as the

strategies which federal, state and private universities could adopt to enhance the exploitation of alternative sources of funding for financial autonomy. The choice of universities in the South- East and South-South was guided by the fact that they are commercially homogeneous and would be inclined to designing alternative sources of funding their university education.

Research Questions

The following research questions were formulated to guide the study:

1    What  are  the  alternative  sources  of  funding  available  to  federal,  state  and  private universities that could be tapped for financial autonomy?

2   What are the differences that exist in the alternative sources of funding available to 1st,

2nd and 3rd generation universities that could be exploited for financial autonomy?

3    What are the differences that exist in the alternative sources of funding available to Nigerian  universities  located  in  urban,  semi-urban  and  rural  areas  for  financial autonomy?

4    What are the problems encountered by federal, state and private universities in tapping the available alternative sources of funding?

5    What  are  the  strategies  which  federal,  state  and  private  universities could  adopt  to enhance the exploitation of alternative sources of funding for financial autonomy?

Hypotheses

The following null hypotheses were formulated and tested at 0.05 level of significance: H01        There is no significant difference in the mean ratings of respondents in the federal, state

and private universities on the alternative sources of funding available that can be tapped

for financial autonomy.

H02       There is no significant difference in the mean ratings of respondents of first, second and third generation universities on the existence of alternative sources of funding that could be tapped for financial autonomy.

H03        The mean ratings of respondents of universities located in urban, semi-urban and rural areas will not differ significantly in the alternative sources of funding available that could be tapped for financial autonomy.

H04        There is no significant difference in the mean ratings of respondents of federal, state and private universities on problems which universities encounter in tapping or exploiting the alternative sources of funding available for financial autonomy.

H05        The mean ratings of respondents of federal, state and private universities will not differ significantly in the strategies universities could adopt to enhance the exploitation of alternative sources of funding for financial autonomy.

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