The Federal Government has yielded to pressure and has decided to suspend the automatic deduction of 40% from the Internally Generated Revenue (IGR) of tertiary institutions.
This reversal order was given by President Bola Ahmed Tinubu on Friday.
Tinubu made this announcement during the ongoing 75th Founder’s Day ceremony of the University of Ibadan (UI).
The Minister of Education, Tahir Mamman, represented Tinubu as the Visitor to the University and described the policy as ill-timed.
“The 40 per cent IGR automatic deduction policy stands cancelled. This is not the best time for such policy since our universities are struggling,” he declared.
Last week, it was revealed that the government plans to start deducting 40% from the internally generated revenues of federal universities and other partially funded institutions.
This decision comes at a time when the economy is struggling and the funding for our nation’s tertiary institutions is inadequate. Many stakeholders are worried about the negative consequences of this policy.
The Revenue and Investment Department of the Office of the Accountant General of the Federation in the Federal Ministry of Finance has released a leaked memo. The memo informs government institutions that 40% of their Internally Generated Revenue (IGR) will be automatically deducted starting from November.
The letter, dated October 17 and referenced as R&I/2045/T/252, was signed by Felix Ogundairo, the Director of the Revenue and Investment Department. It states that this decision applies to all partially funded government agencies and parastatals, including universities. The deduction is in accordance with Section 62 of the Finance Act 2020.
“It is important to emphasise that this policy of 40 per cent auto deduction of gross IGR is in line with the Finance Circular Reference Number FMFBNP/OTHERS/IGR/CRF/12/2021/ dated 20 December 2021, limiting the budgetary agencies or parastatals to not more than 50 per cent of their gross IGR and the remittance of 100 per cent of the remaining 50 per cent to the sub-recurrent account. While all statutory revenue lines like Tender fees, contractors’ registration fees, disposal of fixed assets, rent on quarters, etc., shall be remitted 100 per cent to sub-recurrent accounts,” the memo partly read.
President Bola Tinubu signed a bill in June to establish a Students Loan Fund (SLF) that offers interest-free loans to Nigerians pursuing higher education.
In line with this, the Nigerian federal government proposed an allocation of N5.5 billion for the education loan fund in the 2023 supplemental budget. However, the National Assembly later increased this amount to N10 billion. The President has already passed and signed the appropriation bill.
