Science, Finance and Innovation

Taxes to finance tertiary education: lessons from Nigeria’s TETFund

4 min


Udochukwu B. Akuru

Underfunding has been a major challenge in Nigeria’s tertiary education sector, which is primarily financed by the government. In 2011, the Tertiary Education Trust Fund (TETFund) was established as a counterpart intervention fund based on a 2% tax on profits for companies registered in Nigeria. The TETFund’s massive positive impact on the quality of teaching, learning and institution‐based research suggests that it is a sustainable funding model for other education sectors and other developing countries to emulate.

Imagine being a student in a government-owned university and having your program interrupted for up to eight months. That is exactly what happened in Nigeria recently when the Academic Staff Union of Universities (ASUU) downed tools from 14th February to 11th October 2022 and crippled academic activities in the Nigerian university system (NUS), especially among public higher education institutions (HEIs).

The problem is perennial: the country has experienced approximately 15 semesters (66 months) of similar industrial action since 1999, with the ASUU always citing gross underfunding of the NUS as one of its main motivations for going on strike.

HEI sector challenges in Nigeria

Nigeria is the most populous black country in both sub-Saharan Africa and globally. Its education sector is sub-divided into three levels: primary education (six years); secondary education (six years); and tertiary education (at least four years). This is what is known as the 6-3-3-4 system, since the secondary level is further sub-divided into junior and senior secondary levels of three years each.

Overall, all levels of the country’s education sector are suffering some form of crisis, including infrastructural decay, poor conditions of service, and inadequate regulation, as well as low literacy and enrolment rates. Although the tertiary or HEI sector (which comprises of mostly public universities, polytechnics, colleges of education, and vocational training centers) is critical to national development, it has remained largely underfunded over the years.

Publicly-owned HEIs in Nigeria are mainly funded by the government, which is the norm in most developing countries. Key reforms have been proposed in terms of recovery and reallocation of public funding, encouraging student loans and scholarships, as well as the micromanagement and privatization of public HEIs. However, the budget allocated to fund tertiary education in Nigeria is currently one of the lowest globally, with only about 5.4% allocated for the entire education sector in 2022, down from 8.4% in 2019, in addition to decreasing lecturer-to-student ratios.

As a result, Nigeria’s tertiary education is riddled with incessant industrial actions, low-grade teaching/research throughput, high dropout rates, brain drain, prolonged time to obtain a degree, and, in some cases, low-quality graduates.

TETFund: HEI sustainable funding instrument and impact assessment

To address some of the challenges confronting the HEI sector in Nigeria, the Tertiary Education Trust Fund (TETFund) was established in 2011 to impose, manage, and administer the education tax for providing counterpart funding for public HEIs.

The TETFund – an offshoot of the Education Trust Fund (ETF), which was established in 1993 – is an intervention fund set up to tackle underfunding of public HEIs in Nigeria. The fund is generated from a 2% education tax imposed on companies in Nigeria and channeled through the federal tax-collecting agency, the Federal Inland Revenue Service (FIRS).

The funding mandate of the TETFund is three-fold – project funding, staff training and development, and institutional-based research (IBR) – instituted to benefit all public tertiary institutions whether at federal, state, or local government levels.

For over a decade (2011 to 2021), the TETFund has demonstrated a track record of being a sustainable funding instrument in Nigeria’s HEI sector. It is on record that the fund has expended over 2.5 trillion Naira (EUR 5.6 billion) since inception to date, at a 50% beneficiary rate, meaning that it has penetrated up to half of its beneficiary institutions since 2011.

The biggest impact has been on infrastructural development, with over 152,000 projects launched across various tertiary institutions since 2011. These projects include the construction of lecture halls, laboratories, student residences, offices, and roads.

Another salient impact of the TETFund on Nigeria’s HEI sector over the last decade is in terms of capacity development. Within the country, 10,632 lecturers have completed a PhD degree, while 9,072 have completed a master’s degree. Within the same timeframe, the fund has provided scholarships for 4,485 lecturers to obtain  PhD degrees and 3,192 lecturers to obtain master’s degrees, outside Nigeria.


The massive infrastructural and human capacity developments witnessed over the last decade through the TETFund, as shown in Figure 1, are indicators of the increased quality of teaching and learning in federal HEIs in Nigeria.

Since the TETFund is supplementary in nature and not an exclusive funding structure for public HEIs in Nigeria, it is crucial for other stakeholders such as the relevant government ministry to match the TETFund’s quota with an increased share of the statutory budgets. This will help cut down on incessant strike actions, which continue to hamper the major gains derived through the TETFund.

Beyond that, there is a need to accelerate the TETFund’s beneficiary rate to 100% so that all state-owned institutions can benefit equally. In addition, greater commitments are expected from contributors to the TETFund to increase the collection rate while matching the fund’s growing institutional allocations.

Tertiary institutions should also align their institutional-based research to rank with evolving research trends and industrial needs. This will further encourage important partnerships and collaborations and help generate counterpart funds.

Education income tax, as exemplified by the TETFund model, should be considered as a sustainable funding instrument that could serve as a catalyst of transformation for all levels of the education sector in developing countries, provided it continues to be efficiently administered and managed.

Figure 1: Infrastructural and staff development projects in Nigeria’s public HEIs funded by TETFund (2011 to 2021)

Udochukwu B. Akuru
Senior Lecturer, Tshwane University of Technology