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A strike too many

A strike too many
November 19
10:01 2020

The ongoing strike by the Academic Staff Union of Universities (ASUU), which started in March this year, has succeeded in almost wiping out a whole academic year. Unfortunately, the Federal Government and ASUU have failed to reach an agreement, despite engaging in several meetings, to the detriment of millions of university students.

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While some of the demands by ASUU may be classed as reasonable, some are downright ridiculous. One such ridiculous demand is the insistence by ASUU to be paid through a software of their choice. It will be difficult to find any private sector employer that will be bullied into forcefully accepting such a request by employees. What is important and should be the concern of the employee is being paid, the process by which the employee’s account is credited is not the employee’s business. The Federal Government should, therefore, stand firm and not concede on this particular issue.

The second demand by ASUU that is problematic is that of earned allowances, basically a type of overtime. Lecturers are paid earned allowances when the class size they are teaching exceeds the maximum allowed. Rather than ASUU to insist on increasing staffing levels, it prefers agitating for earned allowances. The Federal Government should consider employing more lecturers rather than paying earned allowances. This will reduce class sizes and improve the quality of teaching.

The third issue is the demand by ASUU for increase funding of universities by the Federal Government. ASUU conveniently forgets that TETFUND is part of government’s intervention in tertiary education. The Fund has the potential to grow to over N200 billion per annum depending on overall performance of the economy and profitability of firms. A review of the proposed 2021 budget reveals that Ministry Education received the second highest allocation amongst ministries in the sum of N743 billion, representing 6.33% of the budget. Only the Ministry of Defence received a higher allocation of N962 billion, representing 8.2% of the budget. Indeed, the capital allocation to Ministry of Education is higher than that of Ministry of Defence. The bulk of the defence budget (81%) is for personnel, which is due to the size of the armed forces. Furthermore, if TETFUND is added to the allocation of Ministry of Education, the allocation to education will be almost at par with that of defence.

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Therefore, it is not clear where the Federal Government will find the funds to meet ASUU demands. Which budget lines should be reduced? The usual scapegoat, deservedly, is the National Assembly (NASS). However, with a budget of N128 billion, even a 50% reduction of NASS budget will merely add about 7% to the budget of education. Contrary to what Nigerians think, most political appointees under the executive branch earn less than one million naira a month. The total allocation to their salaries, overhead and capital in the 2021 budget, under the Office of Secretary to the Government of the Federation, is N12.9 billion. State House, including salaries of civil servants, has about N19 billion allocated to it. Again, any reduction will not significantly improve allocation to education.

What ASUU and some Nigerians have refused to accept, even when the facts are staring them in the face, is that the Federal Government simply does not have the funds to meet most of the demands of Nigerians. For example, in 2019, the Federal Government received only N4.12 trillion in revenues. Meanwhile, personnel costs, overheads and debt service during the year was N6.7 trillion. Meaning, the Federal Government had to borrow N2.59 trillion to cover personnel costs (including pension) and overheads. To put it more starkly, after paying the N2.45 trillion in debt service in 2019, only N1.67 trillion was left to run the entire government. From the foregoing figures, it is clear the Federal Government has a major revenue challenge, which only worsened in 2020, due to the collapse of price of crude oil and lower production as a result of the coronavirus pandemic. Therefore, ASUU should recalibrate its expectations, because no amount of pressure from ASUU can suddenly solve the revenue challenges facing the Federal Government.

Instead, ASUU should work with the Federal Government to find creative ways to improve the quality of university education without breaking the bank. Nigerians clearly value quality education as they spent $6 billion sending their children to schools abroad in 2019. Therefore, improving Nigerian universities will encourage more rich Nigerians to send their children to Nigerian universities, and will have the added benefit of reducing capital flight at a time when Nigeria desperately needs to conserve foreign exchange.

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A potential solution, which ASUU and some Nigerians will probably object to, is to increase fees charged by Federal universities to a level that can generate enough funds to cover personnel costs and overheads of universities. TETFUND will then cover capital expenditure of Federal universities. The Federal Government could then create a fund that will guarantee loans from commercial banks, at 5% interest for students that need them, to cover the new fees and living expenses. Students in both public and private universities should be eligible for the loans, in order to ensure competition that will help improve quality of universities. The guarantee fund should be self-sustaining after initial funding by the Federal Government. Commercial banks will provide the loans while the government guarantees and subsidises the interest so that it is pegged at 5%, repayable over 20 years after graduation. Under the proposed arrangement, the Federal Government will no longer be responsible for salaries and other operating costs of universities, say three years after the commencement of the transition. Universities that can’t attract students or who have low ranking will have to adjust their salaries accordingly. This arrangement could potentially end the current poor standard in government owned universities, create healthy competition, end the era of strikes and closure of universities and save the country billions of dollars in foreign exchange as more rich Nigerians patronise Nigerian universities.

By providing subsidised loans for education, qualified Nigerians who gain admission to any university, no matter their financial situation, can obtain the education they need. Furthermore, student loans will reduce the pressure on public universities, which are currently overcrowded. Meanwhile, private universities, even those with modest fees, fail to attract enough students to be sustainable. This is because of the low income of majority of Nigerians, which makes private university education beyond their reach. The proposed loan is also not onerous on students, since payable over twenty years at 5%. For example, a student can complete most four- year degree programs at the cost of N2.4 million (school fees only) in most private universities currently operating. Such a loan can be paid off with a monthly payment of approximately N19,000 after NYSC over twenty years or N30,000 over ten years.

The Federal Government is struggling to manage its current fiscal burden that has ballooned in the last three years. Unless, something is done urgently to reign in costs, the Federal Government will be unable to pay salaries in the not distant future. ASUU and all other unions requesting for increase in salaries or higher budgetary allocations need to face this reality and work with the government to find creative solutions to fund public services.

The alternative is for the Federal Government to continue running large fiscal deficits. The impact of which include: increasing inflation; lower economic growth; balance of payment difficulties; and devaluation of the Naira. The deteriorating macroeconomic indicators then feed on themselves, prolonging the fiscal crisis and inflicting pain on Nigerians, until everything comes to a head with a massive and disorderly debt default and deleveraging.

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Hopefully, ASUU will see reason, recalibrate their expectations and allow universities to reopen. Innocent students have suffered enough as this is one strike too many and too long, without much progress on what matters – improving the quality of Nigerian public universities. Following the reopening of the universities, ASUU can return to the negotiating table and work with the Federal Government to find creative solutions to funding and improving universities, without placing additional financial burden on the already over stretched Federal Government that is on the verge of a fiscal crisis.

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