Impact Of Education Tax Fund In Tertiary Institutions In Nigeria (Case Study Of Alvan Ikoku Federal College Of Education)

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Project and Seminar material for Accountancy


This study is primarily concerned with finding out the impact of Education Tax Fund (ETF) in tertiary institutions in Nigeria. In the course of this study three research questions were mapped out to guide the researchers and related literatures were also reviewed in this study.

The research design was descriptive survey method and the population comprises of all the students, lecturers and management of staff of Alvan Ikoku Federal College of Education Owerri, Imo State. The sampling techniques used was simple size of 200 and purposive sampling techniques for lecturers and management staff with a sample size of 10. the data generally was analyzed with simple percentage and the result showed that education Tax Fund has not really impacted much on our Tertiary institutions as they still have a lot of work to do on meeting its statutory obligations, sound internal control system and consideration of students opinion before approving any school project.

Based on the findings, the following recommendations were made, that the sharing ratio of fund by education Tax Fund (ETF) should be according to the number of students admitted per session and the accounts of education Tax Fund (ETF) should be Audited twice a year, independent corrupt practices commission (ICPC) should always investigate corrupt activities in Education Tax Fund (ETF), and Accounts of Stewardship of members of board of trustees should presented to the floor of National Assembly once a year. Finally, there should be penalty for companies that fail to pay the two percent (2%) Education tax.

Table Of Contents

Preliminary Page(s)

  • Title page
  • Certification
  • Approval page
  • Dedication
  • Acknowledgement
  • Abstract

Chapter One

1.0 Introduction

  • 1.1 Background of the study
  • 1.2 Statement of the problem
  • 1.3 Objective of the study
  • 1.4 Research Questions
  • 1.5 Significance of study
  • 1.6 Scope of the study
  • 1.7 Limitation of the study
  • 1.8 Definition of terms

Chapter Two

2.0 Literature Review

  • 2.1 Precursors of Education Tax Degree
  • 2.2 The nature of Education Tax Fund
  • 2.3 Objective of Education Tax Fund
  • 2.4 The Structure and Management of the Fund
  • 2.5 Problem of Education Tax Fund
  • 2.6 Effects of Education Tax Fund

Chapter Three

3.0 Research Methodology and Design

  • 3.1 Introduction
  • 3.2 Research Design
  • 3.3 Sources of Data / Method of data
  • 3.4 Population of the study / Sample sizes
  • 3.5 Sampling Technique
  • 3.6 Validity of instrument
  • 3.7 Method of data analysis

Chapter Four

4.0 Presentation and Analysis of data

  • 4.1 Introduction
  • 4.2 Presentation of data
  • 4.3 Analysis of data
  • 4.4 Interpretation of results

Chapter Five

5.0 Summary of findings, Conclusion and Recommendations

  • 5.1 Introduction
  • 5.2 Summary of findings
  • 5.3 Conclusions
  • 5.4 Recommendations
  • References
  • Appendix
  • Questionnaire

Chapter One

1.0 Introduction

1.1 Background Of The Study

Funding of Education cannot be discussed without the knowledge of Education itself. Therefore Education has been defined by various scholars:

According to Uche (1984: 86), “Education is the process of training and developing the mental, potential, physical knowledge, skills and character of individuals by formal and informal schooling”.

In my own view, Education can be defined as a tool, which enables an individual to live efficiently and effectively for him and the society at large. The Nigerian Education system comprises of 6-3-3-4 that is the six years in primary school and three years for the junior level of the secondary school, three years in the senior secondary and fours years in the tertiary institution (Depending on the course of study).

The tertiary institution plays a significant role in the domain of manpower development. According to the National policy on Education (1981:5-38), tertiary institutions “are those institutions that cover the post secondary section of our National Education system, which is given in Universities, Polytechnics and Colleges of education, the advanced teacher training college, correspondent colleges and institutions as my be allied to them”.

Over the yeas, the tertiary institution has suffered due to poor funding, according to Ozurumba (1998:106) “The best Education could be easily aborted if not supported by adequate funds”. Inadequate funding has been the contaminating problem in Nigeria.

To this end, testing institutions need finance to carry out research in Medicine, Engineering, Education etc. training and retraining of lecturers, acquiring of facilities and other amenities that can improve student potentials to the overall achievements of the aims and objectives of higher education in Nigeria.

In Nigeria Education history, between 1932 and 1962, there were only five higher institutions viz: university of Nigeria Nsukka, University of Ibadan, Ahmadu Bello University, Yaba Higher College and University of Lagos. Funding of these institutions was not problem because our country’s economy was one of the strongest amongst the third world countries.

Compared to the country’s population of 55.65 million in 1963, the number of undergraduates were about 8,800, that is to say the country had very few undergraduates. Hence, as a result of this there were job opportunities for graduates, there came to be increased demand for higher education.

Uche (1984:134) said that “Over sixty tertiary institutions were established nationwide between 1970 and 1982. the funding of this higher institutions rested squarely on the government. Based on this, it could be observed that the funding of these institutions was principally shouldered by the government.

In support of this, Amadi (1998:47) pointed out that, “during the oil boom the period of large profit in the petroleum oil section, Nigeria was economically viable and there was boom in the financing of Education. Many Nigerians received scholarships and bursary awards to enable them to be trained in various fields of education. New programmes and specialized areas were introduced and facilities for teaching and learning provided.

The period of oil boom of 1980 was characterized by rapid disbursement of fund to institutions of higher learning as and when due, provision of money for research, oversea scholarship, training and retraining of lecturers, infrastructure, apparatus for our laboratories etc.

However, like a flash in the pan, the era of oil boom set in. uche (1984:135) said “By April 1982, Nigeria suffered from oil glut”. From 1982 to 1989 there was a dramatic nose-diving of the price of our major source of foreign exchange earner (oil). The colossal burden of financing the tertiary institutions became apparently uneasy and extremely unbearable.

To alleviate this gigantic burden, president Ibraham Babangida promulgated the Education Tax Decree No. 7 on 1st January 1993. According to Odicha (1993:20) “this decree finally impose education tax of two percent (2%) on all the profits declared by companies registered in Nigeria and established on Education Fund into which the tax collected shall be paid.

It is in the light of this, that this study has been designed to investigate the impact of education tax fund on tertiary institutions, particularly Alvan Ikoku Federal College of Education Owerri.(A.I.F.E).

1.2 Statement Of The Problem

Ten years after the introduction of Education Tax Decree and its subsequent implementation, has sceneries in our tertiary institutions that prompted it really changed?

We have observed that prior to the enactment of Education Tax Decree, our tertiary institutions were afflicted with such difficulties as decayed facilities, congested classrooms and hostels, obsolete textbooks in our libraries etc. do these problems still persist in Alvan Ikoku Federal college of Education? If they still exist, there are questions to be answered on how education tax fund has impacted on Alvan Ikoku Federal College of Education.

Could it be that these problems are still there because of some abnormalities in the disbursement of funds? Or could it be that the authority charged with the management of the fund are callous and corrupt?

Assuming that the above questions points to the root of the matter, how can they really be remedied? Hence the need to investigate the impact of Education Tax Fund in tertiary institutions in necessary.

1.3 Objectives Of The Study

The objectives of engaging in this study are:

  1. To ascertain the problems impending the disbursement of funds.
  2. To identify the benefits of Education Tax Fund in Alvan Ikoku Federal College of Education Owerri.
  3. To suggest solutions to these problems in order to enhance effective Education in Alvan Ikoku Federal College of Education Owerri.

1.4 Research Questions

The following questions are posed for the purpose of this study.

  1. What are the problems facing the disbursement of fund in Alvan Ikoku Federal College of Edcuation?
  2. How beneficial has education tax fund been to Alvan Ikoku Federal College of Education?
  3. What are the possible solutions to these problems encountered in proper implementation of education tax fund?

1.5 Significance Of Study

This study will be of great significance to the following:
Students, lecturers, school authority etc.


In regard to students, a conducive learning environment will aid effective assimilation and learning.


There will be provision of conducive offices, instructional materials and textbooks for effective teaching and learning process.

The School:

It will help the school to have good recommendation from outside by different institution, researchers, resources personnel etc.


It will also help to produce good, competent, qualified graduates to fit into different areas where they are needed in government parastatals and the society at large. The findings will enable the society to know the various problems militating against disbursement of the Education Tax Fund since its inception.

1.6 Scope Of The Study

This is focused on the impact of Education Tax Fund in Alvan Ikoku Federal College of Education Owerri, Imo State.

1.7 Limitations

In execution of this project, the researcher encountered certain problems.

The researcher had problem of administering the questionnaire to the management staff due to their complain of time and stress. The researcher had to explain the reason for the project work to the students and its urgency before they could fill the questionnaire.

1.8 Definition Of Terms


According to Oxford Advanced Learners Dictionary, Ample can be define as a situation where something is in large quantity, plenty or enough, according to as it was used in this chapter it means enough work opportunity or plenty job vacancies.


According to Chambers dictionary can be defined as the process of bringing something to an end suddenly or unexpectedly.


Can be defined as a very large something as it is used in this work it means a very large or big problem or burden.


This can be defined as the processing of making something widely known.


This can be defined as anything that is outdated or something that is no longer in use.


This can be defined as the process of releasing money or distributing money to different departments of an organization.

Oil Boom:

The phrase oil boom can be defined as the period when the exportation of petroleum products were at its pick or at its highest level.


This can be defined as the stated at which a place is said to be very crowded or a situation were there is a very large population in a very small place.

Chapter Five

5.0 Summary Of Findings, Conclusions, And Recommendations

5.1 Introduction

The main purpose of this study was to determine the impact of Education Tax Fund (ETF) on tertiary institutions in Nigeria. A case study of Alvan Ikoku Federal College of Education Owerri, Imo State.

In this chapter, the researcher discussed the findings, based on the data collected and analyzed, the researcher came to conclusion, listed the Education implications of the study and limitation of the study.
Finally, suggestions were made for further research in future.

5.2 Summary Of Findings

Research Question 1

What are the problems facing the disbursement of funds in Alvan Ikoku Federal College of Education?
The findings revealed that fraud, lack of proper accounting records and ineffective internal control system are the problems militating against disbursement of education tax fund and about eighty –five percent (85%) of the respondents supported this fact. In line with this Uzonwanne (2000:28) stated that the country loose N6 billion annually of the Education Tax Fund to under assessment, under – collection and out right theft by Federal Inland Revenue Services (FIRS).

Research Question II

How beneficial has Education Tax Fund been to Alvan Ikoku Federal College of Education?

The findings proved that seats in the lecture halls, current textbooks in different fields of learning in our library, accommodation for students and lecture halls has not been sufficient in our school. In support of this Uruakpa (1999:490), Ozurumba (1992:15) Okonkwo (1998:134) and Ikemefuna (1995:4) unanimously agreed that the promulgation of Education Tax Decree was indubitious, yet there were insufficient seat in the classrooms, obsolete textbooks in the library, over crowded hostels, and lack of laboratory facilities.

Research Question III

What are the possible solutions to the problems encountered by Education Tax Fund?

The findings shows that the problems encountered in the disbursement and implementation of Education Tax fund could be surmounted by auditing the accounts of Education Tax Fund twice a year, involving the independent corrupt practices commission (ICPC) in investigating the activities of Education Tax Fund (ETF), presenting the accounts of stewardship of members of the board of trustees to the National Assembly and penalties should be given to any defaulting company of the two percent (2%) Education Tax.

Okonkwo (1995), Anyanwu (2001:67) and Okezie (1999:43) unanimously agreed that a good accounting system, effective managerial control and a strong Economy can assist in surmounting the persistent problem of Education Tax Fund.

5.3 Conclusions

The study revealed clearly that before the emergency of education tax fund, the funding situation of our tertiary institutions was precarious. This was as a result of explosion in students enrollment into our tertiary institutions, libraries, seats, laboratories etc. were over stretched.

Numerous problems are currently threatening the existence of Education Tax Fund (ETF). This work revealed that fraud, lack of proper accounting records, lopsidedness in the management of Education Tax Fund, Lack of proper sharing formula of the fund among the states are such problems facing Education Tax Fund.

The study also shows that sixteen years after the coming on stage of Education Tax Fund (ETF) that the learning condition in our school has improved a little, yet they still have much to accomplish for instance, in the case of Alvan Ikoku Federal College of Education Owerri in the provision of reading chairs and desk, bulging of more hostels, building of more classrooms, provision of sports facilities and recreational parks, provision of laboratories and equipments including agricultural; facilities, provision of current textbooks and computerization of library.

In as much as the school still has some needs, we observed that certain things have been put in place such as;

  1. Renovation of offices
  2. Renovation of hostels
  3. Provision of boreholes and reservoir
  4. Renovation and construction of lecturer halls
  5. Provision of giant size generators.
  6. On-going construction of hostels, auditorium and offices.
  7. Procurement of library equipments and stocking of laboratories.

5.4 Recommendations

In view of the outstanding implication of the findings, the following suggestions have been proffered by the researcher in order to enable the education Tax Fund (ETF) to be alive to its responsibilities:

  1. The sharing ratio of fund by Education Tax Fund should be according to number of students admitted per session (the more students, the more fund allocation) and the level of development of a particular institution, that is to say, the boosting of the under developed institutions to be at the same level with the developed institutions.
  2. Accounts of Education Tax Fund (ETF) should be audited twice a year. Although this is a little unusual, however, it will help to instill discipline in the management of Education Tax Fund (ETF). The first six (6) months audit will be interim while the subsequent one will be final. Fraud detected in the interim audit will be presented in the final audit.
  3. Independent corrupt practices commission (ICPC) should always investigate corrupt activities in Education Tax Fund (ETF). This will help the management to be judicious with the resources of ETF.
  4. Accounts of stewardship of members of the board of trustees should be presented on the floor of the National Assembly once a year. This will enable all Nigerians to be accurately informed of the roles each members of the board of trustees play in the disbursement of the funds to various institutions every year.
  5. There should be penalty for companies that fall to pay their two percent (2%) tax because failure to pay their taxes means that there will be lack of fund to carryout its Education Tax Fund activities. Therefore, penalizing companies that fall to pay their two percent (2%) tax will act as deterrent.
Educational Implications Of The Study

This work has shown that learning situations in our tertiary institutions which is supposed to be a centre of excellence, a place for building trains, training of disciplined and highly skilled individuals has not been attained but is still an ongoing development, such that a condition where basic learning facilities are lacking in our tertiary institutions spells down in our library means that students will be destitute of current knowledge in various disciplines, and students tend to exhibit anti-social behaviour just to ease tension generated by the over crowded classrooms and hostels.

Again, our students are usually half-fed because of the unhealthy condition of the learning environment and the implication is that most graduates will be half-baked, lack of morals, discipline and skills to help in the development

of the country.
Also, the numerous students riots are attributed to the unhealthy learning condition and schools are usually closed down when students demonstrate. This prolongs the number of years students should stay in schools.

On the part of lecturers, when the teaching / learning conditions are not conducive, most lecturers looks for other ways to make ends meet. The best brains are lost such situations give rise to vices which ordinarily should not be associated with teaching / learning procedure.

5.5 Suggestions For Further Study

The study suggests that further research on this topic should be conducted with larger population than what was used, and this showed cut across other tertiary institutions in Owerri, Imo State.

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