Finance

What The Education Tax Is Doing in Nigeria’s Public Tertiary Institutions

Published

4 years ago

September 7, 2022

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Some of the most prevalent challenges confronting public tertiary institutions in Nigeria are funding, management problems, obsolete equipment, poor learning facilities and infrastructure. Chief among these that deals the worst blow is funding. Most of the public tertiary institutions in the country are grossly underfunded. When there were just a few tertiary institutions, Government took up the burden of funding the institutions solely but from the mid 1980’s, there was a massive increase in the number of public tertiary institutions and in students’ enrolment in Nigeria. This increase got to the point where Government openly acknowledged that it could no longer shoulder the responsibility of funding institutions alone. This led to the promulgation of the Education Tax Act No7 in January 1993, alongside other education related Decrees. The Decree imposed a 2% tax on the assessable profits of all companies in Nigeria which was earmarked to fund public tertiary institutions in the country.

The Education Trust Fund (ETF), now Tertiary Education Trust Fund Act (replaced in 2011), is an intervention agency set up to provide supplementary support to all levels of public tertiary institutions, with the main objective of using funding alongside project management for the rehabilitation, restoration and consolidation of Tertiary Education in Nigeria. Initially the Education Tax Act No7 of 1993 mandated the Fund to operate as an Intervention Fund to all levels of public education (Federal, State and Local).

The Federal Inland Revenue Service (FIRS) is today empowered by the Education Act to assess and collect Education Tax. The Tertiary Education Trust Fund (TETFUND) also known as “The Fund” administers the tax imposed by the Act, and disburses the amounts to educational institutions at federal, state and local government levels. It also monitors the projects executed with the funds allocated to beneficiaries. The distribution for tertiary education is shared between Universities, Polytechnics and Colleges of Education in the ratio of 2:1:1. The 1998 amendment changed the disbursement to 50% (Tertiary education); 25% (polytechnics) and 25% (Colleges of Education) with emphasis placed on science and technology due to the expensive nature of training within the country.

The Fund is managed by an eleven (11) member Board of Trustees with members drawn from the six geo-political zones of the country, as well as representatives of the Federal Ministry of Education, Federal Ministry of Finance and the Federal Inland Revenue Service. It is disbursed for the general improvement of education in federal and state tertiary education institutions, in form of annual and special interventions specifically for the provision and/or maintenance of: Essential physical infrastructure for teaching and learning, institutional materials and equipment, research and publications, academic staff training and development and, any other need which, in the opinion of the Board of Trustees, is critical and essential for the improvement and maintenance of standards in the higher educational institutions.

So far, what has the Education Tax done for Nigeria?

Tertiary education tax is imposed on every Nigerian company at the rate of 2.5% (as amended in the 2021 Finance Act) of the assessable profit for each year of assessment. The tax is payable within two months of an assessment notice from the FIRS. In practice, many companies pay the tax on a self-assessment basis along with their Companies Income Tax. Failure to pay education tax comes with a penalty. For a first offence, the fine is N10,000 or imprisonment for a term of three years while for a second or subsequent offence, the fine is N20,000 or imprisonment for a term of five years or it could be both fine and imprisonment.

From 1998-2018, a total of about N1 trillion was disbursed by TETFUND to universities, polytechnics and colleges of education, and as of 2021, 221 institutions were beneficiaries of the fund including 87 universities, 65 Polytechnics, and 69 Colleges of Education. The fund has been used to cater for interventions such as physical development in public tertiary institutions, including construction of physical infrastructure like lecture halls and theatres, laboratories, construction of libraries and academic and non-academic staff offices, procurement of equipment and furniture, procurement of hard and soft copies of books and academic journals, as well as ICT software services/licenses.

Another intervention scheme funded by education tax is library development in tertiary institutions. This is done through the provision of library equipment and e-learning facilities. The fund is also used to support authorship of relevant indigenous academic textbooks for teaching and learning in tertiary institutions and the establishment of 7 academic publishing centers and funding the publishing of academic research journals. Part of the fund is set aside and used to offer Academic staff in Nigerian public tertiary institutions study fellowships, to undertake masters and doctorate degrees. There is also the National Research Fund (NRF) a non-infrastructural special intervention that is aimed at promoting the conduct of applied research and innovation by academics, in public tertiary institutions which focuses on Science, Engineering, Technology and Innovation, Humanities and Social Sciences. As at 2020, the NRF funded 457 projects and this dates back to its inception.

It is a known fact that the foundation of education is frail when education is not well funded, and the products of such foundation are weak intellectuals. The Education Tax has impacted positively in Nigeria’s educational development with particular focus on public tertiary institutions. It is no gainsaying that without the Education Tax, earmarked for the transformation of education in Nigeria, the nation’s public tertiary institutions would be a backwater compared to its counterparts in other climes. It is not surprising however, that there is the conspicuous stamp of “TETFUND” on most of the infrastructure in our public tertiary institutions today, and this is courtesy of the taxes we pay.

Written by Aisha Attahiru Jega

Finance

Personal Finance – ABC of Investing – FBNQuest Asset Management …………….. Continued from series 1

Published

2 years ago

September 14, 2024

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Ability to Take Risk

This is your financial capacity to take risks. It depends on factors such as your income, savings, financial obligations, and investment time horizon. For example, higher income and substantial savings can increase your ability to take risks, high debt levels or significant financial responsibilities (like supporting a family) can reduce your ability to take risks, the longer your investment time frame, the more risk you can typically afford to take, as you have more time to recover from potential losses.

Balancing Willingness and Ability

Effective financial planning involves balancing your willingness and ability to take risks. Here are a few steps to consider: Assess Your Risk Tolerance, Evaluate Your Financial Situation, Diversify Your Investments and Adjust Over Time. Understanding your willingness and ability to take risks helps you make informed investment decisions that align with your financial goals and comfort level.

Liquidity Needs

This refers to how quickly and easily an asset can be converted into cash without significantly affecting its value. Liquidity need is the requirement to have access to cash or easily convertible assets to meet short-term financial obligations or unexpected expenses. While liquid assets offer safety and flexibility, they typically yield lower returns compared to less liquid investments. Balancing your portfolio to meet both liquidity needs, and long-term growth goals is essential. Understanding your liquidity needs ensures you have the right mix of assets to meet both immediate and future financial goals.

The investment duration

This directly influences the investment objective. In essence, the longer the investment horizon, the greater the potential for risk and reward. However, it’s crucial to align the investment duration with the investment objective to achieve financial goals effectively.

Short-term objectives: Investors typically seek investments that offer liquidity and stability. Examples include money market funds, certificates of deposit (CDs), and short-term government bonds.

Medium-term objectives: These investors often balance growth and income. They may consider a mix of stocks, bonds, and mutual funds.

Long-term objectives: Investors with a long-term horizon can tolerate higher risk for potentially higher returns. They may invest in stocks, real estate, and other growth-oriented assets.

Example: A young investor aiming to accumulate wealth for retirement (long-term objective) might invest in stocks, which historically offer higher returns over the long run while an investor nearing retirement seeking steady income (short-term objective) might prefer bonds and dividend-paying stocks.

Understanding Various Investment Vehicle

An investment vehicle is a financial product or account that allows individuals and institutional investors to invest their money with the aim of generating profit or returns. These vehicles come in various forms, each carrying its own risks and rewards. The best investment vehicle for you will depend on your individual circumstances and financial goals. Consulting with a financial advisor can help you make informed decisions. Here are some of the most popular investment vehicles:

Stocks: A type of investment that gives you partial ownership of a publicly traded company. Such ownership entitles you to any dividends that may be paid, and you may experience gains or losses on your holdings over time. Potential for high returns but higher risk. E.g. shares of FBN holdings.
Bonds: A debt instrument, a bond is essentially a loan that you are giving to a governmental entity or a company in exchange for a pre-set interest rate. Typically, the bond pays periodic interest (coupon payments) during its term, and it matures on a specific date. Steady income but moderate risk.
Mutual Funds: An investment vehicle that allows you to invest your money in a professionally managed portfolio of assets that, depending on the specific fund, could contain a variety of stocks, bonds, or other investments. E.g. FBN Money Market Fund.
Exchange-Traded Funds (ETFs): Like mutual funds but traded on stock exchanges, offering more flexibility and potentially lower costs.
Real Estate: Investing in physical property, such as houses, apartments, or commercial buildings.
Derivatives: Financial contracts based on an underlying asset (e.g., options, futures). This is also a high-risk investment.
Commodities: Physical assets like gold, oil, or agricultural products.

Other consideration when choosing an investment vehicle

Diversification benefit Fees and expenses Reputation of the Financial Advisor

Stay Informed & Continuous learning (A way to take ownership of your finances)

Certainly, improving your financial literacy is a valuable endeavour that can empower you to make informed decisions and better manage your personal finances. Remember, continuous learning is key to improving your financial literacy. Here are some effective ways to enhance your financial knowledge:

Read Books and Magazines Visit Financial Websites
Attend Local Presentations/Webinar Seek Expert Advice

Common Investment Mistakes

Here we highlight the past mistakes people have made while making an investment decision. The aim is to prevent us from doing same and better equip ourselves to make better investment decisions. Investing is a journey, and learning from missteps can lead to better outcomes.

Not setting financial goals Not diversifying
Not learning from your mistakes Not doing your research

In conclusion, monitoring and reassessment are crucial components of successful personal finance management. It is not just enough to execute the actions above; it is important to imbibe the culture of discipline to achieve your financial objectives.

Remember, the journey to financial well-being is a marathon, not a sprint. Stay committed, stay informed, and your future self will thank you.

Finance

The Alternative Bank Debuts with Spectacular Multi-City Launch

Published

3 years ago

October 16, 2023

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L-R: Chairman, The Alternative Bank, MUHTAR BAKARE; Executive Chairman Stratevium Nigeria LTD, DR. PRISCA NDU; Head of Product Omnibiz, ZAINAB ARILESERE and CEO, The Alternative Bank:, HASSAN YUSUF during the launch of The Alternative Bank in Lagos recently.

The Alternative Bank, Nigeria’s newest entrant into the financial services sector, launched in spectacular fashion by holding simultaneous launch events in three major cities across the country – Lagos, Abuja, and Kano, making it the first synchronized multi-city brand launch in Nigeria’s history. The Alternative Bank is the ethical banking subsidiary of Sterling Financial Holdings.
Speaking from Lagos, Managing Director of The Alternative Bank, Hassan Yusuf, said, “We believe that banking should be a platform for shared prosperity, where everyone benefits. And this explains why we refer to our customers as partners, because we believe we are on a journey of wealth creation where profits are shared, and customers are provided with funds without incurring interest charges.”
Speaking at the launch event in Abuja, Executive Director of The Alternative Bank, Garba Mohammed, said “The Alternative Bank is here to create wealth-for-all in a sustainable way, by doing things differently and taking a different model to partnering with its customers.”
The launch events featured the presentation of digital products to attendees, designed to bring more people into the formal financial sector with an albeit unconventional approach to e-commerce, investments, assets financing, and renewable energy with solutions such as AltMall for e-commerce, AltInvest for ethical retail investments, AltPower for affordable renewable energy solutions, AltDrive for new and pre-owned vehicle financing, and WasteBanc for the monetization recyclable waste.
In recognition of the unique financial needs of individuals and businesses, The Alternative Bank offers personalized financial consultations, tailored solutions, and one-on-one guidance towards ensuring that customers achieve their financial goals. The zero-interest banking principle is dedicated to fostering sustainable practices, responsible investments and financial decisions that contribute to positive social and environmental impacts.
The Alternative Bank also recently launched an innovation in retail investments with the first AltCoin which affords investors the opportunity to preserve and grow their wealth by investing in gold.
The Alternative Bank started in 2014 as Sterling Alternative Finance, after the Central Bank of Nigeria licensed then Sterling Bank Plc to operate a non-interest banking business and has since grown to become one of the largest ethical banks in Nigeria’s non-interest banking sector.
With the recent completion of Sterling’s transition to a full-fledged financial holdings company, The Alternative Bank will operate as the non-interest banking subsidiary of the Group, while Sterling Bank Limited will continue to provide conventional banking services.

Finance

UBA To Empower KDs, SMEs On Wealth Management

Published

3 years ago

October 12, 2023

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Africa’s Global Bank, United Bank for Africa (UBA) Plc, is set to organise another edition of the UBA Business Series. This is in line with the bank’s commitment to support the growth of micro, small, and medium-scale enterprises by equipping them with the requisite tools to strengthen and sustain their businesses.

The UBA Business Series is a regular seminar/workshop organised by the bank as one of its capacity-building initiatives, where leading business leaders and professionals share well-researched insights on relevant topics and best practices for running successful businesses, especially in the face of difficult business challenges.

This edition, which is powered by the UBA Value Chain Banking, will look at the topic ‘Personal Finance: Wealth Management in Today’s Economy’ and is specifically targeted at key distributors and small and medium-sized business owners. It will be held on Thursday, October 12, 2023, from 12 p.m. at the Tony Elumelu Amphitheatre, UBA House, Marina, Lagos, whilst online participants can also access the session on Zoom via https://bit.ly/UBABIZSERIES

See also Jacky Hathiramani: The Brain Behind The Success of Dana Group
The CEO and Executive Editor, of Frontier Africa Reports and eminent television host, Boason Omofaye; Managing Director/CEO, of United Capital Asset Management Plc, Odiri Oginni CFA and Recording Artist and CEO/Founder of Mova Networks, Akitoye ‘Ajebutter22’ Balogun, will be on the ground to give helpful tips on wealth management in today’s economy to business leaders. They will also provide guides on the best ways to take businesses to the next level in challenging economic terrain.

UBA’s Head, SME Banking, Babatunde Ajayi said:

“The vast knowledge and experience of the panellists, will help business owners understand the importance of personal finance, wealth management, and most importantly how to navigate the frailties of the harsh economy to ensure business growth.”

“We know small businesses are the backbone of the economy in every country that is why at UBA, we constantly look for ways of ensuring that these business owners and operators are well-equipped to grow their businesses successfully.”

Recently, UBA announced an initiative aimed at providing robust and comprehensive financing solutions to support and boost the activities of SMEs across the African continent, where SMEs will have the opportunity to access financing in the key sectors of Agro-processing, Pharmaceuticals, Automotive, and Transport and Logistics.

The financing initiative is powered by UBA’s recent partnership with the African Continental Free Trade Area (AfCFTA) secretariat to provide financing for up to $6 billion over the next three years to eligible SMEs across Africa, an agreement which was signed on the sidelines of the 30th Afreximbank Annual Meeting (AAM) which was held in Accra, Ghana earlier in the year.

UBA is a leading pan-African financial institution, offering banking services to more than thirty-seven million customers across 1,000 business offices and customer touch points in 20 African countries.

With a presence in New York, London, Paris, the Cayman Islands, and now the UAE, UBA is connecting people and businesses across Africa through retail, commercial, and corporate banking, innovative cross-border payments and remittances, trade finance, and ancillary banking services.