International Journal of Education, Learning and Development

Vol. 12, No.7, pp.125-133, 2024

Print ISSN: 2054-
6297(Print) Online ISSN: 2054-
6300 (Online) Website:
https://www.eajournals.org/

Implications of Financial Distress on Tertiary Education in

Nigeria

Bolanle Oluwatosin, Oyeleye (Ph.D)1, Oloruntoba Ige Bamikole (Ph.D)2 and

Taiwo Oluwasola Ibidapo 3
1,2,3
Department of Educational Foundations and Management, Bamidele Olumilua University of
Education, Science and Technology, Ikere-Ekiti, Ekiti State, Nigeria.
Email: [email protected]

doi: https://doi.org/10.37745/ijeld.2013/vol12n7125133 Published October 14, 2024

Citation: Oyeleye B.O., Bamikole O.I. and Ibidapo T.O. (2024) Implications of Financial Distress on Tertiary
Education in Nigeria, International Journal of Education, Learning and Development, Vol. 12, No.7, pp.125-133

Abstract: The study examined the implications of financial distress on tertiary Education
Nigeria. The financial distress in tertiary institutions in Nigeria today can be attributed to poor
management and leadership problems. This has tremendously affected the operations of higher
institutions in Nigeria. The university system requires a lot of funds for effective administration
to be able to achieve its goals. The inability of the government to stick to the UNESCO 26% of
national budget for education has seriously affected the management of Nigerian universities.
Most of Nigerian tertiary institutions today face a lot of problems due to financial distress. As
many of them find it difficult to pay workers’ salaries, provide adequate infrastructure and
teaching equipment. The causes and implications of financial distress on tertiary Education were
examined. It was recommended that both federal and state governments need to collaborate
more with the private sector to explore opportunities for raising non-traditional funds and
participation in education financing. Also, government should stop the habit of diverting the
funds meant for tertiary education projects to other sectors. In addition, funds disbursed for
projects and programmes should be adequately supervised, monitored and evaluated to achieve
effective implementation.
Keywords: financial distress, tertiary education, administration, government, management

INTRODUCTION

Tertiary Education is an Education offered after secondary school Education in Nigeria. This
Education helps to build the bedrock for good and quality civil societies. Enenalo (2016) sees
tertiary Education as the Education received after the completion of secondary Education which

1
 International Journal of Education, Learning and Development
Vol. 12, No.7, pp.125-133, 2024
Print ISSN: 2054-
6297(Print) Online ISSN: 2054-
6300 (Online) Website:
https://www.eajournals.org/
takes place in institutions such as universities, polytechnics, college of Education and also other
various bodies offering correspondence courses. The tertiary Education is to enable every
individual to acquire both physical and intellectual skills that will enable him/her to be self-
reliant and useful member of the society. The goals of Tertiary Education according to Olatunde-
Aiyedun, Ogunode and Ohiosumua (2021) was in line with the FRN (2014) to include: the
contribution of national development through high-level manpower training; provide accessible
and affordable quality learning opportunities in formal and informal education in response to the
needs and interests of all Nigerians; provide high-quality career counseling and lifelong learning
programmes that prepare students with the knowledge and skills for self-reliance and the world
of work; reduce skill shortages through the production of skilled manpower relevant to the needs
of the labour market; promote and encourage scholarship, forge and cement national unity; and
promote national and international understanding and interaction.

Finance is very important in tertiary education because it serves as a crucial requirement for
effective management of higher institutions in Nigeria. However, it is inadequate especially in
the government owned tertiary institutions in Nigeria; due to political interference and instability,
tertiary education has faced a lot of problems in its funding, some of these problems are;
inadequate educational infrastructure/facilities, strike action among academic and non-academic
staff, low standard of education, among others. The grant and subventions given to various
tertiary institutions by the government are insufficient to ensure effective management of the
institutions. In addition, the cases of diversion of educational funds, embezzlement of funds,
corrupt leadership etc. all have resulted to financial distress in tertiary institutions

Most of Nigerian tertiary institutions today face a lot of problems due to financial distress. Many
tertiary institutions in Nigeria find it difficult to pay workers’ salaries, provide adequate
infrastructure and teaching equipment. Ogunode (2020) observed that inadequate funding is one
of the major problems affecting the administration of public universities in Nigeria. He also
emphasized that the budgetary allocation for the administration of public universities is
inadequate to implement the programme of universities in Nigeria. The university system
requires a lot of funds for effective administration to be able to achieve its goals. The inability of
the federal government to stick to the UNESCO 26% of national budget for education has
seriously affected the management of Nigerian universities (Ogunode & Abubakar,2020). In this
study, the researchers will discuss the financial distress in tertiary institutions in Nigeria, causes
of financial distress, implications of financial distress on tertiary education and remedial
measures.

Theoretical Framework
The researcher considered the system theory as the most appropriate theory for this study. Von
Bertalanffy developed this theory in the year 1920. A system was viewed as a series of
interconnected and interdependent components, with the interaction of any of the system's
features affecting the entire system. For one part of the system to function correctly, it must
2
 International Journal of Education, Learning and Development
Vol. 12, No.7, pp.125-133, 2024
Print ISSN: 2054-
6297(Print) Online ISSN: 2054-
6300 (Online) Website:
https://www.eajournals.org/
interact with and rely on the other parts. According to Capra, as quoted in Mele, Pels, and Polese
(2010), systems

3
 International Journal of Education, Learning and Development
Vol. 12, No.7, pp.125-133, 2024
Print ISSN: 2054-
6297(Print) Online ISSN: 2054-
6300 (Online) Website:
https://www.eajournals.org/
theory is an integrative theory about every system in nature, community, and many systematic
domains that provides a structure to learn about an event from a comprehensive perspective.
Therefore, a system can be referred to as a collection of interlinked units cooperating to attain a
common purpose. According to this theory, an organizational system has four major components
which are;

 Inputs – These include the workers, materials, machines and other informational sources
required to produce goods and services.
 Transformation processes: These include managerial and technical abilities used to
convert inputs into outputs.
 Outputs: The products, services, profits and other results produced by the organization.
 Feedback: Refers to information about the outcomes and the position of the organization
relative to the environment in which it operates.

The system receives human and materials resources as input, such as financial resources,
instructional resources, teachers, students (input) are admitted into a particular class in order to
achieve the set objectives. The process takes place within the system that involves deployment of
both human and materials resources for the administration, management, supervision,
implementation of teaching and learning programme. The output is the successful completion of
the programme and the emergence of a graduate from the system. By using the system approach,
administrators are able to plan, organize and coordinate the human and materials resources well
in order to facilitate the flow of activities between divisions. Every division is important in the
system and must enjoy a healthy relationship within the system in order to realize the objectives
of the system. The harmonious cooperation between divisions cannot be over emphasized. If the
funds required to implement the school programme is not adequate, it will surely affects the
entire system because each division’s role is crucial for the survival of the system.

Financial Distress in Tertiary Institutions in Nigeria

School finance is the relationship between cost and expenditure in the production of educational
services. Olagboye (2004) viewed education finance as a means by which money is provided for
the development and maintenance of the entire education system. All activities that are geared
towards sourcing, allocating and managing public school revenues in the production of
educational services for the attainment of educational objectives constitute education finance.
According to Bua and Adzongo (2014), every school leader needs to plan the school budget
either semester by semester or annually to accomplish optimal school objectives and for the
proper administration of finances. It is the responsibility of the school administrator to ensure
that the necessary finances, which are routinely requested, are used to meet the needs of the
school. This will enable schools to be able to take care of important tasks and greatly improve
the quality of education for all students.

4
 International Journal of Education, Learning and Development
Vol. 12, No.7, pp.125-133, 2024
Print ISSN: 2054-
6297(Print) Online ISSN: 2054-
6300 (Online) Website:
https://www.eajournals.org/
Financial distress can be defined as the process in which the operating fund of an organization is
insufficient in achieving the various tasks of the organization. The financial distress in tertiary
institutions in Nigeria today can be attributed to poor management and leadership problems. This
has tremendously affected the operations of higher institutions in Nigeria. Observation revealed
that most of the Nigerian leaders in the educational institutions are only interested in their pocket
rather than improving the welfare of the institution they are appointed to head. Umudike Patricia
Mbah in The Guardian (2022) opined that poor quality of teaching staff, poor staff welfare, lack
of educational opportunities and poor academic attainment are major problems affecting
Educational sector as a result of inadequate funding. It appears that the current financial distress
in tertiary institutions in Nigeria is impacted by lack of proper funding. As Ochai (2005) pointed
out, lack of finances presents difficulties for management in every organization.

In addition, the issue of haphazard financial planning due to insufficient and or poor data also
constitute to financial distress in our tertiary institutions. The National Universities Commission
always requested universities to submit accurate data on students' enrolment, numbers of staff
and number of facilities and equipment available in each university. Unfortunately, wrong,
insufficient and poor data are always submitted, making it difficult for the commission to know
the particular funds it should allocate to the universities for development. Added to this fact is
that, there is no agreed and consistent policy for funding the universities by the government. The
result is that the universities and the National universities commission end up getting from
government, only "what the nation can afford" (Noun 2017). Ogbonnaya (2007) in Uwaoma
(2009) rightly noted that the achievement of educational goals depends on adequate financial
support and that the various government of the Federation cannot adequately fund educational
institutions.

Causes of financial distress in Tertiary Institutions in Nigeria

The following are some of the causes of financial distress in tertiary institutions in Nigeria;
1. Unstable policies: Ogbonnaya (2012) defined unstable policy as a policy that frequently
changed. In Nigeria, there is no agreed policy for the funding of tertiary education by the
government. Hence, this result to tertiary institutions getting from the government only what the
country can afford. For instance, newly appointed officials in the institution may decide to make
or choose their own policies and fund such policies to the detriment of other policies formulated
by their predecessors. This has really resulted to lot of financial crisis in higher institutions in
Nigeria.
2. Indiscipline and Corruption: The high rate of indiscipline and corruption in the Nigerian
educational sector is a huge problem causing financial distress in tertiary institutions in Nigeria.
The little funds released for educational administration of education are mismanaged and
misappropriated (Ogunode, 2020, Edeh 2020). Noun (2017) observed that indiscipline and
corruption have eaten deep into the fabrics of Nigeria society. In fact, indiscipline and corruption
are today found in the industrial sector, in health institutions, in government agencies and
parastatals, and even in educational institutions that were once known for order and decorum. In
5
 International Journal of Education, Learning and Development
Vol. 12, No.7, pp.125-133, 2024
Print ISSN: 2054-
6297(Print) Online ISSN: 2054-
6300 (Online) Website:
https://www.eajournals.org/
the ministry of education, some officials embezzle funds meant for specific projects in schools.

6
 International Journal of Education, Learning and Development
Vol. 12, No.7, pp.125-133, 2024
Print ISSN: 2054-
6297(Print) Online ISSN: 2054-
6300 (Online) Website:
https://www.eajournals.org/
There are others who divert funds meant for education to other channels. For instance, some
officials divert funds meant for the erection of classroom blocks into games and sports. Some
others insist on gratification for every task to be accomplished or any project to be undertaken.
Some administrators receive gratification for the award of contract concerning the construction
of science laboratories or the procurement of teaching equipment. Kyari, Obed &Yalwa (2018),
opined that in Nigeria as it is now, it may not be the budgetary figure that may be wrong or too
small, but corruption is the cankerworm that has always eaten up the education budget of the
nation, which has cause under development in education sector.
3. Demand from other sector: Other sectors of the economy such as health sector, security
sector, transportation sector, among others are competing resource allocation with educational
sector. Most times, the resources met for educational sector are diverted to other sectors.
Research has it that Nigerian government spends one trillion for over five years now on security
problem in the country. Funds that supposed to be used to develop other sectors of the economy
like education. Noun (2012), submitted that the revenue of a country is distributed among the
various sectors of the economy in order to foster national development. Education is one of these
sectors and its share of the national revenue depends on the needs of other sectors of the
economy. When other sectors call for more attention of the government, the proportion of the
national revenue devoted to education may reduce.
4. Total reliance on government for fund: The total reliance of tertiary institutions on
government for fund has enormously affected their various operations in the school. The
economy situation of the nation always determines what the government will allocate to higher
institutions. Therefore, this constitute to poor funding of tertiary education. The belief that
tertiary education is government venture has only succeeded in bringing financial distress to the
institutions.
5. Deficit in National Revenue: For the past five years now, Nigeria’s revenue generation has
continued to fall below the expected projected revenue. Punch Newspaper (2023) covered the
actual budget deficits and projections for 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, and
2023. According to the data, deficit financing has risen by 370.54 per cent from N2.41tn in 2016
to N11.34tn in 2023. In 2015, total deficit financing amounted to N841.48bn, it rose to N2.41tn
in 2016, N3.81tn in 2017, N3.65tn in 2018, N4.18tn in 2019, N6.59tn in 2020, N6.44tn in
2021,
N10.78tn in 2022, and N11.34tn in 2023. The quota of the national resources allocated to
education depends on the rate of economic growth of a Nigeria. If the economic growth rate is
low, it may be burdensome for the government to allocate more resources to education.

Implications of financial distress on tertiary Education in Nigeria

The problem of finance has lot of negative impacts on tertiary Education in Nigeria. Some of
these negative impacts are as follows:
1. Abandoned projects: The problem of fund has impacted negatively on projects completion
in many educational institutions. Erunke (2022) pointed out that Tertiary Education Trust Fund
(TETFund) blamed slow pace of work in its various intervention projects in public tertiary
7
 International Journal of Education, Learning and Development
Vol. 12, No.7, pp.125-133, 2024
Print ISSN: 2054-
6297(Print) Online ISSN: 2054-
6300 (Online) Website:
https://www.eajournals.org/
institutions across the country to fluctuations in prices of important building materials. TETFund
agencies emphasized that projects in most tertiary institutions experienced delay as a result of

8
 International Journal of Education, Learning and Development
Vol. 12, No.7, pp.125-133, 2024
Print ISSN: 2054-
6297(Print) Online ISSN: 2054-
6300 (Online) Website:
https://www.eajournals.org/
inflation and economic crisis in the country. Olusegun and Michael (2011) carried out a surveyed
in the six states of South Western Nigeria on factors responsible for project abandonment. The
research revealed the causes of project abandonment include inadequate funding, delayed
payment, poor project planning, inflation, among others.
2. Inadequate Educational infrastructure/facilities: The lacks of adequate
infrastructure/facilities in Nigerian educational institutions are also connected to the poor
budgetary allocation to Educational sector. Educational infrastructure include school buildings
such as classrooms, exam hall, staff offices, seminar/conference/board rooms, laboratories,
workshops, studios, farms, central libraries, specialized/professional libraries, faculty libraries,
departmental libraries, etc. The factors responsible for inadequate infrastructural facilities in
Nigerian public universities include; underfunding, increased in students population, corruption,
poor infrastructural facilities planning, poor supervision and inflation (Ogunode, 2020).
3. Low standard of tertiary Education: The low standard of tertiary education in Nigeria can
be tied to poor funding of the schools across the country. The inability of the school
administrators and managers to employ adequate academic staff and acquire needed education
resources to implement education services is as a result of limited funds allocated to Education.
This is supported by Ogunode, Akinlade & Abubakar (2021), who opined that to ensure quality
assurance in the higher institutions; it required high investment in both human and materials
resources. There are a lot of resources needed to guarantee quality assurance in the higher
institutions. It is unfortunate that the budgetary allocation for the higher institutions is inadequate
and this is affecting the quality assurance in the system. Ogunode (2021) submitted that the
budgetary allocation for the administration of higher institutions is inadequate. Due to this
problem, many school administrators cannot procure the necessary human and materials
resources needed to ensure quality assurance in their various institutions.
4. Strike actions: Strike action in the Nigerian tertiary institutions is linked to poor funding of
the institutions. This is in support of Abubakar, & Ogunode (2021) who opined that
underfunding of higher institutions has been one of the major reasons that different union groups
like ASUU and ASUP, NUT goes on strike. Uzoh. (2017) submitted that the issues of funding
and facilities have caused of friction between ASUU and the government in almost all instances.
This is because the union at different periods has been finding it difficult to teach in an
environment without the expected amenities or with poor facilities. ASUU’s contention has been
to refuse underfunding of the universities, which undermines the capacity of universities to
maintain standards at desirable levels. Underfunding has made staff and students not to have
access to the latest books and journals, laboratories lack equipment, so experiments cannot be
conducted and local research funds have virtually dried up (Pemede, 2007).
5. Lack of professional development Programmes: The lack of professional development
programme in the Nigerian tertiary institutions can also be traced to poor funding. Ogunode
&Oluseun (2020) who opined that inadequate funding of Nigerian higher education institutions
is a major problem facing the administration of professional development programmes for
employees across higher education institutions. Adequate funding is very crucial for
implementing various professional development programmes in the various tertiary institutions.

9
 International Journal of Education, Learning and Development
Vol. 12, No.7, pp.125-133, 2024
Print ISSN: 2054-
6297(Print) Online ISSN: 2054-
6300 (Online) Website:
https://www.eajournals.org/
Inadequate funding has

10
 International Journal of Education, Learning and Development
Vol. 12, No.7, pp.125-133, 2024
Print ISSN: 2054-
6297(Print) Online ISSN: 2054-
6300 (Online) Website:
https://www.eajournals.org/
been a major challenge to the development of higher education institutions in Nigeria. Many
programmes for higher education institutions, such as the teaching programme, conference,
workshop, research programme, among others have not developed because of poor funding. As a
result of this, most public universities find it cumbersome to sponsor their academic staff to
participate in these programmes.

Remedial Measures
To address the problems of financial distress on tertiary education in Nigeria, the following
suggestions were made:
1. Funds disbursed for projects and programmes should be adequately supervised, monitored and
evaluated to achieve effective implementation.
2. The government and Ministry of education should set up a supervision team to inspect how
school administrators disburse the funds assigned for different activities in the school. This will
help to reduce misappropriation of school funds by school managers.
3. The federal and state governments need to collaborate more with the private sector to explore
opportunities for raising non-traditional funds and participation in education financing.
4. Government should stop the habit of diverting the funds meant for tertiary education projects
to other sectors.
5. The federal and state government should create alternate source of income for the education
system to ensure sustainable development in the sector.
6. The financial strength of every institutions should be considered before creating new
departments out of the existing ones to avoid financial distress.

CONCLUSION

This study examined the implications of financial distress on tertiary education in Nigeria. The
problems of financial distress on tertiary education include: abandoned projects, inadequate
educational infrastructure/facilities, strike actions, low standard of tertiary education and lack of
professional development programmes. The study concluded that funding is very significant in the
development of education and also a key instrument in ensuring effective implementation of
education policies, programmes and attainment of educational goals and objectives.

References
Abubakar, L, & Ogunode, N, J (2021).Strike action in Nigerian higher institutions: Meaning,
causes, effects, achievement and way forward. Scholarly publishing discourse. 1(1),17-
30.
Bua, F. T., and Adzongo, P. I., (2014). Impact of Financial Management on Secondary School’s
Administration in Zone A Senatorial District Of Benue State, Nigeria. Public Policy and
Administration Research. .4(.9) 95-104
Edeh J. N. (2020). Creating a culture of continuous quality improvement in secondary schools.

11
 International Journal of Education, Learning and Development
Vol. 12, No.7, pp.125-133, 2024
Print ISSN: 2054-
6297(Print) Online ISSN: 2054-
6300 (Online) Website:
https://www.eajournals.org/
Emenalo, F.C. (2012). Towards sustainability of higher education in Nigeria. In Uche, C.M.,
Anyamele, S.C., Nwikina, L. & Meeyinikor, J.N.D (Eds). Administration of Higher
Education Theories, tasks and techniques. port Harcourt, University of Port Harcourt
Press.
Erunke, J. (June, 2022). TETFund blames slow pace of work in projects to cost of materials,
COVID-19, others. Retrieved from; https://www.vanguardngr.com/2022/06/tetfund-
blames-slow-pace-ofwork-in-projects-to-cost-of-materials-covid-19others/
Federal Republic of Nigeria (FRN) (2014). National policy on education (4th Ed.). Lagos:
NERDC press.
Guardians (2023). Lack of finance responsible for crisis in Nigeria’s Educational system, says
group. Retrieved from https://guardian.ng/features/education/lack-of-finance-
responsible-for-crisis-in-nigerias-eduactional-system-says-group/
Noun (2012). Education Finance. Lagos. Nigeria
Noun (2017) Budgeting and Financial Management in Education. Lagos
Ochai, G.O. (2005) Financial management practices in secondary schools in Otukpo Education
zone, Benue State. An Unpublished M.Ed Thesis Department of Education Foundation,
University of Nigeria, Nsukka.
Ogunode, N.J. (2020). Administration of public universities in Nigeria: Problems and solutions.
Journal of Sinestesia, 10(2), 98-109.
Ogbonnaya, N.O. (2012). Foundations of Education finance. Nsukka; Hallman Publishers.
Ogunode N, J,. (2021)Administration of Public Secondary Schools in Nigeria: Problems and
Suggestions. Central Asian Journal of social sciences and history. 02 (02).p:90- 102
Ogunode N, J. & Abubakar, L. (2020) Public Universities Administration in Nigeria: Challenges
and the ways forward. International Journal on Integrated Education, 3(11), 163.
Ogunode, N.J., Iyabode, A.E. & Olatunde-Aiyedun, T.G. (2022). Community service
programme of Nigerian public tertiary institutions: problems and way forward. Spanish
Journal of Innovation and Integrity, 5, 1-9.
Ogunode N. J Akinlade O, M. &Abubakar, M. (2021). Quality Assurance in Nigerian Public
Higher institutions: Challenges and Way Forward. International Scientific research
Journal. 2(7). 36-55.
Ogunode, N.J. & Oluseun, D.J. (2020). Administration of professional development programme
in Nigerian higher institutions: challenges and way forward. Intercathedra. 3(44), 147–
155.
Olatunde-Aiyedun, T.G., Ogunode, N.J. & Ohiosumua, O.E. (2021). Covid-19 and
Administration of Environmental Education Students in Nigerian Tertiary Institution.
International Journal of Innovative Analyses and Emerging Technology, 1(4), 87– 93.
Retrieved from http://openaccessjournals.eu/index.php/ijiaet/article/view/21

Olusegun, A.E. & Michael, A.O. (2011). Abandonment of construction projects in Nigeria:
Causes and effects. Journal of Emerging Trends in Economics and Management
Sciences, 2(2), 142-145.

12
 International Journal of Education, Learning and Development
Vol. 12, No.7, pp.125-133, 2024
Print ISSN: 2054-
6297(Print) Online ISSN: 2054-
6300 (Online) Website:
https://www.eajournals.org/
Pemede, O. (2007). An Appraisal of contributions of Academic staff Union of universities as a
Trade Union to Educational Development in Nigeria. The Social science, 2(3): 357-364.

Punch (2023). Budget deficit rises 370%, hits ₦47bn under Buhari. Deficit in Nigeria National
Revenue for the last 5 years.

Uzoh. B. C. (2017). An Assessment of the Impact of Academic Staff Union of Universities

(ASUU) on Human Resource Development in Nigerian Universities. International
Journal of Academic Research in Business and Social Sciences, 7(4).

13