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BIG READ: ASUU, funding & social mobility: What needs to be done

With just a budgetary allocation of 5.6%, Nigeria is heavily under-investing in education.



After months of negotiation with the Academic Staff Union of Universities (ASUU), who had embarked on a 9-month strike, the Nigerian Government recently reached an agreement with the union, hence ending the strike.

ASUU embarked on the strike action in March 2020, following its disagreement with the Federal Government over the funding of the universities and implementation of the Integrated Payroll and Personnel Information System (IPPIS), which according to the union, negates the autonomy policy for the universities.

President of ASUU, Prof Ogunyemi, blamed these for the alleged irregularities in the payment of salaries and allowances of lecturers, with some lecturers receiving very poor remuneration in some cases.

According to him, the government gave the lecturers a one-line salary scale which means taxes are being deducted from allowances, unlike what is practiced in the civil service. He disclosed that lecturers were losing as high as 50% – 70% of their salaries, due to the implementation of the IPPIS.

READ: ASUU explains why it is against reopening of universities

During the negotiations, the FG processed for payment, the sum of N70 billion, comprising N40 billion for Earned Academic Allowances/Earned Allowances and N30 billion for revitalization of the universities.

FG has also acceded to a hybrid payment platform, which is not 100%, IPPIS for the payment of salaries and Earned Academic Allowances/Earned Allowances, pending the result and conclusion of the integrity and usability test on the University Transparency and Accountability Solutions (UTAS) by the National Information and Technology Development Agency (NITDA).

READ: FG accuses ASUU of refusing to reciprocate its offers

Education funding

The constant ASUU struggle is linked to one obvious elephant in the room—funding for Tertiary Education in Nigeria. In a Guardian report, the ASUU, Ambrose Alli University (AAU) Chapter, Ekpoma, said the necessity of the strike was borne out of a need for improved funding of universities in Nigeria.

“Nigerians should bear with us. ASUU is fighting their battle. Our union is struggling to ensure that the children of the poor, who cannot afford the prohibitive cost paid in private universities or do not have opportunities to study outside Nigeria, get quality education, which is not priced beyond their reach. This will only happen when government adequately funds public universities and addresses the rot and decay in them,” they said.

READ: ASUU: FG moves to register a rival union, to decide in December

Budget funding

For 2021, the FG budgeted N545.10 billion for Ministry of Education as recurrent expenditure, and N484.49 billion for Statutory Transfers. The Universal Basic Education Commission is to receive N70.05 billion, while total capital projects for Education is N127 billion. Altogether, the Nigerian Government will spend 5.6% on education for the year 2021.

Consequently, the National Association of Nigerian Students (NANS) condemned the FG’s 2021 budgetary provision to education, stating, “It was the worst in the last 10 years. The government only apportioned 5.6 % to the sector out of a total of N13.6 trillion budgetary provisions.

“When you remove the percentage for basic education, what then becomes of the tertiary cadre? The percentage was ridiculous, low and disappointing. This is one of the challenges we are facing in the education sector,” President of the association, Comrade Sunday Asefon, said.


UNESCO’s ‘Education for All, EFA, 2000-2015: achievement and challenges’ and ‘World Education Forum 2015 final report highlighted that “15 per cent to 20 per cent is the international benchmark” to fund education.

This means that with just a budgetary allocation of 5.6%, Nigeria is heavily under-investing in education.

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READ: ASUU strike: NANS threaten to shut down all private universities

So what needs to be done?

The number of Nigerians that are poor is estimated to be 82.9 million; this was revealed in the latest Poverty and Inequality report released by the National Bureau of Statistics, covering the year 2019. 40.1% of Nigerians are classified as poor by national standards.

According to NBS, on average, 4 out of 10 individuals in Nigeria have real per capita expenditures below N137,430 per year, which translates to N376.5 per day.

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With a poor population, education has been used as a tool to lift millions out of poverty through social mobility offered for the poor alongside pro-market reforms. This means that Nigeria cannot afford to joke with its tertiary university funding.

READ: Unemployment rate: Worse days ahead if economic policies don’t improve – TUC

The case for social mobility

Equality Trust UK revealed that a strong relationship exists between high levels of income inequality and low levels of social mobility.

“Education is often seen as a strong driver of social mobility. Social mobility may be reduced in more unequal countries because educational scores are on average lower in less equal countries and education improves incomes more for those at the bottom of the income spectrum than for those further up.


“The link between educational achievement and high aspiration is a key explanation for the association between low educational achievement and inequality. A further explanation suggests that the low levels of trust in unequal societies lead to poor quality social and family relationships which in turn damages learning,” they said.

The report illustrates that for Buhari’s administration to fulfill its promise of lifting 100 million Nigerians out of poverty, investing in education needs to be way above the 5.6% benchmark set in the 2021 budget.

Is Nigeria investing enough in education to warrant reduced tertiary investment?

Award-winning journalist and Business Day columnist, David Hundeyin, says Nigeria’s investment in education does not match its ambitions in fighting poverty for a developing nation.

“Nigeria is investing roughly a fifth of the recommended amount it should be investing annually in education. Per UN recommendations, a developing country should set aside roughly 26 percent of its annual budget for education.

“Nigeria’s 2021 budget sets aside 5.6 percent – the lowest budget share for education in a decade. So not only does Nigeria ordinarily have no business reducing investment in any kind of education based on its purported ambitions, it is not even investing up to a quarter of how much it should be spending on education,” he said.

Professor Yomi Fawehinmi states that Nigeria needs a roadmap to sustainable government funding.

“Nigeria has an ideological challenge with funding tertiary education. Who should fund it, how and at what rate?,” he says.

“In most countries, tertiary education is a balance of funding… User fees like tuition, endowments including alumni support, research funding and others. Our issue is that we focus only on government subsection and subsidies that will be affected by government finances and priorities.

“We need to get to a balanced funding model to make it sustainable.”

Why tertiary education funding is a headache for the FG

Hundeyin further states that massive government spending has made debt a priority over sectors like education which it needs to focus on.

“The FG has tied itself up in an impossible budget situation by consistently and constantly expanding the size and cost of government over decades, leading to a situation where debt is now needed just to keep the bloated federal and state civil services running, and the federal budget specifically is now almost entirely swallowed up by debt servicing and wage expenses, leaving little to nothing for capital investment which typically comes in form of infrastructure and R&D spending,” he said.

“The obvious (if not exactly simple) solution is to aggressively embark on a rationalisation drive to significantly trim the cost of government. The politically unpopular but pragmatic decision must be made to stop running government in Nigeria as a job creation scheme and make it lean and productive as it was originally intended to be. The cost savings should then be invested in infrastructure and R&D, where tertiary education falls under.”

What examples can Nigeria learn from emerging nations on tertiary funding?

According to Hundeyin, “The closest and most relevant example would have to be that of Ghana, which runs a similar kind of economy to Nigeria and has a similar sized government budget on a per capita basis. According to the 2015 paper “Towards Innovative Models for Funding Higher Education in Africa” published by the Association of African Universities, Ghana’s primary sources of funding for tertiary education are direct budgetary allocations and grants from the Ghanaian government, the Ghana Education Trust Fund (GETFund), internally generated revenue from the institutions and contributions from the private sector.

“The GETfund is supported with 2.5% of all VAT revenues collected in Ghana. With the N1.1 trn of VAT revenue collected in Nigeria last year, this would amount to N27.5bn if applied accordingly in Nigeria. Ghanaian universities also enjoy a significant annual income stream from thousands of foreign students, principally from Nigeria and Cote d’Ivoire. These students pay fees in excess of $5,000 per annum, which boosts revenues and further enables education to be provided at highly subsidised rate to local students.”

What are the effects of reduced tertiary funding in Nigeria relating to culture (social mobility) and R&D

Hundeyin says reducing tertiary education funding is a roadblock for social mobility as it would be just a utility for the rich and upper-middle class.

“As has been covered extensively elsewhere, relatively competent tertiary education over the past 60 years has been the single greatest mover of Nigerians from poverty into the middle and upper classes. In terms of providing access to opportunity, enabling social mobility and reducing inequality and inequity, nothing comes close to the impact that subsidised higher education has had on Nigerians – flawed as it is.

“Removing this by leaving tertiary education entirely to market forces might seem pragmatic in the short term by taking what appears to be an expensive recurrent item off the government’s list of budget liabilities, but this short termist view does not account for the fact that Nigeria’s primary competitive advantage is (and has always been) having large amounts of relatively competent labour available cheaply, both locally and internationally. Allowing higher education to become the exclusive preserve of the wealthy and upper middle class demographic entirely destroys this competitive advantage and effectively turns Nigeria into Ethiopia – a densely populated zombie economy without the human capital to power growth.

“It is a terrible idea that completely falls apart within a few minutes of examination,” he adds.

Professor Fawehinmi urges that Nigeria should sell some of its educational institutions and leave those that it can fund, in a bid to find extra sources to fund education.

“Maybe start with what we can afford. Can we afford this number of universities? We should sell some off and retain the few we can fund” he says. “Then introduce user fees including school fees. Also enhance their capacity to attract funds from different sources.”


For a country where statistically over 40% of its population lives below poverty and has a median age of 17.9, investing in education is non-negotiable for the Buhari-led administration’s battle to uplift 100 million out of poverty. Nigeria is neglecting its young population by investing below UNESCO standards for education which leaves little room for social mobility for the poor. The FG also needs to trim its expenses as a first step towards ensuring more funds for the education sector.

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The Nigerian economy is increasingly dollarized but there is a way-out

Nigeria’s overdependence on Oil has brought about high dollarization in Africa’s biggest economy.



For managers of the Nigerian economy, it was a huge sigh of relief when the National Bureau of Statistics reported that the country had surprisingly exited a recession in the 4th quarter of 2020. Contrary to most analyst expectation, the Nigerian economy grew by 0.11% in the 4th quarter of 2020.

Despite the return to growth, albeit tepid, a dark cloud of uncertainty continues to hover over the minds of millions of Nigerians as the broader economy remains in a fragile state. A key factor that remains a bellwether for the economy is the exchange rate, which is always perfectly correlated with the price of oil and the resultant dollar related export earnings.

Data has repeatedly shown that the country of over 200 million people is affected by the volatility of crude oil prices in the international market, particularly in the exchange rate value of the naira. Without oil, the Nigerian economy in its current state will collapse.

Data from Nairalytics, a data-sharing portal, reveals that the oil sector provides for 85% of Nigeria’s export earnings and 55% of its government revenues, making the nation highly dependent on the dollar for its survival. It appears a lot of financially savvy Nigerians now this already and are increasing their dollar positions.

According to Silas Ozoya, Founder/CEO of SUBA Capital LLC, in an exclusive interview with Nairametrics, a growing number of Nigerians are getting more attached to the US dollar due to high inflation and low purchasing power of the naira.

“Many Nigerians are beginning to dollarize their spending, investment and asset holdings to hedge against the ever-increasing inflation rate and our strong economic romance with recession,” Ozoya said.

Nigeria, Africa’s biggest crude oil producer, has been heavily impacted by the plunge in crude oil prices following the outbreak of the COVID-19 pandemic, with the nation’s authorities adjusting the naira twice in the year 2020 to deal with the pressure.

Besides the drop in foreign exchange revenues from crude oil export, diaspora remittances, which made up about 5% of Nigeria’s GDP in the year 2019, also experienced a significant decline in 2020, again due to the impact of the pandemic and the economic challenges faced by many nations across the globe.

Uwa Osadiaye, a financial analyst in a leading merchant bank, in a note to Nairametrics, revealed that the Nigerian apex bank had made great efforts to reduce the country’s high dependence on the dollar. He advised the nation to increase its Agricultural production.

“The central bank has tried to do this with little success but I believe that beyond administrative measures, the key could lie in increased domestic production of things we consume that aren’t commoditized internationally for a start, such as food crops,” Osadiaye said.

Temitope Busari, CFA, in a telephone interview with Nairametrics, said that it was time for Nigeria as a country to diversify.

“One outcome of the diversification of the Nigerian economy, and perhaps the most critical one at this time, is the potential to diversify our foreign exchange earnings as a sovereign state. It will reduce overdependence on crude oil, maximize opportunities in erstwhile neglected sectors and project the country as the destination for top-class value creation in other areas outside being an oil-producing state,” Busari stated.

The financial analyst also spoke on the need for Africa’s leading oil producer to invest more in intellectual property and encourage Nigeria’s talent in the diaspora, saying:

“We have produced some of the most brilliant minds in the world evidenced by the ground-breaking successes recorded by Nigerians in diaspora (Medical professionals, Software engineers, resilient small business owners to mention a few), and we must begin to drive policies to retain that talent in-country and make the world pay premium dollar for it.”


Adetayo Teluwo, a scholar at Warwick Business School, said that the narrative seems to be changing as Nigerians are now beginning to embrace homemade goods.

“The Fashion & Style scene continues to boom. From side hustles to globally-competitive websites with options to accept payments from customers all over the globe,” Teluwo said.

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Bottom line

Economic experts believe that the way to solve this growing menace is for Nigeria to promote free markets and support large scale exports from the Agricultural, Mining, and Technology sectors. The country should tap into its raw diamond which is “intellectual services” to develop a knowledge economy.

Nigeria can draw lessons from India, which has performed remarkably well in creating an outsourcing and knowledge-based economy valued at over 150 billion dollars per annum. This has put India on the technology map, as a destination of low-cost but high-quality technical services, helping the densely populated nation to generate sufficient economic ripple effect to drive job and wealth creation.

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Three things Nigerians can learn from Warren Buffet’s latest letter

Three things we learned from Berkshire Hathaway’s (Warren Buffet’s) 2020 letter to shareholders.



warren-buffett, Young Investors, Here’s why Warren Buffet's $4.6m lunch with Bitcoin entrepreneur is experiencing delay , What Warren Buffet will do if he traded Nigerian stocks

Three things we learned from Berkshire Hathaway’s (Warren Buffet’s) 2020 letter to shareholders.

Warren Buffet (Sage of Omaha) recently released his annual letter to Berkshire Hathaway’s shareholders providing a recap of 2020 performance, as well as, giving his general perspective of his company’s journey.

Investors all around the globe fall over themselves to pay attention to what Mr. Buffet says, as well as how his portfolio of companies are performing. Just to learn as much as possible from one of the world’s most successful investors to date.

We at Nairametrics are no different and in this article, we will share some key business takeaways from the 2020 letter.

READ: Young Investors can learn these tips from Warren Buffet

1. Compounding still makes you rich

Just in case some investors momentarily forget about the power of compounding and consistency in investments, the very first page of Mr. Buffet’s letter serves up a timely reminder.

Specifically, since 1965 to 2020, the market value of Berkshire Hathaway’s stock has grown at a compounded rate of 20%. This is remarkable given that very few companies last that long (55 years) let alone provide such returns in US dollars over such a period of time. Even the S&P 500 with dividends included compounded at 10% (which is no small feat in of itself).

This lesson here is that for Retail investors, SMEs, startups, the power of compounding doesn’t need to be continually reminded, it needs to be a primary focus as you seek to deploy capital.

READ: Analysts pick Nigerian stocks Warren Buffett may likely buy

For context, in 1965 our dear country Nigeria had approximately $240million in external reserves.

  • If only 1% (i.e. $2.4million) had been invested in the S&P500 index and kept in a fund, the value of that fund today will be $56.3billion.
  • Alternatively, if only 0.05% ($1.2million) had been invested in Berkshire Hathaway stock and kept in a fund, the value of that fund today will be worth $67.45billion.

You can learn more about the power of compounding and here also.

2. Always focus on your CORE objectives and Key results

In 2020, Berkshire Hathaway earned USD$45billion of which $21.9b was operating income, $4.9b was unrealized gain, $26.7b was unrealized gain partially offset by $11b loss write-down.

Despite the huge unrealized gain of $26.7b, Mr. Buffet in his typical style was dismissive of unrealized gains but rather was quick to point out that his core objectives of growing operating income and acquiring good companies were not met in 2020!!!.

  • “Operating earnings are what count most, even during periods when they are not the largest item in our GAAP total. Our focus at Berkshire is both to increase this segment of our income and to acquire large and favorably-situated businesses. Last year, however, we met neither goal: Berkshire made no sizable acquisitions and operating earnings fell 9%. We did, though, increase Berkshire’s per-share intrinsic value by both retaining earnings and repurchasing about 5% of our shares.”

READ: Why Warren Buffett’s company is buying shares of a gold mining company

Furthermore, Mr. Buffet points out that Berkshire Hathaway’s earnings do NOT factor any portion of the operating earnings of companies which they have stakes in, such that only the dividends due to Berkshire are included in the results.

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In other words, he is keen to avoid clouding actual performance of his CORE investment vehicle by avoiding accounting gimmicks which gross-up earnings.

For Nigerian startups, SMEs, retail investors, the lesson here is that a laser-focused approach to tracking CORE business earnings helps provide business owners with clarity about actual business performance. This persistent clarity keeps owners grounded on what are the key areas of focus for improved business performance whilst avoiding reporting superficial income.

READ: What Warren Buffet will do if he traded Nigerian stocks

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3. Avoid business complexities AND always choose the most profitable business path which offers the least resistance.

We previously mentioned, Mr. Buffet’s preference to tracking income from CORE businesses. In his letter to shareholders, he goes further to discuss his apathy to the traditional Conglomerate.

Specifically, most businesses that are acquired are seldom leaders in their sector and often are underperforming hence the need to be acquired. Consequently “Conglomerates” who focus on fully acquiring other businesses will likely end up with a portfolio of “Sub-optimal” businesses.

Turning around the fortunes of these “acquired’ businesses will require management time and effort whilst distracting from CORE operations and creating business complexities.

Mr. Buffet notes that going forward Berkshire Hathaway’s approach will seek to avoid this option of undue business complexity and focus on path of least resistance to profitability. This will be achieved by continuing to find very good businesses and taking a stake in these well run businesses.

  • “It took me a while to wise up. But Charlie – and also my 20-year struggle with the textile operation I inherited at Berkshire – finally convinced me that owning a non-controlling portion of a wonderful business is more profitable, more enjoyable and far less work than struggling with 100% of a marginal enterprise.
  • “For those reasons, our conglomerate will remain a collection of controlled and non-controlled businesses. Charlie and I will simply deploy your capital into whatever we believe makes the most sense, based on a company’s durable competitive strengths, the capabilities and character of its management, and price.
  • “If that strategy requires little or no effort on our part, so much the better. In contrast to the scoring system utilized in diving competitions, you are awarded no points in business endeavors for “degree of difficulty.” Furthermore, as Ronald Reagan cautioned: “It’s said that hard work never killed anyone, but I say why take the chance?”

The lesson here for Nigerian startups, SMEs, retail investors is that rather than always wanting to go alone into new ventures, sometimes you need to seek competent partners to collaborate and execute ventures with. (i.e., successful business isn’t always about who struggled the most).

Finally, (Yeah, I know I said three things, but this is also an important takeaway), one additional point is that consistency pays. We previously stated that Berkshire Hathaway stock has returned 2,810,526% between 1965 to 2020. One way that Mr. Buffet has accomplished this is by being very consistent in his portfolio. Consistency can be seen in the duration of holdings, as well as the general mix of the sectors of interest.

With regards to duration, the three most valuable assets in his portfolio have been held for at least 15years plus.

Holding Duration Sector 
GEICO 1951 to date Financial Services – Insurance 
BHE (Berkshire Hathaway Energy) 1999 to date Utilities – Energy 
BNSF (Burlington Northern Santa Fe, LLC) 2006 to date Utilities – Freight/Transport 

Even if you then look at the top 15 investments in Berkshire’s portfolio, you notice it is comprised largely of Financial Services, Utilities stocks and Large Tech firms.

The lesson here for Nigerian startups, SMEs, retail investors is that if you find something that you are good at, keep doing it and producing consistent results, stay within your area of competence and aim to maximize value.

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