The Federal Government has commenced the implementation of an automatic 40% deduction from the Internally Generated Revenues (IGR) of Federal Universities and other partially funded institutions nationwide. This automatic deduction policy aligns with the Finance Circular bearing reference number FMFBNP/OTHERS/IGR/CRF/12/2021, which was issued on December 20, 2021, and places limits on the annual budgetary expenditure derived from the IGR of partially funded federal government institutions.
This development is outlined in a letter dated October 17, 2023, titled ‘Implementation of 40% Automatic Deduction from Internally Generated Revenue of Partially Funded Federal Government Institutions.’ The letter, addressed to the Vice-Chancellors of the universities, was issued by the Accountant-General of the Federation, Mrs. Oluwatoyin Madein, and signed by Felix Ore-ofe Ogundairo, the Director of Revenue and Investment at the Office of the Accountant-General of the Federation. The letter received approval from the Minister of Finance, Wale Edun.
“I am directed to inform you that the Honourable Minister of Finance and Coordinating Minister of the Economy has approved the implementation of a 40% auto deduction from the Gross Internally Generated Revenue (IGR) of all Partially Funded Federal Government Institutions in line with the Provision of Section 62 of the Finance Act, 2020, with effect from November 2023,” the letter states.
The directive emphasizes that agencies and parastatals should retain no more than 50% of their gross IGR, with the remaining 50% to be remitted to the Sub-recurrent Account. All statutory revenue lines, including Tender Fees, Contractor’s Registration Fees, Disposal of Fixed Assets, Rent on Quarters, etc., must be remitted in full to the Sub-recurrent Account.
In line with the Finance Act, 2020, and the Finance Circular of 2021, the partially funded agencies and parastatals are urged to align their budget requirements and ensure complete compliance with these provisions.
It’s important to note that the federal government had previously given universities full autonomy to explore alternative sources of financing for their activities.