How Nigeria Funds Its Schools: UBEC and TETFund
The money for basic education exists. Getting it out of the account and into a classroom requires a state to put up its own half first.
Nigeria funds basic and tertiary education through two separate mechanisms, both with dedicated revenue streams. Understanding why money sits unspent requires understanding how each one releases funds.
UBEC and the matching grant
The Universal Basic Education Act 2004 requires the federal government to contribute not less than 2% of the Consolidated Revenue Fund to the UBE Intervention Fund.
Half of that — 50% — is the matching grant. Under section 11(2), a state can only draw its share by depositing an equal counterpart contribution of its own. Put up ₦3.5 billion, and you unlock ₦3.5 billion. Put up nothing, and you get nothing.
The grant per state was raised to ₦3,554,642,584.46, from roughly ₦1.3 billion, announced on 29 August 2024. A state that matches it deploys around ₦6.6 billion for basic education.
Unaccessed grants are meant to lapse and be redistributed.
The money not being taken
As at 12 August 2026:
- Over ₦65 billion in counterpart and matching funds had not been drawn by states
- Approximately ₦267 billion had been released to states but remained unspent
- States have accessed more than ₦177 billion in UBE matching grants to date
One report frames the combined exposure as ₦332 billion at risk.
The ₦267 billion figure is the more striking one. That is money that cleared the matching hurdle, reached state accounts, and then did not get spent. The reasons vary — procurement delays, capacity shortfalls, and in some cases diversion — but the effect is the same: classrooms not built while funds sit idle.
We could not verify which specific states have failed to access funds, or whether any unaccessed money has actually been forfeited.
Why it matters most in the north
Because the north carries the largest share of Nigeria's out-of-school population and the greatest infrastructure deficit. A northern state that cannot find ₦3.5 billion in counterpart funding forfeits ₦3.5 billion it would otherwise receive — in a region where the need is highest.
The matching requirement is defensible in principle: it forces states to commit their own resources rather than treating federal money as a windfall. In practice it means the states least able to raise revenue are the least able to access the fund designed to help them.
TETFund and the education tax
TETFund — the Tertiary Education Trust Fund, created by the Tertiary Education Trust Fund Act 2011 — provides supplementary funding to public tertiary institutions: infrastructure, research, and academic staff training and development. It covers over 260 beneficiary institutions across universities, polytechnics and colleges of education. Executive Secretary: Sonny Echono.
Its funding came from the Tertiary Education Tax on companies' assessable profits. The rate rose over time: 2% until 2021, 2.5% under the Finance Act 2021, and 3% under the Finance Act 2023.
The 2026 change
The Nigeria Tax Act 2025 and Nigeria Tax Administration Act 2025 replaced the standalone education tax with a single 4% development levy on companies' assessable profits.
The levy consolidates four previously separate charges — the 3% tertiary education tax, the 1% NITDA levy, the 0.25% NASENI levy and the 0.005% Police Trust Fund levy — which together came to roughly 4.25%.
Under section 59(3) of the Tax Administration Act, the 4% is allocated:
| Recipient | Share |
|---|---|
| TETFund | 50% |
| Nigerian Education Loan Fund (NELFUND) | 15% |
| Defence and Security Infrastructure Fund | 10% |
| NITDA | 8% |
| NASENI | 8% |
| National Cybersecurity Fund | 5% |
| National Board for Technological Incubation | 4% |
It applies to all companies chargeable to tax, excluding small companies and non-resident firms.
The arithmetic is worth doing. TETFund previously received the full 3%. It now receives 50% of 4%, which is 2%. On the face of it, that is a reduction in TETFund's share of company profits, offset by whatever the broader base and improved collection deliver. Whether it nets out higher or lower will show in the disbursement figures.
The commencement date is widely reported as 1 January 2026. We could not confirm it from a primary source.
Frequently asked questions
What is the difference between UBEC and TETFund? UBEC funds basic education — primary and junior secondary. TETFund funds public tertiary institutions.
Why do states lose UBEC money? Because the matching grant requires an equal state contribution. No contribution, no release.
Does TETFund fund private universities? No. Public institutions only.
Sources
- Matching grant increase — UBEC
- Unaccessed and unspent funds, August 2026 — BusinessDay
- ₦332bn at risk — The Guardian Nigeria
- The 4% development levy and its allocation — BusinessDay
- Education tax increase to 3% — The Guardian Nigeria