SEC Urges Nigerian Universities to Tap Capital Market for Sustainable Funding

 

 

By Atlantic Reports

Nigerian universities have been challenged to rethink their funding models by attracting long-term investment, developing income-generating assets and exploring opportunities in the capital market rather than relying predominantly on government allocations.

The Director-General of the Securities and Exchange Commission (SEC), Dr Emomotimi Agama, made the call on Friday, October 9, 2026, at the University of Ibadan Alumni Association Annual Public Service Lecture in Ibadan, Oyo State.

Speaking on the theme, “First and Best But Whose Capital Built It? Rethinking How Nigeria Funds Its Own Future”, Agama argued that Nigeria's universities could strengthen their financial independence by adopting investment structures that attract private capital while supporting education, research and infrastructure.

His proposals included university endowment funds, infrastructure bonds, student accommodation investments, research commercialisation and investment opportunities for alumni in the diaspora.

The recommendations come amid continuing concerns about the financial sustainability of public universities, where infrastructure needs, rising operating costs and growing student populations place pressure on available resources.

University of Ibadan's History Offers Lessons in Capital Formation

Agama traced the establishment of the University of Ibadan to a significant contribution made by its host community.

He recalled that in 1948, the chiefs and people of Ibadan donated 2,500 acres of land to the institution under a 999-year lease.

According to him, the decision demonstrated how communities could mobilise valuable assets to support institutions intended to serve future generations.

He contrasted that early contribution with what he described as the university's limited participation in modern capital-market financing.

Despite producing distinguished graduates, including a Nobel laureate, national leaders, central bank governors and professionals who contributed to Nigeria's financial sector, Agama said the university had not independently approached the capital market to raise long-term funding.

“Not once. Not a bond. Not a fund. Not a listed vehicle,” he said.

“The premier university of Africa’s largest economy has been, financially speaking, a spectator at a market its own graduates built.”

His remarks were intended to encourage the institution to consider whether its assets, alumni network and research capabilities could support more sustainable financing arrangements.

However, the absence of previous capital-market fundraising does not, by itself, establish that any particular financing instrument would be suitable or commercially viable for the university.

Student Housing Identified as Major Investment Opportunity

One of the most pressing challenges highlighted during the lecture was the shortage of student accommodation.

Agama said the University of Ibadan had approximately 41,700 students, while its halls of residence were designed to accommodate fewer than 10,000.

Based on those figures, existing accommodation capacity would serve less than one-quarter of the student population if every student required a place.

The gap illustrates the scale of potential demand for additional university housing, although not all enrolled students necessarily require accommodation on campus.

Agama proposed that the institution explore a Real Estate Investment Trust (REIT) or concession arrangement to finance new residential facilities.

Under such a model, investors could provide funding for student housing developments and receive returns from an agreed share of rental income.

The university could potentially benefit through improved accommodation capacity, contractual revenue and better management of residential facilities.

Agama argued that part of the money students currently pay to private landlords could instead support investment in university-linked housing.

However, the affordability of accommodation would remain a central consideration.

A privately financed housing project would need to balance investor returns with students' ability to pay, maintenance requirements and appropriate standards of accommodation.

Without careful planning, new financing arrangements could increase accommodation costs rather than ease the burden on students and their families.

SEC Chief Says Nigeria Has Capital but Needs Bankable Projects

Agama maintained that Nigeria's challenge was not simply a shortage of capital but the difficulty of directing available funds towards productive long-term investments.

He cited pension assets of ₦31.48 trillion as of July 2026 and Nigerian Exchange market capitalisation of ₦215.09 trillion as indicators of the scale of domestic financial resources.

He also referred to ₦4.65 trillion raised by banks over 24 months through recapitalisation efforts.

The SEC chief contrasted this with a ₦2.53 billion allocation to a university by the Tertiary Education Trust Fund (TETFund).

He argued that the comparison demonstrated the substantial difference between funding mobilised through financial markets and resources available through conventional education financing channels.

However, the figures measure different things.

Pension assets represent funds managed on behalf of contributors, while stock-market capitalisation measures the market value of listed equities. Neither amount constitutes money automatically available for university projects.

Similarly, bank recapitalisation proceeds and TETFund allocations serve different purposes and operate under different regulatory frameworks.

The central question is whether universities can develop credible projects with suitable financial structures, transparent governance and sustainable repayment or income arrangements.

Five Financing Options for Universities

Agama outlined five investment approaches that universities could explore within the framework of the Investments and Securities Act 2025.

For the proposed endowment fund, Agama recommended a structure registered with the SEC as a collective investment scheme, supported by an independent trustee and licensed fund manager.

He suggested an annual spending rule of four to five per cent, allowing the institution to support activities while seeking to preserve the fund's long-term financial capacity.

The sustainability of such a spending rule would depend on investment returns, inflation, operating costs and the fund's overall risk profile.

For infrastructure development, he proposed bonds and sukuk issued through dedicated financing vehicles backed by clearly identified revenue-generating assets.

Such instruments could potentially finance facilities without depending entirely on annual government allocations, although they would introduce repayment obligations and investment risks.

Universities Urged to Commercialise Research

Beyond physical infrastructure, Agama identified university research as a potential source of economic value.

He proposed the establishment of an innovation fund that could invest in businesses emerging from university laboratories and research centres.

Under the proposed arrangement, universities could retain equity interests in commercially viable companies developed from their research activities.

This could allow institutions to benefit financially when innovations generate successful businesses or marketable technologies.

The approach would also create opportunities for researchers, students and entrepreneurs to collaborate in developing products and services.

However, commercialising academic research requires clear rules governing intellectual property, conflicts of interest, revenue sharing and academic independence.

Universities would also need systems to evaluate which research projects have realistic commercial potential.

Not every research output will generate financial returns, and public universities must continue supporting fundamental research and scholarship that may not have immediate commercial applications.

Diaspora Investment Could Expand Funding Options

Agama also proposed a financing arrangement targeting Nigerians living abroad.

He suggested that the non-resident Bank Verification Number framework could help facilitate investment participation by members of the diaspora.

Citing annual remittances of $21.8 billion, he argued that universities could develop credible investment instruments capable of attracting a portion of funds currently directed towards household consumption and other purposes.

The proposal would not automatically convert remittances into university investment.

Participation would depend on investors' preferences, financial capacity, expected returns, risks and confidence in the institutions managing the funds.

A diaspora-focused investment scheme would also require appropriate regulatory safeguards and transparent disclosure of how money would be used.

Transparency Must Come Before Fundraising

While advocating capital-market financing, Agama warned that universities would need to meet demanding standards of financial accountability.

He identified several requirements, including annual publication of audited financial statements, credit ratings by registered agencies where applicable, professionally managed investment arrangements and clearly defined revenue streams.

He also emphasised the importance of protecting project finances from disruptions caused by changes in university leadership.

These safeguards would be essential because investors need reliable information before committing funds.

Unlike government grants, many capital-market instruments create financial obligations or expose investors to the possibility of losses.

Universities would therefore need to demonstrate that proposed projects are financially viable and that institutional governance arrangements can protect investors and public assets.

Transparency would also help students, staff, alumni and other stakeholders understand how funds are raised and spent.

Alumni Encouraged to Invest Beyond Donations

Agama urged university alumni to consider investment models that could generate continuing financial benefits rather than relying exclusively on one-off donations.

He proposed an Alumni Capital Fund with a relatively low minimum investment threshold to allow younger graduates and Nigerians abroad to participate.

The proposed fund would operate under transparent governance arrangements and publish audited accounts annually.

Acting President of the University of Ibadan Alumni Association, Prof. Terrumun Gajir, supported the call for greater domestic capital mobilisation.

Gajir said Nigeria needed to strengthen investment in productive sectors and reduce excessive dependence on external financing.

He identified pension funds, household savings and private capital as potential sources of development financing, subject to appropriate investment conditions.

According to him, a functional capital market could support industrial development, infrastructure and employment while providing investment opportunities.

He urged universities to embrace capital formation, investment and ownership as part of their long-term development strategies.

University Urged to Establish Independent Endowment

Chairman of the occasion, Bayo Oyero, also encouraged the University of Ibadan to explore direct investment opportunities.

Oyero, an alumnus of the institution, proposed the establishment of an independent university endowment fund separate from the existing Alumni Endowment Fund.

He suggested that such a fund could invest in property and other suitable assets to generate returns for institutional development.

Oyero also called for greater financial education among young Nigerians, particularly regarding long-term investment and participation in the capital market.

His remarks reinforced the argument that universities should not only teach financial and economic principles but also examine how those principles could support their own institutional sustainability.

Can Capital Markets Help Close Nigeria's University Funding Gap?

The proposals presented at the lecture offer a possible direction for addressing long-standing financial pressures within Nigeria's public university system.

Additional financing could support student accommodation, research facilities, laboratories and other infrastructure that universities struggle to maintain or expand.

However, capital-market funding is not a substitute for responsible public investment in education.

Government funding remains important for teaching, research, student support and activities that do not generate commercial revenue.

Investment-based financing also carries risks, including project failure, borrowing costs, market volatility and the possibility that pressure to generate returns could undermine affordability.

Any transition towards greater financial independence would therefore require careful regulation, consultation with university stakeholders and clear protection of the public-interest responsibilities of higher education.

For the University of Ibadan, Agama's proposals raise an immediate question: which institutional assets and projects could realistically attract investment while delivering measurable benefits to students and the wider academic community?

The answer will depend on feasibility studies, transparent governance, financial discipline and the university's willingness to translate proposals into credible investment plans.

The broader challenge for Nigerian universities is to develop sustainable funding systems without losing sight of their primary responsibilities: providing accessible education, advancing research and serving society.

Atlantic Reports: Voices. People. Facts.