50 Percent of Public Universities Drowning in Debt: New Report Reveals Financial Crisis
According to the data tabled in Parliament, 23 of the 40 universities are on the verge of collapsing due to heavy debts, with the total debt burden across all institutions now reaching a record Sh76 billion.
According to a document tabled before the National Assembly Committee on Education, the University of Nairobi (UON) accounts for the lion’s share of the debt at Sh18 billion.
The Technical University of Kenya (TUK), which owes Sh10.367 billion, comes next, followed by Egerton University, which owes Sh10.363 billion.
Kenyatta University has a debt burden of Sh9.538 billion, with JKUAT closing out the top five with an outstanding debt of Sh8.857 billion.
The debt burden has prompted the Ministry of Education to declare the 23 universities technically insolvent, meaning that the institutions cannot pay their debts.
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Beatrice Inyangala, Higher Education Principal Secretary, informed MPs that the other institutions include Multimedia University, Kabianga, the Technical University of Kenya, Kisii, and Koitalel Samoei University.
Cooperative University, Dedan Kimathi, Maseno, Chuka, South Eastern Kenya University, Laikipia, Embu, Maasai Mara, Moi, Masinde Muliro, Kirinyaga, and Garissa universities are the other struggling institutions weighed down by debt.
However, Tharaka University College, Pwani University, and Masinde Muliro University of Science and Technology have still managed to remain debt-free.
Nature of this debt
The report further delves into the nature of this debt, highlighting the various entities to whom these institutions owe money.
Defaults on pension payments, gratuities, insurance premiums, and other statutory deductions constitute the largest portion of the debt, accumulating to Sh28.414 billion.
Neglected supplier bills, unremitted employee deductions, and outstanding payments to part-time lecturers further exacerbate the financial problems.
The institutions owe Sh5.595 billion to unpaid suppliers, Sh3.49 billion to unremitted Sacco deductions, Sh3.369 billion to part-time lecturers, Sh2.25 billion to banks, and Sh1.152 billion to capital projects.
Other debts include the Housing Levy, to which universities owe Sh39.4 million, Sh520,000 to the Higher Education Loans Board (HELB), and Sh120,000 to the National Industrial Training Authority (NITA). Other unspecified debts amount to Sh6.248 billion.
Inyangala last week indicated that the Ministry’s analysis shows that the institutions will need at least five years and a ton of government support to emerge from the debt pit.
However, the institutions’ prospects are bleak as the government further proposes to cut down funding for government-sponsored students in public universities.
Budget estimates for university fee grants for government-sponsored students indicate a significant decrease from the required student fees.
Details show that the universities need Sh28.7 billion to pay fees for continuing students in the third to sixth years of study.
Financial Budget
In 2023, a need-based scholarship and loan model replaced the phased-out funding formula for these students.
However, budget estimates show the National Treasury proposes Sh17.9 billion for student fees.
The biggest shock, however, is that four universities will receive zero funds for continuing students.
The University of Nairobi needs Sh1.725 billion for continuing students; the University of Eldoret needs Sh703 million; Moi University needs Sh1.28 billion; and the University of Kabianga needs Sh339 billion, but none of these institutions received any funding.
On Wednesday, the National Assembly Committee on Education pressed the Ministry of Finance to explain why the four universities were exempt from the capitation for continuing students.
Inyangala issued a warning about the far-reaching implications of the funding reduction for continuing students proposed in the Financial Year 2024/2025 Budget proposals.
The allocation to various universities is not consistent with the criteria developed by the Universities Fund.
50 Percent of Public Universities Drowning in Debt: New Report Reveals Financial Crisis
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