Public Universities Drowning in Sh72.3B Debt
Public universities collectively owe Sh72.3 billion in unremitted deductions from both academic and non-academic staff, salary arrears, and unpaid supplier bills.
Initially standing at Sh60 billion when the Kenya Kwanza regime took office in 2022, the debt later surged to Sh75 billion before slightly reducing to its current level. Universities are now seeking government intervention to alleviate the crisis.
The financial struggles of public universities were discussed at the Second Biennial Universities Funding Conference, organized by the State Department of Higher Education. The conference brought together key stakeholders, including vice-chancellors, policymakers, and private sector representatives.
An analysis of the debt indicates that Sh25.9 billion was deducted from staff salaries for pension contributions but never remitted to pension schemes. Additionally, Sh20 billion in Pay As You Earn (PAYE) deductions from employees’ salaries was not forwarded to the Kenya Revenue Authority.
Further, universities withheld Sh3.3 billion meant for workers’ savings and loan repayments to their saccos, failing to remit the funds. Another Sh3.3 billion remains unpaid to various suppliers.
Additionally, capital projects where funds were spent but construction stalled, leaving projects unutilized, have been valued at Sh5.1 billion. The Universities Fund (UF) has classified an additional Sh5.6 billion as miscellaneous debts owed by public universities.
Funding Challenges and Legal Hurdles
The revelations come amid growing uncertainty over higher education funding. A financing model introduced in 2023, initially seen as a solution to the universities’ financial distress, was later ruled unconstitutional by the High Court. The government has since appealed the ruling.
The CEO of the Universities Fund, Geoffrey Monari, emphasized the need for universities to diversify their revenue streams.
He suggested that institutions should form private-public partnerships (PPPs) to enhance infrastructure, such as constructing student hostels. He also highlighted consultancy services as a potential revenue source, with academic staff offering expertise in various sectors.
Monari further noted that lobbying efforts are underway to secure exclusive government contracts for public universities to provide consultancy services, targeting at least 30% of government-related consultancy work.
Exploring Alternative Revenue Streams
Former university lecturer and National Assembly Education Committee member, Dr. Christine Ombaka, underscored the urgent need for alternative revenue generation strategies.
She pointed out that universities are drowning in debt and should capitalize on their land and properties to generate additional income, settle outstanding debts, and elevate their institutions to global standards.
Dr. Ombaka stressed that if universities utilized their assets strategically, financial constraints would no longer be an issue. Participants at the conference noted the irony of universities struggling financially despite owning assets worth billions of shillings.
The University of Nairobi, for instance, has properties valued at over Sh200 billion, while Moi University leased out 1,500 acres of its 3,000-acre Eldoret land to a private developer. However, the deal is currently under investigation by the Ethics and Anti-Corruption Commission (EACC) after the investor failed to pay rent.
Egerton University, despite operating an extensive agricultural program, also has large portions of land lying idle. Besides land, universities own commercial properties such as hotels and malls, which remain largely untapped as revenue sources.
Members of the Education Committee urged vice-chancellors to adopt alternative funding approaches beyond government allocations and tuition fees. Kitutu Masaba Member of Parliament, Clive Gisairo, stressed that for long-term financial stability, universities must utilize their vast lands, properties, and research commercialization rather than solely relying on government funding.
He further emphasized that universities should explore innovative financing models to mitigate economic pressures and meet the increasing demand for higher education. Other suggested solutions include adopting renewable energy to lower electricity costs, leveraging alumni contributions, and securing endowments.
Government’s Role in Supporting Universities
Principal Secretary for Higher Education, Dr. Beatrice Inyangala, stated that the government is exploring ways to incentivize the private sector to support research funding. The ministry plans to increase grant allocations to universities to sustain training programs and boost research funding.
Dr. Inyangala highlighted proposals under consideration by the Ministry of Education, including performance-based funding to address systemic challenges and enhance education quality. Additionally, the development of centers of excellence is being proposed to establish and promote technical, research, agricultural, and applied universities.
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According to a communiqué from vice-chancellors at the conclusion of the conference, there is a need to market local scholars’ research in international peer-reviewed journals to enhance global recognition.
They also urged the government to revise policies to grant tax waivers on eligible research grants and donations while strengthening university linkages.
Monari raised concerns about the pension arrears, warning that if unresolved, retiring lecturers would be left without financial security. He pointed out that the pension crisis poses a serious threat to employees’ social security, as many may retire without receiving their dues.
Public Universities Drowning in Sh72.3B Debt
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