New Report Shows Kenya’s Public Universities are Owing about $514.3 Million

The Universities Funding Board –a Kenyan agency that is responsible for financing the country’s public universities –has revealed that public schools in the East African country are owing  Sh56.6 billion, or about $514.3 million.

According to the report, the debt accrued due to a drastic decline in the number of students attending the universities, a situation that has inevitably caused a significant decline in the revenue generated through tuition.

Do note that thousands of prospective Kenyan university students recently refused to take up about 38,973 admission slots, a development analysts believe has dealt further blows to the already precarious situation in the country’s tertiary education system.

Interestingly, the salaries of staff have been on the increase despite the declining student population. To pay these salaries, schools have been forced to resort to loans.

As at April this year, a bulk of the debt owed by public universities comprise of unremitted statutory deductions, the report said. At the moment, there are billions of shillings worth of outstanding remittances to the Kenya Revenue Authority, the National Social Security Fund, the National Hospital Insurance Fund, pension schemes, insurance companies, and saccos.

Earlier on, the Vice-chancellor of the University of Nairobi, Prof. Stephen Kiama, admitted to these unremitted funds. He disclosed that the school owed Sh7.2 billion (about $63.6 million) to the Kenya Revenue Authority  and another Sh4 billion ($36.3 million) worth of staff’s pension arrears. He gave an explanation:

“This has come as a result of us not costing our services. Over the years, the university has continued to develop many programmes to bring students on Module II with the assumption that government would subsidise those students. So we have been undercharging them thinking that we’d use the money government is paying for regular students to cover the deficit. This fee adjustment applies to new students and they can pay in instalments.”

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Business Elites Africa understands that the universities will face various penalties for these unremitted statutory deductions that have arbitrarily been converted to loans.

Meanwhile, of a much greater concern is the question of how sustainable these public universities will be in the long-run. Already, the Kenyan Government is trying to implement some restructuring.

Specifically, the Kenyan Government is committed to a financial evaluation of three State-owned universities and some parastatals including Kenya Airways, Kenya Power, the Kenya Airports Authority, Kenya Railways Corporation, Kenya Electricity Generating Company, and the Kenya Ports Authority.

On its part, the Universities Funding Board has recommended that public universities should start putting their idle assets to better use. According to the agency’s Chief Executive Officer, Geoffrey Monari, “the universities should consider and effect public-private partnerships in the provision of some services in all universities, especially those central to the core mandate of the university.”