Treasury accuses universities of hiding budget billions

Treasury secretary Henry Rotich has accused public universities of failing to declare internally generated cash as the government faces difficulties in funding projects.

The Quarterly Economic and Budgetary Review covering the nine months to March shows that collections of ministerial Appropriations-in-Aid (AIA) or internally generated funds recorded an underperformance of Sh31.6 billion.

“The AIA underperformance reflects the persistent problem of under-reporting, especially of the universities collection which is not adequately captured in the ministry’s expenditure return for the period under review,” said Mr Rotich in the report.

The AIA, which stood at Sh39.1 billion against a target of Sh70.7 billion, is built from funds raised from fuel levy and revenues generated by public universities.

The law requires State agencies and ministries to first deposit internal collections in the government’s main account before use.

The spotlight on universities comes in a period that has seen the institutions raise billions of shillings from increased intake, buoyed by a rising number of self-sponsored students.

READ: Universities fail to declare billions of internal cash

The number of students enrolled in public universities grew 25.4 per cent last year to 363,334 due to approval of new degree courses and the setting up of new universities.

Non-remittance of funds could open loopholes through which billions of taxpayers’ funds are lost or mismanaged.

The Controller of Budget is supposed to authorise withdrawal of public funds from the state’s main account. This means that cash raised and used by the universities is outside the watch of the budget chief.

The failure to declare internally generated cash comes at a time when the Kenya Revenue Authority missed tax revenue collection targets by Sh36.3 billion, raising uncertainty on the government budgetary spending projections.

The taxman attributed the performance, which represents a 4.9 per cent drop from a target of Sh758.5 billion, to the underperformance of income tax and value added tax on imports.

The KRA missed income tax target from workers by Sh21.7 billion while VAT on imports underperformed by Sh11.6 billion.