Economy

Treasury hunts for hidden billions in varsities

ROTICH

Treasury Cabinet secretary Henry Rotich. PHOTO | DIANA NGILA

Treasury secretary Henry Rotich has told the National Assembly that the government has started the search of billions of shillings that public universities have failed to declare.

The Budget review covering the nine months to March show that fee collections by the universities were not captured in the Education ministry’s expenditure plans.

This led to ministerial Appropriations-in-Aid (AIA) or internally generated funds recording an underperformance of Sh31.6 billion with the universities accounting for the largest share of the missing billions.

Now, the Treasury assures that an audit is on to verify the billions collected in fees by universities from self-sponsored students.

“The National Treasury would also engage the Ministry of Education to ascertain the level of Appropriations-in-Aid they collect through the Module 2 programmes,” Mr Rotich told the parliamentary Budget Committee at a closed door session on Monday.

He also told the MPs that the universities would not be allowed to spend the money from fees before depositing it in the government’s main account.

“The National Treasury had issued a circular to ministries, departments and agencies to have all their Appropriations-in-Aid converted into revenues,” added Mr Rotich.

Top universities like University of Nairobi and Kenyatta University are set to be the biggest losers in the plan to have all public universities share the fees raised from parallel or self-sponsored students.

“The National Treasury undertook to develop criteria for sharing the resources among the public universities,” said Mr Rotich.

The University of Nairobi was expected to raise Sh4.7 billion, Kenyatta University (Sh2.5 billion), Jomo Kenyatta (Sh1.9 billion) and Moi University (Sh1.6 billion).

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

“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 Budget review.

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

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

READ: Treasury accuses universities of hiding billions

The number of students enrolled in public universities grew 25.4 per cent last year to 363,334, boosted by the 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 are 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 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 (VAT) on imports.

Income tax from workers was Sh21.7 billion target while VAT on imports underperformed by Sh11.6 billion.

The authority collected Sh722 billion in the nine months of 2014/15, up from Sh645 billion in the same period the previous year. It faces a daunting task of raising more than Sh1 trillion to finance the Budget.