Boss Talk

Universities Fund CEO on how public varsities can be pulled out of debt hole

monari

The Universities Fund chief executive officer Geoffrey Monari. ILLUSTRATION | JOSEPH BARASA | NMG

Public universities have been described as the sick man of the education sector. The universities are now struggling to honour obligations such as payroll taxes, retirement benefits and insurance premiums for staff with total pending bills shooting to Sh56 billion by June 2022.

The Universities Fund (UF) chief executive officer, Geoffrey Monari, spoke to the Business Daily on the options the sector is looking at to remedy the situation ahead of the student enrolment expansion when the first competency-based curriculum (CBC) cohort transitions in 2029.

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Some universities have informed their staff that they now cannot pay salaries. How did we get here?

Universities rapidly expanded as more students qualified for admission, leading to a rise in enrolment between 2002 and 2015 for module II programmes. However, from 2016 following strict examination rules, the number of students available for self-sponsored or module II programmes shrank, hitting the institutions’ finances. Another factor is the increased cost of living and expenses incurred by universities due to staff costs and operational costs while tuition fees have remained the same since 1989/90 at Sh16,000 per year.

From where you sit, what can be done to change the sorry state of affairs at the institutions?

This can be tackled from four fronts; debt management, including negotiating a payment plan with creditors, relooking university financing by enhancing differentiated unit cost (DUC) allocation to 80 percent from the current 48.11 percent, developing a government-sponsorship management policy and giving priority to young universities in the allocation of infrastructure funds.

As the government endeavours to figure out how to reduce its present debt levels, the universities will need to adopt reforms that will allow them to deliberately cut costs. To prevent a relapse into the same circumstance, therefore, strict procedures will need to be put in place. The universities must also refocus on their niche areas.

You recently revealed a Sh2.4 billion grant request to the World Bank. Is this the first time you are looking for alternative resources and is this your strategy going forward?

Yes, it is the initial proposal as we seek to supplement government financing in light of other competing requirements. We have created resource mobilisation strategies that will aid in bolstering the funding for higher education that is now available. The focus of this request is to gradually introduce performance-based funding for universities.

Where are we now in the implementation of the DUC?

Government capitation to universities is currently based on the DUC model that is pegged on the number of undergraduate students registered and the courses they take. Currently, the funding is at 48.11 percent in public universities and 22 percent in private universities.

UF caters for government-sponsored students (GSS) in private universities despite struggling to cater for 80 percent of the unit cost for GSS in public universities. There has been a lot of talk against this ,including UASU [the Universities Academic Staff Union] recently saying it beats logic.

The placement of GSS in private universities was introduced in 2016/2017 to ensure a 100 percent transition to universities and reduce the delay in admission. The students being sponsored to private universities should be refocused on the issuance of conditional grants which may entail partnerships in strategic programmes or projects.

This, however, will require stakeholder engagement as currently students have the freedom to enrol in any university of their choice. There is also a need for public universities to market their programmes better to attract more students to reduce the preference for private universities.

How about own-generated revenue? How can universities be self-sufficient?

Aside from restructuring the existing business enterprises of the universities, if any, to a fully commercial basis, the institutions could greatly benefit from involvement in government projects. At least 50 percent of consultancies procured by government and State corporations should be ring-fenced for universities to compete among themselves to promote local content and participation.

This would greatly enhance their income. Some consultancies are being run by university staff privately. Universities should also strengthen the capacities of staff in proposal writing, consultancy and research to access funds and equipment from development agencies.

Possible strategies include the proposed education tax to be implemented to support the rising number of students being admitted. This can be done against profits amassed from commercial businesses in Kenya or as a percentage of VAT as is the case with Ghana Education Trust Fund (GetFund), as it is expected the same industry benefits from graduates trained by the government. In addition to this, tax incentives should be implemented to encourage local and international philanthropy in resource mobilisation.

The incoming cohort of university students is larger than those exiting by 52,195, highlighting increased pressure on your ability to cater for GSSs. What is going to happen?

The Universities Fund is currently negotiating with the Treasury for the provision of 80 percent of the DUC for funding universities. This will adequately resource programmes offered in universities while keeping the impending crisis at bay and allow the sector to seek out other ways to finally reform the status of financing universities in Kenya.

However, if the funding is not available due to other national priorities the government has three options; increase fees (which is not advisable given the current economic situation), support only needy students based on the economic situation of each household and thirdly admit students as per the available funds.

Are universities biting more than they can chew with delays in the effecting of the collective bargaining agreement (CBA)?

The CBA process normally is carried out between employers and employees. It is our opinion that this process should be confined to individual universities as they are aware of their financial capabilities in meeting these costs. It is also necessary to put on hold the CBA negotiations until the Treasury can clear the funds owed to universities.

Continuation of this process will continue to pile up debt whilst additional funds are not available. In the recent past, the funds released did not include the pensions component which further increased debt for universities. The sustainability of the CBAs was not included in the payouts as they were paid one-off while they are a recurring expenditure.

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