UoN cash crisis deepens as taxman owed Sh7bn

The University of Nairobi (UoN) has revealed it owes the Kenya Revenue Authority (KRA) Sh7.2 billion, underlining deepening cashflow crisis at the institution amid a dip in student enrolment.

Vice Chancellor Stephen Kiama said Tuesday ballooning pending bills are part of the reason the university is implementing financial, curriculum, people and structural reforms.

The university is struggling to honour obligations such as payroll taxes, retirement benefits and insurance premiums for employees.

The University risks asset seizures from the unpaid tax, collection of duty directly from their suppliers and bank accounts holding student fees as well prosecution of its top officials.

“The UoN has been operating under a huge deficit and today we owe KRA Sh7.2 billion which has come as a result of us not costing our services,” said UoN vice chancellor.

The UoN sank into a Sh1.4 billion loss in the year to June 2018 after overshooting its budget and failing to raise projected revenue, according to an audit report by former Auditor-General Edward Ouko.

Funding for the UoN just like other universities has been hit by a sharp fall in the number self-sponsored students in the past three years due to a drop in number of students scoring the mandatory C+ grade in KCSE.

Students enrolling for the parallel degree programme courses have over the years generated billions for the institutions.

The cash crunch for the universities has also been caused by the implementation of the Differentiated Unit Cost (DUC) model that resulted in a reduction of government capitation in large universities. This caused huge payroll gap and accumulation of debts.

“When DUC was introduced (in 2017), the capitation from government dropped from

Sh6.2 billion to Sh4.5 billion, yet the cost of living has been going up,” said Prof Kiama.

The UoN said it had factored in the DUC costing which has doubled fees for postgraduate courses and parallel degrees to ease the cash crunch.

The university increased fees for liberal arts Master’s courses like communication and MBA to more than Sh600,000 for a two-year programme from an average Sh275,000, reflecting an increase of 118 percent.

The new fees apply to new students joining the university from this month, marking the first major fees review for postgraduate courses and parallel degrees in nearly two decades.