The University of Nairobi (UoN) has started the process of writing off student debts accumulated for close to two decades as it seeks to streamline its financial records.
Former students owe the university Sh1.1 billion in unpaid fees, a bill that has accumulated since the financial year 2005/2006.
UoN Vice Chancellor Stephen Kiama told Parliament the management has sought approval from the university council to write off Sh876 million which the institution has established cannot be recovered.
“We have had the finance committee approve the report and are now planning to take it to the next council that should sit by June. After that it will need to go to the minister for onward forwarding to the Treasury for it to be declared as bad debt,” he told the National Assembly Public Investments Committee on Education and Governance (PICEG).
Prof Kiama said an assessment of reasons for the huge debt established that the institution can only recover Sh277 million.
In June last year, the university hired the services of a debt collector but nothing has been recovered yet.
At the time, the UoN said it sought to trace and recover overdue debts and manage its debt portfolio estimated at Sh5 billion.
The accruing student debt, Auditor General Nancy Gathungu says, highlights a breach of law where the university is required to withdraw services, examination results, and conferment of any degree, certificate, or award until all fees are settled.
The University Regulations further provide that the university can institute legal recovery proceedings against students with outstanding fees and also a surcharge at an interest rate to be determined by the university council.
Cash-flow challenges at the UoN have resulted in a build-up of pending bills, a freeze on hiring and stalled infrastructure projects.
Prof Kiama said the university had undertaken a raft of measures on its curriculum, governance structure and financial management in efforts to address the cash flow crisis.
Cumulatively, following the reforms that kicked off in the financial year 2021/2022, the UoN has saved around Sh8 billion, which has enabled it to pay the Kenya Revenue Authority (KRA) Sh2.5 billion and settle pensions of Sh506 million.
The UoN has been grappling with a cash-flow crisis due to a drop in the number of self-sponsored students and government funding, hurting efforts to upgrade its infrastructure and attract students locally and from outside the country.