The University of Nairobi (UoN) and Kenyatta University have dipped into a combined Sh4.3 billion financial deficit, underlining the cash flow problems at the institutions that has seen them seek to raise student fees.
The Treasury revealed to Parliament last week that UoN had a deficit of Sh2.17 billion in the year to June, up from Sh1.62 billion a year earlier.
KU’s deficit dipped to Sh2.13 billion in the period under review from Sh1.3 billion with the institution relying on short-term loans to finance its operations.
The latest disclosure reveals the deep financial difficulties facing the country's institutions of higher learning.
Public universities have found themselves in deep financial straits blamed on falling student population, mismanagement and low State funding. In recent months, a number of universities have had to scrap some courses and close satellite campuses to cut cost of operations.
They have been unable to remit statutory deductions like pensions and tax, prompting warnings from the Kenya Revenue Authority amid fears of asset seizures.
A separate audit report indicated that UoN was unable to remit statutory deductions amounting to Sh7.01 billion in the year to June last year.
These included Pay as You Earn (PAYE) and VAT totalling Sh3.79 billion and pensions contributions of Sh3.22 billion.
UoN has already started its reforms, recently scrapping eight colleges and collapsing faculty functions from 35 to 11.
It more than doubled fees for postgraduate courses and parallel degrees to ease a cash crunch as a result of a dip in student enrolment.
The university has increased accommodation fees by up to seven times per semester.
The audit revealed the KU is technically insolvent. The audit said the university is operating under financial difficulties and is relying on costly borrowings that may further worsen the liquidity problem.
Public universities have come under financial strain in recent years as a result of rapid expansion amid a dip in student enrolment.
They are expected to undergo reforms to cut their costs to make them financially viable.
The number of self-sponsored students in the past three years has gone down due to a drop in number of students scoring the mandatory C+ and above grades in KCSE for eligibility.
Students enrolling for the parallel degree programme courses had over the years generated billions of shillings 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.