The University of Nairobi is seeking to collect Sh5 billion overdue debts that include monies owed by former students in a bid to address its cash flow challenges amid dwindling government capitation.
The University is looking to hire debt collectors to trace and recover the non-performing debts that have remained a concern to the institution, its partners, and stakeholders.
“The sought service provider will support the UoN in tracing and recovery of overdue debts and in management of the debt portfolio estimated at Sh5 billion,” said the UoN in the notice calling for interested debt collecting firms.
Auditor General Nancy Gathungu notes former UoN students owed the university Sh857 million in an audit for the year ending June 2020.
The accruing student debt, Ms 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 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.
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.
The consulting firm will be engaged for three years and will be working closely with the appointed correspondents from UoN.
The scope of work covers negotiating and managing reasonable debt repayment plans with the debtors to ensure full debt recovery.
The adviser will be mandated to maintain accurate records for recovery made and will be required to report on a monthly basis the progress made.
Aside from infrastructure challenges, the UoN is struggling to honour obligations such as payroll taxes, retirement benefits, and insurance premiums for employees.
To remedy the cash flow challenges, the UoN has announced the establishment of a foundation to harness donations from the UoN alumni base in a bid to raise private funds
The UoN is following in the footsteps of top universities like Harvard and Cambridge that have tapped philanthropy in supporting the expansion of facilities and supplying capital for research and curriculum development.
