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University crisis deepens as deficit doubles to Sh27bn

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A view of Moi University Main Campus in Uasin Gishu County on October 27, 2021. PHOTO | JARED NYATAYA | NMG

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Summary

  • Data from the Universities Fund (UF) —which guides the allocation of State cash to public universities— shows that the gap has hit Sh27 billion in the current financial year, a 107.7 percent jump from Sh13 billion two years ago.
  • The average allocation per student fell to Sh135,244.88 in the current financial year from Sh170,861. 63 in the period to June last year.
  • The data shows that the allocation in the current financial year will cater for 49.51 percent of the tuition cost per student, compared to the required 80 percent.

The funding gap for students in public universities has more than doubled in the past two years, signalling even tougher days ahead for the cash-strapped institutions.

Data from the Universities Fund (UF) —which guides the allocation of State cash to public universities— shows that the gap has hit Sh27 billion in the current financial year, a 107.7 percent jump from Sh13 billion two years ago.

Capitation per student declined by up to Sh35,616 per student in the period, raising fears that more universities may follow the University of Nairobi in raising tuition and accommodation fees to plug the gaps.

The average allocation per student fell to Sh135,244.88 in the current financial year from Sh170,861. 63 in the period to June last year.

Vice-chancellors have since last year been pushing the government to increase fees nearly three times, in a bid to ease the cash flow woes bedeviling the institutions.

“Universities in Kenya are in a serious financial crisis because there is a continuous decline in government funding amidst increased cost of administering education,” the Fund says in a report.

The data shows that the allocation in the current financial year will cater for 49.51 percent of the tuition cost per student, compared to the required 80 percent. The universities and students foot the remaining costs.

The reduced allocation per student has seen the funding deficit more than double in the two years, exposing universities already hit by the reduced enrolment of self-sponsored students.

The State Department for Higher Education last year backed plans by vice-chancellors to increase fees, saying it will help keep the institutions afloat.

“In our very simplistic way, we thought that it is necessary to increase the contribution by individual students, so that funding is adequate for every university,” Higher Education Principal Secretary Simon Nabukwesi told MPs last year.

The University of Nairobi in September more than doubled fees for postgraduate courses and parallel degrees to ease a cash crunch brought home by a dip in student enrolment.

The increment was effected for self-sponsored first-year undergraduate and postgraduate students who reported that month.

The institution also increased accommodation fees by up to seven times per semester, with those in third and final years paying Sh21,525 per semester up from Sh3,150 followed while those in rooms shared by four will pay Sh15,120, up from Sh2,730.

Fresh students who reported in September will pay Sh19, 635 for a room shared by two students per semester up from the Sh2,835 under the revised rates that took effect two months ago.

Student capitation has been falling for the past two years in the face of sharp increases in enrolment that has outpaced the near stagnant budgetary allocations.

The number of students eligible for the capitation stands at 324,182 in the current financial year, a 34 percent jump from 241,015 two years ago.

In the same period, budgetary allocation for the capitation has increased six percent to Sh43.84 billion in the current financial year from Sh41.18 billion in 2019.

The Treasury has in recent years been cutting allocation to universities in the face of perennial revenue shortfalls and debt payment obligations that have increased pressure on the Exchequer.

Universities have in turn shut down several campuses and defaulted on statutory obligations and payments to contractors.

The UF has already sent a draft funding formula to the Treasury, that if adopted will replace the current criteria that has been used since 2017.

The proposed funding formula is pegged on performance indicators that include, including absorption of an institution’s graduates in the job market, research and training on financial management for top officials.

The current formula has been used since the 2017/18 financial year to allocate funds to government-sponsored students in public and private universities.

The higher education sector has been grappling with financial challenges that have been made worse by the Covid-19 pandemic.

Universities are struggling to honour obligations such as payroll taxes, retirement benefits, insurance premiums for employees and payment for contractors and suppliers, according to a report before Parliament.

They have outstanding remittances to the Kenya Revenue Authority, the National Hospital Insurance Fund, the National Social Security Fund, pension schemes, insurance companies and SACCOs.

The debt hit Sh60 billion in the year ended June, prompting calls from the UF for emergency measures by the State to prevent further increases.

“There is need for an audit to ascertain the extent of debts in the universities and provide a roadmap on how to clear them. In the meantime, measures are needed to prevent the accumulation of more arrears,” UF chief executive Geoffrey Monari said.

The push to review the formula comes amid calls from the World Bank for the merging and closure of the cash-strapped public universities, citing duplication of courses and the need to cut spending.

Kenya has 102 public universities and campuses — which posted a deficit of Sh6.2 billion in the year to June and received nearly Sh70 billion from the Treasury to run their operations.

Last week, Egerton University closed its main campus in Njoro amid a financial crisis that prompted a go-slow by lecturers and non-teaching staff.

Kisii, Laikipia, Moi, and Jomo Kenyatta University of Agriculture and Technology have also shut some of their campuses in the wake of the cash crisis.

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