Kenyan public universities’ revenue is expected to hit record levels of Sh15.12 billion as they shift to income-generating activities like hotel business, textile-making, following a drop in government funding.
The government will provide Sh15.19 billion in recurrent expenditure grants, an almost equivalent amount to what the universities are expected to generate.
University of Nairobi (UON) is expected to earn Sh4.39 billion compared to Sh3.95 billion projected last financial year— an 11 per cent increase while Kenyatta University’s internally generated income is expected to go up by nine per cent to Sh3.86 billion compared to Sh3.54 billion projected last year, the Ministry of Higher Education Science and Technology statistics show.
The remaining five public universities are set to break even, some for the very first time in a span of five years.
Public universities are seeking new revenue streams in a move to be self-reliant as student numbers rise, pushing costs of running the institutions up. The institutions have been forced to expand infrastructure to cater for the growing numbers.
“Universities are an expensive business and before the internally generated income projects were started, the universities had big financial problems,” Prof Everett Standa, the secretary at the Commission for Higher Education —the universities’ regulator—adding that these new revenue streams have helped them expand.
There is a push to have the universities become self-reliant and generate their own income and the public universities are up to the task, said Prof Dominic Makawiti, vice chancellor Maseno University told Business Daily in a telephone interview.
Jomo Kenyatta University of Agriculture and Technology’s (JKUAT) internally generated income is projected to go up marginally by two per cent to Sh2.36 billion while Egerton University’s is projected to go up by 12 per cent to Sh1.39 billion up from Sh1.23 billion.
Moi and Maseno Universities are projected to generate Sh1.63 billion and Sh629 million respectively while Masinde Muliro University of Science and Technology’s (MMUST) internally generated income is expected to go up by 21 per cent to Sh846 million from Sh700 million - the highest margin among all the seven universities.
The bulk of the money for most of the universities comes from parallel degree programmes and short professional courses, but others have diversified their income sources to ventures such as running of hotels and restaurants, bookstores, funeral homes, printing presses among others.
Kenyatta University, for instance, owns Thika Road Funeral Home and in 2009 acquired North Coast Beach Hotel in Mombasa which was previously known as Le Soleil Beach Club.
The university which also runs a 100-roomed conference centre and a bookstore. Last year, it established a printing press among other investments.
The university is projected to make Sh1.78 billion in surpluses for 2011/2010 financial year, having made Sh957 million and Sh329 million in surpluses in the 2010/2009 and 2009/2008 financial years respectively.
UON through its enterprise unit —University of Nairobi Enterprises and Services (UNES) Limited - runs Arziki Restaurants, a bookstore, conference centre, dental plaza, the Chiromo Funeral Parlour among other investments.
It is projected to make Sh185 million in the 2011/2010 financial years having made Sh1.11 billion and Sh293 million in surpluses in the 2010/2009 and 2009/2008 financial years respectively.
Egerton University is expected to break even in the coming financial year after making Sh30 million and Sh9 million in deficits over the past two financial years.
The university owns the 90-bed capacity ARC hotel and the 3,000-acre Ngongogeri farm which specialises on large-scale dairy farming, sheep production as well as large-scale barley, wheat, pasture seed and maize farming.
Egerton University also owns the Lord Egerton Castle —a tourist attraction and also operates a pharmacy, bookshop, knitting unit and an abattoir.
Prof James Tuitoek, vice chancellor, Egerton University said the farm and the hotel alone contributes about Sh200 million annually.
Moi University, on the other hand, runs a textiles firm, Rivatex East Africa Limited, which it also uses as a training and research facility for its students while Maseno University owns Kisumu Hotel among other ventures.
“The income from these business activities supplements university recurrent budgets and assists in development projects,” said Prof Tuitoek, adding that Egerton is looking for other revenue streams in the coming year to expand its ICT infrastructure, update library facilities, and modernise equipment in chemistry laboratories among other projects.
The investments have not only provided much needed income for infrastructure projects in universities, but have also provided students with internship opportunities while lecturers have benefited from teaching the parallel degree programmes and short courses.
“While student numbers, access and inflation are going up, funding from government has remained constant or declined,” said Prof Tuitoek, adding that the amounts allocated by the government are not enough to support infrastructure projects.
The increased earnings by universities has seen them pay lecturers more money with more opting to come back to teach in Kenyan colleges.
The poor lecturers’ pay had seen most move to neighbouring countries where they were paid better.
“Lecturers are being paid extra. The money has also benefited students especially where universities have used the money generated in infrastructure and equipment,” said Universities Academic Staff Union national chairman, Prof. Sammy Kubasu.
He, however, said even though the universities need to be encouraged to continue with such ventures, some had not been fully transparent on how much was really coming in through these investments.
New revenue stream
“In some instances, it has been mixed with the universities’ regular income, making it difficult to know exactly how much they make,” Prof Kubasu said. “I encourage universities to get into new ventures,” he said, adding that some of them have large tracts of land that are lying idle which can be used to generate income.
However, the shift in business model has sparked debate with analysts saying if self-reliance is not properly implemented, education and research standards may get compromised, lecturers may get strained, core subjects such as medicine and engineering may suffer since they are labour intensive and public universities may opt for soft courses which earn the universities more.
“There needs to be a balance so that standards do not get diluted,” said Prof Makawiti.