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Economy

MPs reverse Sh1.9bn varsities budget cut

University of Nairobi
The University of Nairobi. The Retirement Benefits Authority in May warned that six public universities, including UoN risked losing prime property if they failed to clear statutory deductions arrears. PHOTO | FILE 

Public universities have received a boost after Parliament reversed a Treasury budget cut that would have taken away Sh1.88 billion meant for completion of ongoing infrastructural projects and debt payment in the year to June 2020.

MPs revised the supplementary budget and turned down the Treasury’s proposal to cut the funds under the universities development budget.

The Budget and Appropriations committee (BAC) said the proposed cuts would have adverse effects on on-going critical projects by the cash-strapped universities and debt repayment.

The committee, led by Kikuyu Member Kimani Ichung’wah, added that the allocation would help the cash-strapped varsities clear outstanding debts that risked incurring penalties if the Treasury’s proposals were adopted.

Acting Treasury Secretary Ukur Yatani had in the supplementary budget estimates proposed Sh1.87 billion cuts in capital expenditure as part of reducing State spending amid a shortfall in revenue collections.

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The allocation is a reprieve for the public varsities that currently owe over Sh5 billion in statutory deductions and are in the middle of multi-million infrastructural projects that include new hostels and office blocks. “The reduction will adversely affect project implementation including critical infrastructure in the universities. Further, the institutions have pending certificates that remain unpaid and could potentially generate penalties and other litigation costs,” BAC said last week.

Public universities are grappling with a cash-crunch caused by the sharp fall in the number of self-sponsored students after the state raised the minimum entry grade to degree programme to C+ and above. The introduction of funding based on courses offered since 2017 has further hit the universities’ coffers, in addition to a high wage bill.

The Retirement Benefits Authority in May warned that six public universities, including the University of Nairobi and Jomo Kenyatta University of Science and Technology (JKUAT) risked losing prime property if they failed to clear the statutory deductions arrears.

Mr Yatani had in September warned ministries and their line departments to prepare for “brutal budget cuts” as the State moves to cut non-essential spending amid falling revenue collections.

BAC said revenues for the period to next June are set to fall short by Sh120 billion to stand at Sh1.7 trillion by the close of the financial year.

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