The University of Nairobi (UoN) is in a cash crisis triggered by low State funding and under-collection of internal revenue that has forced it to survive on commercial bank overdrafts, according to a special audit report.
Auditor-General Edward Ouko says as a result the university has fallen behind in paying statutory dues to the Kenya Revenue Authority, Pensions Scheme, National Hospital Insurance Fund, National Social Security Fund, Higher Education Loans Board and University of Nairobi Co-operative.
“The special audit noted that the University of Nairobi did not remit Sh673.6 million, being statutory deductions from staff salaries to the respective institutions,” said the report on UoN Financial, Procurement and Human Resources Management.
The report was sanctioned by the National Assembly following a public petition to Parliament alleging the university is experiencing financial crisis of unprecedented proportions and is operating on a deficit of Sh2.6 billion.
The petitioners also claimed there were glaring cases of irregular procurement, unresolved conflict between the office of the vice-chancellor and deputy vice-chancellor (Finance and Administration) and blatant abuse of office through hiring of staff from one ethnic community.
In his findings, Mr Ouko said the university has a history of shortages in funding from the Treasury dating back to 2009.
“This was noted to have continued to date, for example, for the period under review (July 2014 to November 30, 2015), the special audit noted the University of Nairobi received capitation from government totalling Sh5.3 billion against a request of Sh6.7 billion—thus a shortage of Sh1.42 billion or 26 per cent,” Mr Ouko said in the report tabled on Tuesday.
He said the university expected to raise its revenues internally but had been recording shortfalls as well.
The audit noted the university targeted to raise Sh8 billion, but only managed Sh6.4 billion with a shortfall of Sh1.6 billion.
Mr Ouko said the staff salary review for universities after the signing of the collective bargaining agreement (CBA) in 2010 contributed to the UoN problems. The university made a payment on behalf of others and has since been claiming Sh194.8 million from the government.
“The university is making a further claim of Sh627.7 million from the government for delayed pension receipts. These total claims amount to Sh822,483,452,” he said.
The hard-pressed institution’s executive management consequently board secured a Sh450 million overdraft facility from Barclays Bank of Kenya to bridge the spending gap on delay in exchequer releases.
Mr Ouko said the university does not have a policy on overdrafts but it relied on a memo prepared by the Finance and Administration department for the vice- chancellor also approved by the university council.
Mr Ouko defended 13 procurements conducted by the university during the review period, saying they had been factored in the year 2014/15 financial year.
“The total project cost for these 13 projects amounted to Sh3 billion. The audit profiled and reviewed six including the University of Nairobi Towers, Kisumu Campus Complex, School of Pharmacy, proposed SEMis Phase II, Renovation of Vice-Chancellor Residence, Ganda Police Post and procurement of motor vehicles,” Mr Ouko said.
On governance issues, Mr Ouko said there is no policy to guide staff handing of procedures but there are existing practices.
He said the audit did not find any evidence of interference of duties of the deputy vice-chancellor (administration and finance) Prof Bernard Njoroge by vice-chancellor Prof Philip Mbithi as alleged in the petition.
“There are legislative provisions which are explicit that the vice-chancellor is the academic and administrative head of the university and has the overall responsibility for the direction, organisation and administration of programmes of the university and other duties as may be provided for under the Charter,” he said.
He dismissed claims of ethnic hiring and termination of staff, but noted that one community dominated the list of officers promoted during the period under review.