Report exposes shame of broke public varsities sinking in debt

The University of Nairobi. [David Gichuru, Standard]

New details have revealed the dire financial state of public universities, with fresh data showing that more than half of the institutions are broke.

The data tabled in Parliament shows that 23 of the 40 universities are on the verge of collapse from heavy debts, with total debt burden across all institutions now hitting a record Sh76 billion.

A document tabled before the National Assembly Committee on Education and seen by the Sunday Standard reveals that the University of Nairobi  accounts for the lion’s share of the debt of Sh18 billion.

This is followed by the Technical University of Kenya (TUK) owing Sh10.367 billion, and Egerton University coming third at Sh10.363 billion.

Kenyatta University has a debt burden of Sh9.538 billion, with JKUAT closing the top five broke list with an outstanding debt of Sh8.857 billion.

The debt burden has prompted the Ministry of Education to declare the 23 universities technically insolvent; meaning that the institutions cannot pay their debts.

Higher Education Principal Secretary Beatrice Inyangala told MPs that the other institutions include Multimedia University, Kabianga, Technical University of Kenya, Kisii, and Koitalel Samoei University.

Cooperative University, Dedan Kimathi, Maseno, Chuka, South Eastern Kenya University, Laikipia, Embu, Maasai Mara, Moi, Masinde Muliro, Kirinyaga, and Garissa universities are the other struggling institutions weighed down by debt.

However, Tharaka University College, Pwani University, and Masinde Muliro University of Science and Technology have still managed to remain debt-free.

The report further delves into the nature of this debt, highlighting the various entities to whom these institutions owe money. 

Defaults on pension payments, gratuities, insurance premiums, and other statutory deductions constitute the largest portion of the debt, accumulating to Sh28.414 billion.

Neglected bills to suppliers, unremitted employee deductions, and outstanding payments to part-time lecturers further exacerbate the financial woes.

For the unpaid suppliers the institutions owe Sh5.595 billion, unremitted Sacco deductions are Sh3.49 billion, debt to part-time lecturers on the other hand stands at Sh3.369 billion, money owed to banks stands at Sh2.25 billion, while capital projects have a debt of Sh1.152 billion.

Other debts are imminent from the Housing Levy which universities owe Sh39.4 million, Sh520,000 to the Higher Education Loans Board (Helb), and Sh120,000 owed to the National Industrial Training Authority (NITA). Other unspecified debts amount to Sh6.248 billion.

Inyangala last week said a forecast by the Ministry shows that the institutions will need at least five years and a tonne of government support to emerge from the debt pit.

However, the institutions' future prospects are bleak as the government further proposes to cut down funding for government-sponsored students in public universities.

Budget estimates for university fee grants for government-sponsored students show a major decline from what is needed for student fees.

Details show that the universities need Sh28.7 billion to pay fees for continuing students in the third to sixth years of study.

These students are funded under a phased-out funding formula replaced by a need-based scholarship and loans model in 2023.

However, budget estimates show the National Treasury proposes Sh17.9 billion for the student fees. The biggest shock, however, is that four universities will receive zero funds for continuing students.

These are the University of Nairobi which required Sh1.725 billion for continuing students, the University of Eldoret which needed Sh703 million, Moi University Sh1.28 billion and the University of Kabianga Sh339 billion, but none was allocated funds.

The Ministry of Finance on Wednesday was hard-pressed by the National Assembly Committee on Education to explain why the four universities were exempted from the capitation for continuing students.

Inyangala warned that the shrink in funding as proposed in the Financial Year 2024/2025 Budget proposals for continuing students will have far-reaching implications.

“The allocation to various universities is not consistent with the criteria developed by the Universities Fund,” Inyangala said.