Why private varsities are in Sh31b debt crisis

Education Cabinet Secretary Ezekiel Machogu. [Boniface Okendo, Standard]

It is now emerging that private universities are grappling with a financial crisis, burdened by billions of shillings in unpaid government funding for state-sponsored students.

A document from the Universities Fund reveals a staggering accumulation of Sh31 billion in debt over the past six years stemming from a government programme that financed students attending private institutions.

The programme, initiated in 2016 by former President Uhuru Kenyatta, has since been discontinued, leaving private universities in the pit.

The revelation coincides with mounting pressure on the Ministry of Education to address the potential misallocation of funds intended for private universities.

A special audit uncovered an overpayment of Sh17.7 million due to duplicated student enrollment records.

The Auditor General’s report identified 387 student records with duplicated payments, raising concerns of potential mismanagement or deliberate inflation of enrollment figures.

The audit further questions differences in the number of students in the institutions as the number provided by the ministry is higher than the declared number of students by the institutions. 

The Ministry, led by Education Cabinet Secretary Ezekiel Machogu, last week acknowledged the duplicated payments but stated that some previously identified instances had been rectified with refunds.

However concerns remain regarding the disparity between the amount allocated by the Ministry and the number of students reported by universities.

Public Investments Committee on Governance and Education chairman Jack Wamboka, on Thursday, called for a deeper investigation. 

“The lost public funds should be recovered, the officers responsible for this need to be identified, and the possibility of collusion with the universities investigated,” Wamboka said during a sitting to look into the special report.

Wamboka further stated his intention to involve the Director of Public Prosecutions (DPP) and the Ethics and Anti-Corruption Commission (EACC) to pursue legal action against those responsible for inflating the student numbers.

Return funds

Meanwhile, Nominated MP Mairie Kakai called on the ministry to push the institution’s leadership to return the overpaid funds within two weeks.

Machogu, however, indicated that they had so far managed to recover Sh4 million of the funds lost due to duplication.

Details from the Fund indicate that the funding of students to private universities suffered massive underfunding in the period it was active.

The Universities Fund is now seeking The National Treasury to step in and help clear the debt.

According to the document, the institutions were meant to receive Sh5.39 billion as funding for the 29,729 students–the then population of State-sponsored students – but only provided Sh1.58 billion.

This means the government failed to pay the universities some Sh3.8 billion. In the 2019/2020 financial year, the amount almost doubled to Sh6.18 billion, after the government provided only Sh2.5 billion out of the Sh8.68 billion it was meant to send as funding to the students.

At the time, the student population under state sponsorship stood at 43,676. In 2020/2021, the document shows that the number of state-sponsored students in private universities had clocked at 61,541.

To fund the students, the government needed Sh12.1 billion but only ended up providing Sh2.7 billion.

This means the amount the government owes the institutions for that financial year is Sh9.37 billion.

The amount owed grew further in the 2021/2022 financial year with the institutions owed Sh12 billion.

With 78,433 government-sponsored students, the government was supposed to give Sh15.39 billion, but only gave Sh3.37 billion.

The problem persisted in the 2022/2023 financial year, with the number of students in private universities hitting 89,644.

The estimated cost of funding for the students was set at Sh17.53 billion but they only received Sh3.17 billion.

This means that the institutions suffered a deficit of Sh14.35 billion.