Kenya’s public universities could benefit from debt relief to help them cope with pressing financial pressures and save them from impending closure. This follows a push by the Universities Fund (UF) – the agency that manages funding for public universities on behalf of the government – to renegotiate the debt to ease repayment obligations.
This is among many new proposals the agency has put to Education Cabinet Secretary Ezekiel Machogu which, if accepted, will also improve income generation within universities and nearly double government subsidies. This is intended to help bail out financially-struggling universities and improve the country’s faltering college degrees.
UF chief executive officer Geoffrey Monari says the government needs to develop a debt management strategy to get universities out of unsustainable debt, something most public institutions struggle with. This way involves negotiating a payment schedule with the creditors for the existing loans.
Agency data shows that outstanding bills for universities totaled $466 million in June 2022, including outstanding statutory deductions.
Second, the agency seeks to restructure current business enterprises at public universities to help them efficiently generate more revenue to complement government subsidies.
Apart from that, the agency would also include setting a quota for government procurement to public universities.
Monari said at least 50% of consulting firms contracted out by governments and state-owned companies should be earmarked to allow universities to compete with each other to promote local content and participation.
Third, the fund is urging the national Treasury to consider increasing the allocation of differentiated unit costs (DUC) for university funding to 80% from the current 48.11%. That means that under the current model, based on the unit cost of each course or program, the government is supposed to cover 80% of tuition for students in public universities, but only covers 48.11%, which is what they believe should be the case some experts increased.
“This will adequately resource the programs offered at universities while keeping the looming crisis at bay and allowing the sector to look for other avenues to finally reform the status of university funding in Kenya,” Monari told media .
Continuous funding cuts
However, this proposal is likely to face opposition as the government appears determined to further cut DUC allocation to institutions.
Kenya has already made another cut in funding for public universities for the fiscal year that began in July 2022. The National Treasury announced in a budget statement for the current budget period that it had allocated $793 million from the $1.003 billion allocated last year, a 20% cut.
The universities had requested 1.8 billion US dollars from the government in their budget plans. Public universities rely largely on government subsidies to run their operations.
In a further proposal, the funding agency also wants young universities to be given preferential treatment when allocating infrastructure funds from the government in order to increase their performance.
UF’s proposals are critical given the agency’s mandate to advise the Secretary of the Education Cabinet on higher education funding issues and to develop a fair and transparent criterion for allocating funds to universities.
The agency is also in charge of allocating funds to the universities; Setting the maximum differentiated unit costs for the programs offered and mobilizing and obtaining funds from the government, donors and other sources.
“However, if the additional funds are not available due to other national priorities, the government has three options; Raise fees (which is inadvisable given the current economic situation), only support needy students based on each household’s economic situation, and third, accept students according to available funds,” Monari said Business Dailya Kenyan business publication, on November 12.
Serious concern about crisis
Educators fear that the current state of universities, if left unattended, could lead to a major crisis that could result in the institutions being shut down.
“It’s a bad situation. Unless something is done urgently, we will probably close some universities. Our collective bargaining agreements are unenforceable.
“As we speak, some are not paying full salaries, while others are paying their staff very late. This affects our members who have other scores to settle,” said Onesmus Mutio, organizing secretary of the Universities Academic Staff Union (UASU).
The nagging lack of funding has left most institutions struggling to stay afloat as the amount provided by the government is insufficient to cover their expenses amid higher student enrollments.
As a result of the escalating crisis, most universities are unable to meet their financial obligations. For example, Kenyatta University, Kenya’s largest university by enrollment, failed to pay teachers’ October salaries, citing cash flow problems.
Lecturers at Egerton University are also facing delayed salaries. Moi University announced in July that it would lay off some of its staff to lower its wage bill and stay afloat.
Last month, UF wrote to the World Bank to secure a $20 million bailout to help public universities run.
On 2.11 News from the university world reported that Kenya sought to exclude students from wealthy families from state-funded university courses to ease the unbearable burden of subsidized education.
UF said it will conduct screening of all new and existing students to ensure only those from needy backgrounds are accessing government funds.
This conservative approach will also be extended to the Higher Education Loans Board, the agency that disburses government loans to students, meaning the facilities will be closed to students who have the means to study.
The new model is primarily intended to help cut state subsidies at a time when the government is struggling to fund its obligations – the result of a difficult economic environment and urgent loan repayments.