Public universities debt doubles to Sh75bn
Education Cabinet Secretary Ezekiel Machogu.
What you need to know:
- By 2023, Egerton University's debt burden had ballooned and hit the Sh9 billion mark from Sh6 billion in 2019 as it continued to struggle to run its operations, due to insufficient funds.
- Other public universities that have also been struggling under the heavy yoke of debt include Kenyatta University, the University of Nairobi and Jomo Kenyatta University of Agriculture and Technology (JKUAT).
Public universities cumulatively owe statutory bodies and other creditors a total of Sh75 billion in pending bills, a figure which has doubled in a span of two years and continues to attract huge interest, putting their operations at risk.
The revelation comes at a time when the government is transitioning to a new funding model that appears headed for the headwinds, less than a year after it was unveiled due to delays in disbursing funds to the cash-strapped universities.
The institutions still expect to receive Sh11.9 billion from the exchequer for students in their first year of study. Only Sh7.97 billion had been received by the Universities Fund (UF) by last week.
The CEO of the UF said that public universities had been issued with promissory letters that the funds would be disbursed immediately after they were received by the agency. It has also emerged that continuing government-sponsored students in private universities are dropping out because the government has not paid their tuition fees.
Although students have received their money for upkeep from the Higher Education Loans Board (Helb), the Universities Fund has not disbursed their money for tuition to the universities.
This raises doubts over the sustainability of the model considering that more students are expected to join university this year as the old differentiated unit cost model is phased out.
As a result, the chair of the Education Committee of the National Assembly Julius Melly has instructed the Principal Secretary for University Education and Research Beatrice Inyangala to prepare a brief on the sustainability of the model as student numbers rise.
The details emerged during a meeting last week at a Naivasha hotel convened to deliberate on universities' preparedness for the implementation of the competency-based curriculum (CBC).
The meeting brought together vice chancellors and deputy vice chancellors (Academics) and was organised by the Commission for University Education (CUE).
Records show that in one year, the 32 public universities have accumulated more than Sh8 billion in pending bills.
However, the Ministry of Education says plans are at an advanced stage to waive the billions of shillings that the institutions owe the Kenya Revenue Authority (KRA) in Pay-As-You-Earn (PAYE) remittances.
The ministry has announced the debts are being audited, with plans to clear them in the coming months.
According to PS Inyangala, public universities are not out of the woods following their recent financial woes.
"We are also looking at escalating the issue of these pending bills to the Cabinet. Already, the Ministry of Education is consulting with the Ministry of Finance and other stakeholders to have part of the huge pending bills facing public universities, which now stands at over Sh75 billion waived."
"The report on the pending bills is now with the Pending Bills Committee and they are also discussing with Treasury and other stakeholders through a committee that was formed to see if KRA can be allowed to waive the dues owed from Statutory deductions.
"The deductions were not remitted such as PAYE and National Hospital Insurance Fund (NHIF) due to lack of funds so that the universities can pay the other debts such as those owed to suppliers among others," said Dr Muganda.
With the plans to waive part of the pending bills, public universities can now breathe a sigh of relief.
The PS revealed that under the new university funding model, the government has increased budgetary allocation. In the 2023 - 2024 financial year, Sh82 billion has been allocated for university education.
Public universities owe the KRA about Sh20 billion in unremitted PAYE with pension standing at about Sh24.6 billion and about Sh10 billion unpaid to various suppliers.
Last year VCs of public universities revealed that the universities had accumulated debts of more than Sh60 billion, in staff pensions and statutory deductions such as PAYE and National Hospital Insurance Fund, with the figure rising due to interest.
Breakdown of debt
By 2023, Egerton University's debt burden for instance had ballooned and hit the Sh9 billion mark, as it continued to struggle to run its operations, due to insufficient funds.
The debt included pending bills.
As of 2019, the debt burden at the university was Sh6 billion, but at the onset of the pandemic in 2020, the debt increased, as the management of the Njoro-based campus led by Vice-Chancellor Prof Isaac Ongubo Kibwage made frantic efforts to rescue the institution from insolvency.
Since 2020, the institution has reduced the lecturers' and staff's salaries by 40 per cent in order to stay afloat. However, the 100 per cent salary payment was reinstated last month.
Other public universities that have also been struggling under the heavy yoke of debt include Kenyatta University, the University of Nairobi and Jomo Kenyatta University of Agriculture and Technology (JKUAT).
According to the latest National Government Budget Implementation Review Report, a closer look at the numbers shows Kenyatta University leading the pack owing Sh11.7 billion in pending bills, followed by Egerton University at Sh9 billion.
The Technical University of Kenya has a debt of Sh8.2 billion, then Jomo Kenyatta University of Agriculture and Technology (JKUAT) at Sh8.1 billion and Moi University at around Sh37 billion.
Kisii University has a pending bill of Sh824.8 million, Tom Mboya University College of Sh 453 million, and Rongo University of Sh431 million.
The data further lists Dedan Kimathi University as having an accumulated bill of Sh353.3 million, followed by Taita Taveta University at Sh247 million, and the University of Nairobi at Sh224.5 million.
Laikipia University on the other hand has a debt of Sh194 million, with South-Eastern Kenya University standing at Sh174 million.
Others are Maseno University at Sh115 million, Garissa University whose debt stands at Sh81.8 million, followed by Kenya Institute of Curriculum Development (KICD) at Sh80.1 million, and Karatina University at Sh75 million.
Learning institutions with minimal pending bills include the Technical University of Mombasa at Sh24 million, the Technical University of Kenya at Sh16.2 million and Kaimosi Friends College at Sh7.3 million.
Others are; Koitalel Arap Samoei University College with Sh5.5 million, North-Eastern National Polytechnic at Sh5.1 million, University of Kabianga at Sh5 million, Meru National Polytechnic Sh5 million and Kenya Education Management Institute (KEMI) Sh4.6 million.
The climbing debt has exacerbated an already dire situation for varsities that have been unable to pay KRA, PAYE, and workers’ pension schemes, over the years.
This has seen higher learning institutions shut down several campuses and default on statutory obligations and payments to contractors.
Public universities largely rely on government subsidies to run their operations.
In the financial year 2022/23, the National Treasury allocated only US$793 million (about Sh80 billion) for higher education.
The universities had requested US$1.8 billion (about Sh180 billion) from the government in their budget plans in order to be able to function effectively.
And in FY 2023/2024, the government allocated Sh82 billion to the universities, as part of development and expenditure in line with the new funding model.
Additional reporting by David Muchunguh
