Varsities owe Sh75bn in pending bills amid cash crunch, MPs told

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 a rocky path less than a year after it was unveiled, following delays in disbursing funds to the cash-strapped universities.

The Universities Fund (UF) requires Sh11.9 from the Exchequer for students in their first year of study after receiving only Sh7.97 billion. The CEO of the fund, Mr Geoffrey Monari, said public universities had been issued with promissory letters that the monies would be disbursed immediately they are received by the agency.

He was speaking when he appeared before the Education Committee of the National Assembly. It has also emerged that continuing government-sponsored students in private universities are dropping out because the government has not paid their tuition fees. Mr Monari said private universities had only received 10 per cent of the expected tuition fees.

However, students have received their money for upkeep from the Higher Education Loans Board (Helb). 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. Committee chair Julius Melly has instructed University Education and Research Principal Secretary Beatrice Inyangala to prepare a report on the new model.

 In 2023, over 200,000 students qualified for university admission compared to 173,000 who the previous year, putting a strain on State coffers.

Student leaders from Kenyatta University have planned to present a petition to Helb and the Ministry of Education calling for more accountability on how students are allocated scholarships and loans. One of the unions’ representatives, Zadock Nyakwaka, alleged that the funding model has loaded students with hefty debts.

During a meeting last week at a Naivasha hotel that brought together vice-chancellors for academic affairs and their deputies, it was reported that, in one year, the 32 public universities have accumulated more than Sh8 billion in pending bills. In the 2023/2024 financial year, Sh82 billion has been allocated for university education.

Dr Inyangala, however, insists that public universities are not in danger and their financial woes will be resolved.

“Already, the Ministry of Education is consulting with the National Treasury and other stakeholders to have part of the huge pending bills waived," stated Dr Inyangala.

"The report is now with the Pending Bills Verification Committee and they are also discussing with Treasury and other stakeholders to see if the Kenya Revenue Authority (KRA) can be allowed to waive the dues owed from unremitted statutory deductions such as Pay-As-You-Earn (Paye) and National Hospital Insurance Fund (NHIF) ," added Dr Muganda.

Public universities owe KRA about Sh20 billion in unremitted Paye with pension deductions standing at about Sh24.6 billion while suppliers are owed about Sh10 billion.

Public universities largely rely on government subsidies to run their operations. In the financial year 2022/2023, the National Treasury allocated only Sh80 billion for higher education.

The universities had requested Sh180 billion) from the government in their budget plans

And in 2023/2024, the government gave them Sh82 billion for development and recurrent expenditure in line with the new funding model.