Higher Education players during the Universities Funding Conference in Naivasha on February 27, 2025.
The full magnitude of the financial burden facing universities was laid bare at a meeting of vice-chancellors in Naivasha last week, prompting calls for decisive measures to forestall the extinction of some of these institutions.
Nothing underscored the debt crisis confronting these institutions more than revelations that pending bills for public universities stand at Sh72 billion.
Though the pending bills have eased by Sh3 billion, thanks to gains arising from the wobbling student-centred model, the debt levels are still much higher than where they stood before the Kenya Kwanza coalition took power in 2022.
As of February 2023 when the First Biennial Universities Funding Conference was held in Mombasa, the total pending bills stood at Sh60.5 billion.
But participants at the summit were stunned at revelations that pension debts constituted the greatest portion of the pending bills, amounting to 25.9 billion, followed by Pay-As-You- Earn (PAYE), which accounts for Sh20 billion.
Unremitted sacco deductions constitute Sh3.3 billion while part-time dons are owed Sh3.9 billion.
So nagging has been the malignant question of the pending bills that the summit proposed a “targeted government bailout” to address legacy debts.
It was clear at the meeting that budgetary constraints from government coffers are a major challenge facing the universities, a situation that is getting more intricate, owing to a rise in student enrolment.
A growing student population is a major concern, coming when Exchequer funding is dwindling.
In the 2024/25 financial year, for instance, some 575,315 students were funded in local universities under the Universities Fund and the Higher Education Loans Board.
Of these, a total of 275,926 comprised the two cohorts funded through UF scholarships under the controversial student-centred model.
A further 299,389 learners were offered scholarships under the Differentiated Unit Cost.
Participants at the summit were told to brace themselves for more financial pressure likely to come from the 2024 Kenya Certificate of Secondary Education examination university qualifiers.
A total of 246,391 candidates scored grades C+ and above in the tests.
Challenging the universities to be more innovative in resourcing their operations, Education Cabinet Secretary Julius Ogamba said all the 2024 qualifiers would be funded to join the university.
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The minister added that the government needs Sh25 billion to fully fund the 2025 first-year students for one year.
According to the Budget Policy Paper tabled at the National Assembly last month, some Sh46.9 billion would be set aside for loans and bursary for universities during the 2025/26 fiscal year, meaning half of it would go to first-year students alone.
The conference in Naivasha came just a two days after the High Court rejected a plea by the government to stay orders over a December 2024 ruling that declared the student-centred funding model unconstitutional.
Need for clear policy
The government has appealed the ruling at the Court of Appeal. However, with the door on the implementing the model shut, participants at the summit deliberated alternative sustainable measures to keep public universities afloat.
On the table was discussion on diversifying income streams to make up for the falling state financing.
The conference agreed that over and above the much-awaited direction by the court, there is need to keep reviewing and refining the university funding model to address long-term sustainability concerns.
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Students placed through the Kenya Universities and Colleges Central Placement Service (KUCCPS), the conference resolved, should receive adequate financial support, regardless of the type of institution they join.
Participants also proposed stronger stakeholder engagements to mobilise additional university funding, including from alumni and development partners.
The institutions were encouraged to dive into creating endowment funds, look for research grants and publications as part of seeking financial stability.
The vice-chancellors resolved to aggressively pursue public-private partnerships, leveraging collaborations to enhance funding and resource mobilisation.
Some universities, the conference resolved, should optimise the use of idle assets to maximise their value. Such include land and other properties.
They should also commercialise research output, turning findings into viable products and services.
The need for a clear policy on government funding across public and private institutions was emphasised.
The conference, organised by the Universities Fund, called for a policy framework that ensures equitable distribution of government financing to students at accredited universities.
It also called for the implementation of sound monetary management and repayment strategies by the universities.
Dr Siringi is a senior lecturer, the University of Nairobi
