No Bail Out As Cash-Strapped Universities Debts Hit Sh56,1 Billion
As of June 2022, cash-strapped public universities had accrued debts totaling Sh56.1 billion.
According to the Universities Fund, most public universities are close to collapsing.
Geoffrey Monari, who heads the University Fund, says that public universities should look for other ways to make money.
On the weekend, Monari was speaking during a workshop.
He stated that the institutes should not rely solely on government funding.
“Currently our universities are facing a profound financial crisis. The aftermath of Covid 19 still lingers,” Monari said.
According to UF data, the accrued debt comprises, among others, remittances, part-time professors, Sacco, and contractors.
The Universities owe Sh1.4 billion to contractors, Sh4.5 billion to part-time professors, Sh4.8 billion to suppliers, and Sh4.1 billion to Saccos.
“NSSF is owed Sh139m, at NHIF there is Sh2million, loan deductions worth Sh1.3bn, pension schemes Sh18bn and PAYE is owed is Sh13bn, while other loans have accumulated Sh10bn,” he said.
Monari explained that relying on government funding is risky because there is never enough money.
He credits this to the ongoing rise in college and university enrollment.
For example, as 2022 KCSE students prepare for their exams, the board anticipates an increase of 52,195 government-funded students.
“The funding requirement for the 2022 cohort of 145,145 students is Sh32bn while the available funds are Sh12bn,” Monari said.
The UF leader said the board could not meet the requisite finding percentage.
Under the differentiated unit cost funding system, the government must pay for 80 percent, and universities must pay for the other 20 percent.
Due to the country’s financial position, the allocation began at 66 percent, was cut to 48.11 percent, and is now at 44 percent.
The current DUC requirement is Sh87 billion, whereas the available budget is Sh47 billion, resulting in a deficit of Sh39 billion.
Monari advocated for the adoption of three solutions to resolve the university’s financial dilemma.
Due to the current economic climate, according to Monari, it is not advisable to raise university tuition.
“Admit students as per the available funds giving programs of national priority emphasis to enhance employability,” he said.
He also advocated for funding for kids from disadvantaged families who may be unable to afford tuition.
This is despite the fact that the Vice Chancellor previously indicated that university students from wealthy households should not be financed.
By the time KCSE students enroll in universities in 2022, the government is supposed to have developed a sustainable way of finding.
Education stakeholders demand financing for students who are intelligent and in need.
Universities like as Moi and Egerton, whose administrations have been fighting to stay afloat, have asked the government to come to their aid.
Prof. Walter Mwanda, a member of the board and the chair of the audit and risk committee, urged universities to rationalize their academic-to-non-academic employee ratios.
The financial requirements for the 145,145 students in the class of 2022, according to him, exceeded Sh32 billion.
Mr. Monari stated that the current budget for government-sponsored students was greater than Sh40 billion, of which around Sh3 billion was allocated to students enrolled in public universities.
He noted that the government has numerous alternatives, including increasing student fees and admissions based on available money.
To overcome the deficiencies, Mr. Monari recommended that only economically disadvantaged students be funded, stating that doing so would create financing parity.
During the 2021/22 fiscal year, the number of GSS in public and private universities was 434,631, with a differential unit cost requirement of Sh87 billion compared to a budget of Sh47 billion.
He stated that the organization had initiated resource mobilization efforts to assist universities and alleviate government pressure.
Mr. Monari disclosed that they had recruited numerous funders and partners eager to sponsor certain programs, such as mining, agriculture, and climate change.