Shame of Sh8b varsities owe the taxman, NHIF and banks

A Government report has unearthed shocking revelations of a Sh8 billion debt universities owe various agencies in Third Party deductions. This, as reports emerged of workers' embarrassment in hospitals and banking institutions.

The report indicates that 26 public universities have not released pension monies to the tune of Sh4.5 billion. University of Nairobi is leading with Sh1.3 billion pensions debt, followed by Sh1.09 billion by Jomo Kenyatta University of Agriculture and Technology (JKUAT).

Obligation

Technical University of Kenya owes its workers Sh946 million, as Kenyatta University also withholds Sh362 million in pensions.

On Pay as You Earn, some 10 public universities are still withholding Sh2.6 billion remittances, with nearly all of them appearing in the first default list.

Kenyatta University is leading in the default list with Sh902 million. It is followed by University of Nairobi with Sh704 million.

These details are contained in the Status of Remittance by Public Universities of Staff Deductions report.

The data was requested from each institution when the workers' unions crippled universities operations following the Collective Bargaining Agreement stalemate.

Further details of the report show that five universities are yet to release Sh4.2 million to National Hospital Insurance Fund (NHIF).

Another Sh481 million should be released by some seven universities to various banks and savings and credit facilities.

Remittance of statutory, loan and membership deductions to Saccos and banks is a mandatory obligation for employers. The deductions are made from employees' payrolls and are expected to be remitted within stipulated time. Other deductions include National Social Security Fund, Higher Education Loans Board and insurance claims.

University Academic Staff Union (Uasu) and Kenya Universities Staff Union officials Friday said each university would defend its actions in court.

“We have taken some of them to court and we are doing this systematically. Some are being handled by tribunals... each institution will land in court,” said Constantine Wasonga, the Uasu Secretary General.

The Ministry report warned of major court battles that may further cripple teaching and learning in the already broke public institutions. “Continued default by universities is likely to lead to costly litigation, not to mention stoking staff unrest,” reads the report.

The report says the universities also risk paying huge amounts in penalty fees.

Under the Cooperatives Act, institutions that fail to remit deductions are liable to a compounded penalty interest of five per cent per month on value of the unremitted deductions. “This is approximately Sh24 million in interest penalties every month. This is an enormous cost to a sector that is grappling with shortage in funding,” reads report.

The report says an analysis of data presented by the institutions reveals high level of non-compliance. “From the submitted reports, a number of universities were found to have failed to comply in remitting all the staff deductions,” it reads in part.

University of Nairobi, JKUAT, Technical University of Kenya, Kenyatta University, Egerton and Multimedia University of Kenya are among top institutions in the default list.

“Failure to remit deductions from employees has led to employees defaulting on their obligations with the service providers and financial institutions. This has potentially eroded the credit rating of the employees and affected the financial position of their cooperatives,” reads the report.

Outstanding loans

Early this year, university workers claimed that some university workers bank loans had been outstanding for years, as universities clung to amounts deducted to settle the loans.

It also emerged that many university workers were yet to get pension after retirement, with those still in employment put under the Kenya Revenue Authority watch.

What was, however, humiliating was the revelation that some university workers were turned away from hospitals after their employers failed to remit NHIF money.

The data presented in the report shows that Technical University of Kenya, Egerton, Maasai Mara University, Multimedia University and Kaimosi Friends University College collectively owe NHIF Sh4.2 million. The matter was so serious, MPs summoned the institutions' management to explain the cause.