Why Moi University remains in the red one year after recovery plan

One year after Moi University rolled out an ambitious recovery plan to pull itself back from the brink of financial collapse, the crisis that nearly crippled the institution remains far from over.

Appearing before Parliament, the university management said the recovery plan has restored stability in academic programmes, ended the salary delays that plagued staff for years and eliminated the frequent strikes that had become synonymous with the institution.

However, fresh disclosures to the National Assembly's Departmental Committee on Education reveal that despite the gains, the university still requires Sh23 billion to fully overcome its financial crisis.

The institution is still weighed down by a wage bill that consumes most of its income, pending bills running into billions of shillings, shrinking student numbers and liabilities that continue to exceed its assets.

The figures presented to MPs further revealed that the university is among 11 institutions in the country that are insolvent.

That has raised questions over why the recovery plan has yet to translate into measurable financial gains one year later despite the government pumping over Sh11 billion into the recovery plan.

When the recovery programme was unveiled last year, management identified restoring normal operations as the first priority.

At the time, the university had become synonymous with staff strikes, delayed graduations, interrupted semesters and prolonged disputes  over unpaid salaries and statutory deductions.

Acting Vice-Chancellor Prof Kiplagat Kotut told MPs that since September last year, salaries have largely been paid on time, a significant shift from previous years when delayed salaries frequently triggered industrial unrest.

The university also says industrial relations have improved. Unlike previous years, there have been no prolonged strikes disrupting learning since the current management assumed office.

Despite the changes, the university remains under financial pressure from obligations.

At the centre of the university challenge is the huge wage bill. Management disclosed that salaries still consume 81 per cent of total revenue with the university spending about Sh383 million every month on paying employees.

That leaves little money for operations, maintenance, debt repayment and development.

Prof Kotut on Thursday said the university plans to reduce staff numbers as the centrepiece of the recovery strategy. The university initially planned to rationalise about 900 employees after determining that staffing levels no longer matched student enrolment.

Management expected the exercise to reduce the monthly payroll by about Sh120 million. However, the exercise was stopped after staff unions challenged the process in court.

But the VC revealed that the institution has restarted the exercise after a ruling that ordered the university back to the drawing board.

Kotut said they have began with staff headcounts, and are currently conducting the verification of academic certificates before assessing workload.

The outcome of these will provide the institution with the final number of employees required and inform the rationalisation.

"Workload cannot lie. If you have been teaching and you have students, why would we send you away?" Prof Kotut said.

The institution is also  carrying pending bills estimated at about Sh10 billion. The obligations include supplier debts, statutory deductions, salary-related liabilities and other historical financial commitments.

Chief Internal Auditor CPA Dr Gabriel Ogutu told the committee the university's financial position remains critical.

"The numbers never lie. The university is technically insolvent," he said.

According to management, liabilities now exceed assets by more than Sh8 billion while annual deficits have been recorded every year since 2014.

That means the university continues to spend more than it generates despite the reforms introduced over the last year.

Management attributed part of the crisis to decisions made long before the recovery plan was launched.

Prof Kotut told MPs that the management has cut expenditure to cut the growing debt.

Officials told MPs that policy changes introduced in 2016 and 2017 significantly altered the financing model for public universities after the government expanded sponsorship to almost all students qualifying for university admission.

The shift reduced the number of self-sponsored students who had become an important source of revenue for established universities.

According to management, institutions such as Moi had already expanded infrastructure and staffing based on expectations that privately sponsored students would continue filling available capacity.

Instead, student numbers declined while expenditure remained largely unchanged.

"But following that policy change... there was idle capacity, idle staff and so on. That really brought about a turning point in the financing of several universities," Prof. Kotut told MPs.

Management also admitted that the university delayed responding to those changes.

While other institutions adjusted their operations, Moi University hoped government funding would improve and postponed difficult decisions.

"I think for Moi, we delayed in terms of acting on this. There was hope that things could actually stabilise,"Kotut said.

That delay allowed deficits to accumulate over several years.

Today, those historical obligations continue to shape the university's finances.

The challenge has been made worse by declining student enrolment.

The university told MPs that student numbers have dropped from about 40,000 at their peak to about 12,000 Today.

That decline has significantly reduced tuition income.

Management admitted that workload assessments have identified departments where staff have little teaching responsibility because student numbers have fallen.

"We are looking at what people have actually been doing. Some people have not been teaching. They have been here doing nothing," Prof Kotut said.

The university has already reduced its workforce from about 2,000 employees to 1,765.

About 300 contract workers were released last year.

Another 56 employees have been transferred to Kabarnet University.

Others have been deployed to Karatina University, Bomet University and Kerio Valley University College.

Despite the efforts by the university dream team, those measures have had little impact on the institution's overall financial position.

The university remains dependent on government support to meet many of its obligations.

Management is seeking an additional Sh1.9 billion in recurrent funding.

It is also asking the government to support payment of CBA arrears, statutory deductions and pending bills accumulated over several years.

At the same time, the university is pursuing new sources of income.

Among them is commercial sugarcane farming on 1,500 acres of land. The first harvest is expected in December 2027.

The university also plans to revive its tablet assembly plant to manufacture tablets, smartphones and smart boards.

Management hopes the projects will diversify revenue and reduce reliance on tuition fees.

But those projects remain long-term investments and are unlikely to ease the immediate financial pressure facing the institution.

To contain expenditure, management has introduced tighter financial controls.

Officials told MPs that procurement is no longer undertaken unless funds are available.

The university has also established new committees on public finance management, risk management and internal audit to strengthen oversight and prevent further accumulation of debt.

Parliament, however, indicated that governance reforms alone will not be enough.

Education Committee Chair Julius Melly reminded management that Parliament expects the recovery plan to produce measurable financial results.

"You advised that once you generate revenue, you should pay part of your pending bills and stop accumulating new ones," Melly said.

The committee directed the university to submit a detailed staffing structure and workload analysis.

Baringo North MP Joseph Makilap also demanded a breakdown of academic and non-academic staff, saying Parliament wanted to understand whether the institution's workforce reflects its current needs.