The truth vs reality when privatising universities

An aerial view of the University Of Nairobi on November 2, 2022. [Kelly Ayodi, Standard]

The list of State-owned enterprises provided by the government for privatisation does not include any university. The closest is the Numerical Machine Complex (NMC), partly owned by the University of Nairobi.

That did not stop one cabinet secretary, Moses Kuria from stating that universities could be privatised. He is in charge of trade and one is left wondering why he had to break such news. Was he testing the ground?

Previously, there was an outcry over another cabinet secretary’s pronouncement that universities will not be funded. Whatever the truth, wherever there is smoke there is some fire.

Despite universities missing from the list and another fake list of institutions to be privatised circulating, we can speculate what privatising universities would entail.

After all, speculation is a legitimate source of knowledge. Privatisation can be full when the going concern is sold to a new owner.

The new owner would probably do away with the university, and sell its assets. That is unlikely, the political reality would not allow it. But wait a minute, how would the value of the university be established?

It is about its assets. It so happens that our universities biggest asset is land. We have few IPs or companies associated with them. It’s this prime land located in strategic places that makes the privatisation of universities a sensitive issue.

Keen observers will note that institutions are the few remaining owners of “empty land.”

There is a widely held but antiquated belief that empty land in Nairobi or other towns is a “waste.” It should be built up, never mind what renters do when not sleeping. Owning a block of flats is a status symbol. 

It’s strange how we copied the American constitution but not common sense like establishing parks and “breathing spaces” in cities, including ghettos. Harlem in New York has a park and so do the other high-density residences, including Jackson, Mississippi in the US Deep South that was once my home.

It’s the paradox of Africa that despite our leaders being well travelled, they selectively copy what to adopt. Why do we think overcrowding is normal? Why can’t we have public parks in Mlolongo or Githurai?

The other asset is the brand name. Anyone buying a university would pay a premium for a brand name.

Compare a university in Nairobi and another one named after a tribe. Older universities would be more valuable. 

Human Resources

Other assets like buildings would be valued but their “inflexibility” would be a problem. Laboratories might be hard to change to something else.

The location would up the price; compare the university of Nairobi’s main campus to another university 400km (kilometres) away. 

Human Resources would be valued too. This is an interesting one.

Universities have highly educated men and women. Would they command a premium in the market? An auction for them would spring surprises. Can you guess why?

Indebtedness would lower the price. I also guess the number of bidders would be extremely low, unless they are allowed to strip the university and do whatever they want with it.

The number of students has been going down. Maybe after privatisation students from abroad would become cash cows. The second model would be to privatise services.

Someone would run the hostels, the kitchens, the playfields, transport, and security and may use the Uber model in teaching. The new university owners would use an app to find out which don is available at a certain time. 

What about floating the university on the stock exchange in an initial public offering (IPO)? 

The other option is to give someone or an entity a service contract to run the university. The new managers would share profits or surplus with the owner and government.

The beauty about this is ensuring quality is maintained, the contract can be terminated. What of franchising? Think of one university getting Harvard or Oxford franchise. Add other models if you can.

Let’s be blunt; while some countries’ top universities in the world are privately owned, from Harvard or Waseda, there are very successful public universities. Examples include universities in Canada, Germany or China. 

The big question is if privatisation can make universities more sustainable, developing manpower and catalysing economic growth with new ideas. Kenya Airways and Uchumi were privatised.

Remember the benefits of universities are not obvious or instant. Some of the cutting-edge research ideas today could be commercialised decades later. Think of quantum computing. 

Would profit overwrite the search for knowledge and truth? Another worry is that universities would become a preserve of the few, denying citizens opportunities for growth, and upward mobility.

Until this is made official, we can only speculate if universities will be privatised. My hunch tells me it’s the privatisation of non-core services that will take place.

But for now, the university’s core assets, particularly land will leave many salivating.  

Higher education

One would have expected university mergers to be the first step in reforming higher education to benefit from economies of scale.

That is a politically hot potato. 

What makes economic sense does not always make political sense. Remember it was once mentioned, then fizzled out. When firms are in problems shareholders inject new capital. The government would do the same with universities, it’s the only shareholder. 

What is not contestable is that our universities need a working model to make money or better break even, from their assets both physical and intellectual to become engines of economic growth and raise national aspirations.

Let’s exhaustively discuss these models against the globalisation of education and shifting to online, making the university an idea, not a place. We know the invisible hand of capitalism can capture anything and turn it into money.

But the visible hand of the State can protect national monuments like universities national parks or golf courses. Money is not everything. How do you price the feeling of having gone through Harvard, Oxford or your old school?

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