Elections: Why free university education pledge is a long shot

For students who qualify for State sponsorship in universities, the government pays up to 80 per cent of the fees. [iStock]

If education is the key, then tell me why the people have to make it so expensive for we give them the key, oh set them free.” -Richie Spice, “Youth Dem Cold”

Lately, the former Prime Minister Mr Raila Odinga appears to have been enthralled by reggae tunes, adopting some of them as his campaign theme songs.   

And his newfound love affair with reggae music goes beyond its sonorous tunes.

Mr Odinga also appears to be increasingly falling for reggae music’s theme of economic redistribution, promising freebies should he be elected President in the August polls.

And as if heeding Richie Spice’s hit song, the ODM party leader (now Azimio-One Kenya Alliance) candidate has promised free education - right from primary to university level should voters make him Kenya’s fifth President.

Just as his competitor, Deputy President Dr William Ruto, Mr Odinga has also promised to convert the student loans offered by the Higher Education Loans Board (Helb) into a grant.

This will make higher learning - from tuition fees, food to accommodation - entirely free for students, says Helb Chief Executive Charles Ringera.   

This is music to the ears of millions of voting youths who are not only struggling to finance their college education but are also staring at a dreadful possibility of being caught in Helb’s dragnet for non-payment of their student loans.

But the reality of financing higher education in Kenya - amidst an unenviable task of a broke government juggling so many pressing needs, including high debt repayment — is not as soothing as the mellowing reggae tunes.   

On Saturday, Education Cabinet Secretary Prof George Magoha while releasing the 2021 Kenya Certificate for Secondary Education (KCSE) results reminded whoever, between Mr Odinga and Dr Ruto, is going to replace President Uhuru Kenyatta that he will need loads of cash to educate the 145,145 students who qualified for university education.

This is an increase from 143,140 in 2020. “The job of the next government is to provide money to ensure that they remain in the university system,” said Prof Magoha.

Whoever will take over government after the August 9 polls will inherit largely empty coffers, making it difficult to fulfil most of their grandiose promises on education.

“I think we need to be alive to the current fiscal space that we are currently in and whether that fiscal space is allowing higher education to develop at a faster rate,” said Helb boss Mr Ringera in a recent interview with Financial Standard.

Higher Education Loans Board (HELB) CEO Charles Ringera . [David Gichuru, Standard]

For students who qualify for State sponsorship in universities, the government pays up to 80 per cent of the fees, and the difference is financed through Helb loans. The loans are repaid at an interest of four per cent a year after a student has completed their undergraduate studies. Mr Odinga’s solution, he explains, lies in sealing all the loopholes for graft. After all, didn’t President Uhuru say that Sh2 billion is stolen every day?

This would translate into an annual saving of close to Sh730 billion, which Mr Odinga reckons will be enough to finance his promise of free public university education, pushing Kenya close to countries like Norway, Finland and Germany. 

Due to the rapid increase in student numbers, the Education Ministry noted that the average State funding per student has rapidly declined from Sh66,493 in the 2017-18 financial year to Sh44,357 in the current financial year ending June.

In the upcoming 2022-23 financial year, the government has allocated Sh109.9 billion for higher learning, with a big chunk of the cash going to recurrent expenses such as paying salaries, operations and maintenance.

With more students joining universities and technical and vocational education and training (TVETs), this allocation is expected to rise to Sh115.4 billion and Sh126.6 billion in the 2023-24 financial year and 2024-25 financial year respectively.

In the spirit of equipping as many Kenyans as possible with the right technical skills for the job market, KCSE candidates, irrespective of the year when they did their final exams, are eligible for placement in TVET courses. By the end of June 2021, 347,539 students were placed in TVET institutions.

Between 2012 and 2020, the number of TVETs has increased more than three-fold from 701 to 2,301.

“You don’t want to lock out any of these students. You want them to have one form of skill or the other,” explains Mr Ringera, whose organisation has also been giving a lot of student loans in TVETs.

Helb has also been giving loans, mostly for tuition, to students in private universities.  

This is why a drop in allocation to the State Department for Higher Learning - as it happened in the current financial year owing to the Covid-19 - leaves a huge hole in terms of average student financing.

Allocation for higher learning dropped from Sh123.6 billion in 2019-20 financial year to Sh92.2 billion in the current financial year owing to the challenges of the Covid-19 pandemic that not only ravaged the government’s income but also that of universities and Helb.

The increase in allocation, however, has not been keeping up with the increase in students qualifying for public universities as well as in TVETs and some in private universities, which have been eating into public universities’ allocations.

The government has been pushing considerable resources into TVETs.

Despite the persistent increase in prices of goods and services, Helb’s average allocation per student has been stagnant at around Sh42,000, says Ringera.

It is even worse with the government’s student capitation, which has never moved in the last 30 years.

It is a stark reality that was acknowledged by the National Treasury Cabinet Secretary Mr Ukur Yatani in his Budget speech for the 2020-21 financial year.

Higher Education Loans Board (HELB) CEO Charles Ringera. [David Gichuru, Standard]

Mr Yatani noted that the ideal cost of training a student in a university has increased from Sh120,000 to about Sh200,000 per year, noting that the prevailing funding arrangement introduced in 1991, is unsustainable.

“Under the current arrangement, universities have not only experienced financial constraints but have also been unable to continuously honour their statutory obligations,” said CS Yatani.

In order to ensure sustainability and self-reliance of public universities, he noted that the Education Ministry was expected to engage stakeholders beginning July last year to address this sticky issue.

Under the current cost-sharing model, it is clear that the government is not going to raise its share.

Indeed, in the current financial year ending June, for example, fewer students (229,727) compared to 243,084 in the previous calendar, were enrolled in public universities after the government cut its budget.

Parallel programmes which supplemented government capitation after the flow from the Exchequer could not meet all the public universities’ needs have all but collapsed.

And in 2007, the government shifted to the “Differentiated Unit Cost,” financing model where institutions are allocated budgets based on the number of undergraduate students they register for the State-funded regular programme and the kinds of courses they take.

This is unlike in the previous case where a student would be allocated a flat rate of Sh120,000 in a year, a model that was favoured by big universities such as the University of Nairobi and Kenyatta University.  

This has spawned a financial crisis in the public universities, with most of them grappling with a pile-up in statutory debts owed to the Kenya Revenue Authority and the National Social Security Fund.

So bad was the crisis that some institutions such as Egerton University were forced to shut down due to cash flow issues.

Consequently, the troubled public universities are increasingly being seen as deadweights by fiscal deficit hawks such as the Washington-based International Monetary Fund (IMF) that fears that they could go down with the entire government.  

The IMF wants these cash-strapped public universities to find a way of standing on their own by merging departments, cutting down on unnecessary spending and staff and, where possible, charging students more.

The IMF and its sister Bretton Woods institution - the World Bank - were responsible for the introduction of the current cost-sharing model of financing higher education where the government pays a grant of 80 per cent of a student’s fee, with households paying the rest.

The introduction of cost-sharing was done in the early 1990s under the structural adjustment programmes (SAPs).  

SAPs were based on an economic model of private ownership, competitive markets and an out-ward oriented development strategy and brought to an end the famous “boom” under which the government gave university students money for upkeep.

Named after the Chepkube coffee boom of the late 1970s when Kenyans became overnight millionaires by smuggling coffee from Uganda, the boom ensured that university students never paid for anything from food to beer.   

Coffee. [File, Standard]

The boom never ended completely for government-sponsored students.

Instead, the money was channelled to Helb where it would be given as a loan, unlike before when upkeep for regular students was free, courtesy of the State.  

In the upcoming financial year, for example, the National Treasury has allocated Sh15.8 billion to Helb.

A third of this, Sh4.7 billion, will come from its revolving fund where students who benefited paid back their loans.

For poor students under the government-sponsored programme, the Sh42,000 from Helb was enough to settle the Sh16,000 fees and remain with something for upkeep.

Bright poor students, who would normally be given more loans, are also entitled to a bursary from Helb. However, with the onset of the pandemic pushing a lot of people out of work, Helb found itself between a rock and a hard place.

Allocation from Treasury dwindled, repayments reduced and more students who previously did not need Helb loans were suddenly knocking on their doors for financial assistance.

Both Mr Odinga and Dr William Ruto want to make college learning either free or highly subsidised. Unfortunately, they are not offering any solutions that will spare the country another round of SAPs.

The State, it seems is the one expected to, not only finance but also provision and regulate education. Prof Bitange Ndemo, until recently a lecturer at the University of Nairobi, reckons universities have not been innovative enough.

According to Prof Ndemo, universities were supposed to attract research and become engines of innovation.

He gave an example where, last year, $5.2 billion (Sh592 billion) worth of venture capital came into Africa, but there was no money for universities. Ideally, universities, some with huge farms, should create spin-offs of their commercial activities as it happens in Silicon Valley, in the US.

From these spin-offs, they can earn some money and stop relying heavily on the Exchequer, explains Ndemo who blames trade unions for this lethargy.

“It is just like bad children who are not taking responsibility for their father’s wealth,” said Ndemo.