State must bail out universities before it’s too late

Kabarak university Chancellor and Baringo Senator Gideon Moi confer Doctor of Philosophy in Business administration Finance to Stephen Oloo Magadi during the Kabarak University 17th graduation ceremony at the university on December 17, 2021. [Kipsang Joseph, Standard]

It is sad that Egerton University is in the red. It is sadder that Egerton is not alone in this predicament. Things are tough for nearly every public university, all of which are grappling with a financial crisis that threatens to disrupt higher learning in Kenya. 

Egerton University Vice-Chancellor Prof Isaac Kibwage noted that the institution needs in excess of Sh6b bailout to be debt-free. The Njoro-based university closed down on November 26 last year following lecturers strike that began on November 12 and is still going on.

Yet Egerton is not the only public university that is cash-strapped. The University of Nairobi, Kenyatta University and Moi University are all neck-deep into debts. Clearly, Egerton university does not have this money, partly because their revenues, just like that of many other universities, have been dwindling. 

For long, universities relied on parallel programmes to finance their activities. But this was disrupted by the State decision to crackdown on exam cheating in KCSE, a situation that saw almost all students join universities through the Government-sponsored programme. There is a need for the Government to intervene to redirect these institutions of higher learning in the right direction.

But the excess flow of money into their coffers might have left universities too complacent. The workforce was bloated and they created departments that were barely essential to their core business. In the mini-budget that was recently presented before the National Assembly, Treasury gave the university education programme an additional Sh8.58b aimed at helping universities put their houses in order.

In July, Treasury announced that it had completed a financial health check on 18 parastatals that unearthed a cumulative five-year financial shortfall of Sh70b, which means that a good number of them are in the red with liabilities exceeding their assets. Consequently, National Treasury Cabinet Secretary Ukur Yatani said the Government will undertake a rigorous restructuring of the State corporations.

“This requires multi-faceted efforts by all stakeholders to address the financial challenges facing SOEs including, but not limited to, possible reforms and restructuring through expenditure rationalisation, revenue-enhancing measures and sealing of revenue leakages to minimise financial support from the Exchequer,” said Yatani.

The restructuring, which is being spearheaded by the International Monetary Fund, will also state corporations that offer social services including the four largest public universities and Kenyatta National Hospital that have also been draining the national coffers. There might be some pain. But as they say, there is no gain without pain. Universities will have to cut the extra fat and commit to running their affairs efficiently.