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Is Kenya’s higher education at shakeout stage?

By XN Iraki | November 24th 2015

There are 53 universities listed on the Commission of University Education (CUE) website. Twenty-two are fully fledged public universities, 17 private universities, 13 with letters of interim authority and one privately registered. There are also 13 constituent colleges (five are private).

This data should change because Kibabii is now a fully fledged public university. Few can doubt that higher education is one bright spot in Kenya. Not just in growth of the number of universities and colleges but number of students who doubled between 2011 and 2014. Last year, 443,800 students were enrolled in the Kenyan universities. They were 571 at independence.

It is interesting that as corporations leave the city centre to the outskirts; their place is being taken over by universities. The university way in Nairobi has become really a university way going by the number of universities located there. At 8.30pm, the city streets are flooded with youngsters leaving classes. The middle aged are not left behind. Even men and women in their 50s are in class; with parents and children often in class together.

In rural areas, university campuses are no longer a rarity. They are even in refugee camps. Foreign universities are also targeting Kenyan students; British, Canadian, South African and Asian universities are advertising their courses through the media or coming physically to Nairobi and other big cities. Their presence is an indicator that higher education is a lucrative business. The physical presence of these foreign universities could also be an indication that they are feeling the effect of expansion of local universities and reduction in outflow of Kenyans to their universities. Local universities are also heavily advertising in the media, some using creative methods like sponsoring golf tournaments.

The lucrativeness of the higher education is driven by favourable taxation. They only pay VAT and no income tax. The fact that only a few individuals can invest in higher education ensures there is restricted supply that serves as a barrier to entry. Churches investment in universities might indicate they have lots of money. Investing in higher education is a whole different game compared to say primary or secondary education. The customers are more discerning with good management and teaching skills hard to get.

The sector is also highly regulated because of information asymmetry. The customers (students) are not as knowledgeable as the suppliers or even the service providers (lecturers and professors). Students only come to know if they got the right education after graduation, too late. Will Kenya remain the higher education Wild West? In the short run, expect more universities as counties clamour for them. Public sector is likely to remain a leader in higher education but will feel the heat of the competition driven by more entrants to share the cake.

Another problem often overlooked is that Kenya’s population is stabilizing. It grew at 3.82 per cent in 1982 and at 2.64 per cent last year, a substantial decrease. The universities are likely to feel this glut in student’s enrolment. Note that although the absolute number of university students has gone up, they are being shared among more universities. Two universities, UoN and KU take up about 30 per cent of all enrolled students.

A curious observation about higher education is that universities have been using pricing as a competitive tool; their fees are not significantly differently. Fees have remained low to attract students; Kenyans are very price sensitive. That has made differentiation very hard, which increases the competition further. Since 2012, all universities in Kenya are governed by the same university law, unlike in the past when each university was set by an act of Parliament. Did this new law equalize all the universities and increase competition?

The competition for fee paying students means that the middle class must expand fast enough to afford higher education. The upper class have their own system of education from kindergarten to university. Sustaining a critical mass of fees paying students calls for faster economic growth, which will create more jobs (not internships) for the graduates.

This heightened competition is forcing universities to compete on facilities, ranking, location, famous alumni and collaborations. They should add patents and job placement. The issue of location for universities is an interesting one; bringing services closer to the people seems counterproductive. It dilutes the brand and denies graduates the opportunity to interact with new people, new cultures and ideas, which might be more critical to students lifelong success than even grades. Who wants to go to Shamakhokho Primary School, Makhokho Secondary School and Likhokho University?

Competition in Kenya’s higher education is not about to end and it seems soon there will be a shakeout with some universities merging or selling off. Already two private universities have either called in strategic investors or sold off. The premises formerly occupied by Inoorero are now owned by Mt Kenya University. What happened to Inoorero? Could focusing more on foreign students give universities a much needed lifeline in addition to earning the country a much needed foreign exchange?

This competition is leading universities to a time tested strategy of diversification into other businesses. What of on-line learning? After shakeout, we expect refocusing of higher education to new areas such as science, technology, engineering and mathematics (STEM), which have remained largely in public universities (public can afford them). Prices will readjust to reflect the market reality.

Mimicking cars

Most of the students in our universities are in social sciences, which are cheaper to mount and may be more profitable to the entrepreneurs, but makes it hard to land jobs for the graduates. Universities will also start focusing on a few areas and do them very well. Quality and reputation will remain key sources of universities’ competitiveness after shakeout. These cannot be faked or replicated like software or buildings. They take time to build, the reason most top universities in the world are old.

The expansion of higher education is not about money but transforming the next generation so that it succeeds where we failed. What skills do they need? Think of how India created a reputation for computer science. Surprisingly, graduates make less than 2 percent of the Kenyan population. The market for higher education is there but the question is who will take this market and how.

In the long run, I foresee universities mimicking cars, where we have a spectrum from high to lower end. It is an open question which universities will become the Lexus of higher education and which ones will become the Vitz. But the signs are already there, can you see them?

—The writer is senior lecturer, University of Nairobi School of Business. [email protected]

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