New salvo in debt crisis for cash-strapped state universities

KENYA

Public universities in Kenya could benefit from debt relief to help them cope with pressing financial pressures and save them from impending closure. This follows pressure from the Universities Fund (UF) – the agency that manages funding for public universities on behalf of the government – ​​for debts to be renegotiated to ease repayment obligations.

It is part of a series of new proposals made by the agency to Cabinet Secretary for Education Ezekiel Machogu which, if passed, will also improve revenue generation within universities and nearly double education grants. ‘State. This is in an effort to rescue cash-strapped universities and raise the country’s failing higher education credentials.

UF chief executive Geoffrey Monari said the government must come up with a debt management strategy to get universities out of unsustainable debt, which most public institutions are struggling with. This path will include negotiating a payment plan with creditors for existing loans.

Agency data shows pending bills for universities stood at US$466 million as of June 2022, which includes unpaid statutory deductions.

Second, the agency seeks to restructure current business ventures at public universities to help them efficiently generate more revenue to supplement government grants.

That said, the agency would also include the government setting aside a quota on its purchases from public universities.

Monari said at least 50% of consultants purchased by government and state-owned companies should be reserved for universities to compete against each other to promote local content and participation.

Third, the fund is pushing the National Treasury to consider increasing the Differentiated Unit Cost (DUC) provision for university funding from the current 48.11% to 80%. This means that under the current model, based on the unit cost of each course or program, the government is supposed to cover 80% of the tuition fees for students in public universities, but it only covers 48.11%. , which should be increased, according to some experts.

“This will provide adequate resources to programs offered in universities while keeping the impending crisis at bay and enabling the sector to seek other means to finally reform the status of university funding in Kenya,” Monari told media.

Continued funding cuts

However, this proposal is likely to face opposition, as the government seems determined to further reduce the CIC allocation to institutions.

Kenya has already made a further reduction in funding to public universities for the financial year which started in July 2022. The National Treasury, in a budget statement for the current financial year, said it had allocated 793 million dollars out of the $1.003 billion allocated. last year, a reduction of 20%.

Universities had requested US$1.8 billion from the government in their budget plans. Public universities rely heavily on government grants to run their operations.

In another proposal, the funding agency also wants young universities to be given priority in the allocation of government infrastructure funds, to increase their capacity.

UF’s proposals are essential because the agency has a mandate to advise the Cabinet Secretary for Education on funding university education and to develop fair and transparent criteria for the allocation of funds to universities.

The agency is also responsible for distributing funds to universities; establishing the maximum differentiated unit cost for the programs offered and raising and receiving funds from government, donors and any other source.

“However, if additional funding is not available due to other national priorities, the government has three options; increase fees (which is not advisable given the current economic situation), support only needy students according to the economic situation of each household, and thirdly, admit students according to available funds,” said declared Monari to business dailya Kenyan commercial title, on November 12.

Serious concern about the crisis

Educationists fear that if left unaddressed, the current state of universities could escalate into a major crisis that could lead to the closure of institutions.

“It is a disastrous situation. If something is not done urgently, we risk closing some universities. Our collective agreements cannot be applied.

“As we speak, some are not paying their full salaries while others are paying their staff very late. This affects our members who have other bills to pay,” said Onesmus Mutio, the organizing secretary of the University Academic Staff Union, or UASU.

The critical lack of funding has seen most institutions struggle to stay afloat as the amount allocated by the government is not enough to meet their expenses amid higher student enrolments.

Due to the escalating crisis, most universities are unable to meet their financial obligations. Kenyatta University, Kenya’s largest by student numbers, for example, failed to pay teachers’ salaries in October, citing cash flow problems.

Professors at Egerton University are also facing salary delays. Moi University announced in July that it would declare a number of its workforce laid off in a bid to reduce its payroll and stay afloat.

Last month, UF wrote to the World Bank asking for a $20 million bailout to support operations at state universities.

November 2 Academia News reported that Kenya was seeking to exclude students from wealthy families from publicly funded university education in a bid to reduce the unbearable burden of subsidized education.

UF said it would audit all new and existing students to ensure that only those from needy backgrounds had access to state funding.

This conservative approach will also be extended to the Higher Education Loans Board, the agency that disburses state loans to students, meaning facilities will not be accessible to students who can afford to study.

The new model is largely intended to help reduce state subsidies at a time when the government is struggling to fund its obligations – the result of a difficult economic environment and pressing loan repayments.