Nairobi plans US$11.7 million commercial complex

The University of Nairobi, Kenya’s biggest by student numbers, is to construct a KSh1 billion (US$11.7 million) business complex to expand its revenue streams – a route also taken by its top rival, Kenyatta University.

The proposed nine-storey building at the University of Nairobi’s main campus outside the central business district is expected to host several conference halls, a modern library, a hotel and restaurant as well as outdoor and indoor sports facilities.

Construction is due to start later this year, and is expected to be completed by 2015.

The university is drawing on former students to raise part of the funds while also courting big companies to put money into the facility.

The partnership between the university and the ex-students is expected to raise 10% of the amount, at least KSh155 million (US$1.8 million), before the end of the year. So far, KSh45 billion (US$582,000) has been netted from alumni.

Nairobi has also appealed to companies like audit firm KPMG, the Central Bank of Kenya, Equity Bank, Barclays Bank and the Nairobi Securities Exchange to contribute to funding the project.

Demand for higher learning and competition among universities is piling pressure on the institutions to expand and forcing them to rethink their commercial plans.

Over the past two years, the University of Nairobi has acquired at least three buildings in its vicinity, beating commercial banks and listed companies in some of the most expensive real estate deals in the country, in search of space for its spiralling student numbers.

“Funding is the biggest challenge. Everyone wants to go to school. But the government can’t cope with the numbers. So university administrators have to think outside the box,” said Professor George Magoha, vice-chancellor at the University of Nairobi, in a previous interview with University World News.

Kenyatta University is in the process of constructing a state-of-the-art referral hospital at a cost of KSh8 billion ($95.2 billion) – more than the university’s annual budget – a project meant to help raise funds to cope with growing student numbers.

Currently, the institution has a budget of KSh7 billion (US$83.3 million). Only 45% comes in as government subsidies, meaning that Kenyatta has to tap commercial activities to raise the balance.

Kenyatta recently announced it was seeking private investors to provide extra accommodation for its students.

The numbers of school-leavers seeking university education has risen faster than universities have been able to expand infrastructure, leading to strained facilities and compromised quality of learning. Student numbers have risen from 140,000 in 2010 to 218,832 this year.

Universities are increasingly seeking private investors to build new academic and residential facilities, as surging enrolments pile pressure on the cash- and space-strapped institutions.

While the government has been increasing its subsidies to public universities, this has not matched the rise in student numbers, meaning that universities have had to consider other ventures to finance their operations.

The state has increased funding for higher education by 30% for the upcoming financial year, as it seeks to bankroll 15 new public universities. But institutions said even this boost was way below financial needs.

The Ministry of Finance, in its spending plan to be announced during the June budget, said funding to the Ministry of Higher Education, Science and Technology would increase from KSh61 billion (US$717 million) during the current year to KSh80 billion (US$941 million) in the coming year.