Ongoing financial, management woes for flagship university

It has been ranked the best institution for higher learning in East Africa, according to the latest Webometrics ranking of world universities released in January, but can the credentials of the University of Nairobi continue to withstand ongoing financial and management crises?

Unable to pay the KES1.6 billion (US$16 million) it owes for unpaid pension and statutory deductions for staff, the university is also embroiled in a damaging standoff with Education Cabinet Secretary Amina Mohamed over last month’s appointment of three new deputy vice-chancellors.

Kenya’s Attorney General Paul Kihara Kariuki is expected over the course of the next week to unlock the stalemate between the government and the university that has left the university with a leadership vacuum.

Contested appointments

It follows the recent rejection by the university’s council of three out of the four new deputy vice-chancellors selected for the university by Mohamed. The council accused her of not applying merit in the appointments. By law, the university council recommends three names to the Cabinet Secretary for each position.

The contested appointments are those of professors William Ogara, Mohamud Jamah and Lydia Njenga, all of whom the council claims were not top interviewees. However, the council agreed with the minister on the hiring of the Professor Julius Ogeng’o as the deputy vice-chancellor for academic affairs.

Until last year, Vice-chancellor Professor Peter Mbithi was at loggerheads with his deputy Professor Bernard Njoroge over the control of finances and the institution in general. Eventually, the vice-chancellor sent Njoroge home but not without major fallout within the university’s top ranks – a situation which eventually necessitated the intervention of government.

Speaking on the parlous state of the university’s finances and its causes in a state of the university address two weeks ago, Mbithi said the university had received only US$3.9 million from the Treasury last year to pay its 4,945 workers against a need for US$8.9 million, leaving a deficit of US$5 million.

Budget cuts

“The sudden and unplanned budget cuts due to the new formula of costing degree programmes and differentiated unit costs had left the institution with a huge budget hole,” Mbithi said, referring to the government’s new ‘Differentiated Unit Cost’ system whereby universities receive funding based on the courses they offer.

“This has immensely affected delivery of services. The huge wage bill due to clamour for higher pay by trade unions has worsened this situation. Ultimately, this exerts a major strain on our dwindling cash flows. The university continued to experience disruptions due to frequent industrial actions, leading to the disruption of the various academic programmes,” he said.

In 2016 the government also lowered the university entry grade to C+ for students to receive state funding, effectively reducing the number of students seeking education under the lucrative parallel (self-sponsored) programme, which is the biggest revenue generator for public universities besides the government subsidies. Initially, the cut-off was a B+.

Statistics show that slightly fewer than 70,000 students qualified to join universities this year after attaining the requisite grades in the 2017 secondary school examinations. Previously, at least half of these students would join universities under the self-sponsored programmes, while an equal number would enrol for regular courses.

The financial weakness of Kenyan institutions is widespread. A 2016 report by the Commission for University Education showed that the public universities in Kenya are operating with at least US$100 million in budget deficits arising from poor financial management.

In a February 2017 assessment of public universities, the country’s auditor general listed 11 of the country’s institutions, including the University of Nairobi, as being insolvent.

Public debate

Where the blame actually lies – lack of government funding or mismanagement – is a source of public debate.

“To get it right, it behoves the government and the university management to assess and address the source of financial challenges that the academic institutions are facing. Is it funding? Is it poor management? Or is it both? Once this has been established, they might embark on the more demanding task of identifying what they need to do to turn their fortunes around,” said the Business Daily, in an editorial last week.

“There is no justice in cutting allocations to universities that are supposed to produce talent and ideas to, for example, create employment. Similarly, universities will only achieve their goals when they are led and managed by the right people who deliver uninterrupted business,” it said.

Meanwhile, the University of Nairobi is also facing a KES237 million (US$2.4 million) claim from a quantity surveyor hired during construction of its KES2.3 billion tower.

Songa Ogoda and Associates, the company hired by the university to work on the tower in Nairobi, has moved to court to compel the institution to settle a contractual debt and accrued interest.

The contractor was engaged in November 2011 to undertake quantity surveying consultancy for the construction of the tower, but the agreement was terminated a few months later, leading to the current dispute that was referred to arbitration in 2016. The finding by the arbitration tribunal that that the university was correct to terminate the contract has been subsequently challenged by the contractor who is seeking fees and interest accrued before the cancellation of the contract.