Government probes irregular university procurement deals

Several public universities in Kenya are locked in a probe over US$30 million in questionable supplies as the country battles rising cases of financial impropriety in the institutions.

In a case that has brought to the fore the sorry state of financial management in state-run universities, the government has cancelled performance guarantees which were used by eight contractors to secure supply agreements for assorted equipment to the institutions.

The government, through the Ministry of Education, now wants the bank which issued the bonds, M Oriental – a private lender based in Nairobi – to cash the instruments in its favour.

Faulty equipment

This is after it emerged that the suppliers either failed to deliver or supplied faulty equipment to the public universities.

The government has not disclosed how many and which universities were involved in the scandal. However, in a disclosure to parliament, Kenya’s Education Chief Administrative Secretary Colleta Suda named the suppliers as Madujey Global Services, Beta Trading Company, Rockey Africa, Aerospace Aviation, Evatop Agencies, Sonny Commercial Agencies, Redline Ltd and Sciencescope Limited.

Some of them are involved in global supplies and therefore their predicament is likely to attract attention from beyond Kenyan borders.

The eight firms are yet to meet their end of the deal nearly five years into the contracts which were being funded via the African Development Bank.

While the development doesn’t expose the government to any financial loss, the ministry said it is investigating if there was any culpability on the side of the administrators at the universities. The government has also withheld from suppliers the 20% pending balance.

“We are going to withdraw performance bonds and thereafter see if we will terminate the contracts,” Suda said.

Financial governance

The findings have exposed the soft underbelly that is financial management in the country’s public universities.

Kenya has for the past two years been pushing for universities to publish regular financial performance reports as part of sweeping regulations aimed at lifting the veil of secrecy that has shrouded institutions’ financial status and effectively put millions of dollars at risk.

Currently, the publication of financial performance reports for public universities takes as many as four years, a situation that has seen most institutions drift into financial problems. In addition, none of the private universities in the country has ever made public their financials despite handling millions of dollars annually in student funds.

Credibility crisis

The procurement scandal comes at a time when Kenya’s higher education sector is facing a credibility crisis over falling quality of learning and mismanagement, which experts said risked denting Kenya’s ability to produce skills needed to drive economic growth.

“Inevitably, the current model of uncontrolled expansion, declining quality and ballooning costs is unsustainable. However, what is required is a comprehensive review of university education in its entirety and charting out a new path. Funding, academic programmes and management, among others, should be critically reviewed and tough decisions made,” said the Daily Nation newspaper in an editorial published on 9 September, and titled “It’s time to accord higher education new direction."

Kenya is currently running a comprehensive institutional review in the higher education sector, which is meant to clean up those universities which are improperly run, offering sub-standard courses, are mismanaged, and those not accredited by the Commission for University Education.