Government cuts universities budget by 26%

Kenya has slashed funding to its public universities by US$400 million in the coming financial year which begins on 1 July as the effects of the COVID-19 pandemic continue to bite the East African economy.

Universities will have to make do with US$1.13 billion, down from the US$1.53 billion the government planned to spend on institutions earlier in the year.

The 26% reduction has been necessitated by a cost-cutting drive by the government, with the coronavirus crisis significantly hurting revenue collections and reducing economic activity.

Kenya’s economy has been badly battered by uncertainties and the impact of the pandemic on key sectors. The education sector is completely shut with all learning institutions closed since the end of March. Indications are that learning could resume progressively from September. However, the government has rolled out fiscal and monetary policy interventions to mitigate the effects and stimulate economic activity and stability.

Salaries

In the spending plan to be unveiled on Thursday 11 June in parliament, the biggest chunk of the higher education budget – US$1.06 billion – will go to recurrent expenditure (largely salaries), while the balance of US$70 million will be spent on infrastructure development within the institutions.

The amounts include US$168 million in allocations to the Higher Education Loans Board (HELB), the agency that disburses loans to students on behalf of the government. The amount is shy of the US$200 million the agency says it needs annually. HELB is owed almost US$500 million by former university students and cannot trace 17,000 of its loan defaulters.

According to documents seen by University World News, the government has allocated the lion’s share to the University of Nairobi which will get US$59 million. Moi University has been allocated US$48 million, while Jomo Kenyatta University of Agriculture and Technology (JKUAT) will receive US$42 million. The other big beneficiary is Kenyatta University, the biggest university by student numbers, which has been given US$41 million.

A total of US$24 million will be sent to private universities to support government-sponsored students.

Inadequate funding

National Treasury Cabinet Secretary Ukur Yatani has admitted that there is inadequate funding to cater for the university sector programmes and activities as well as capital projects. This, coupled with frequent national budget rationalisations, has led to failure to implement planned programmes and projects.

Public universities rely largely on government subsidies to run their operations. The government capitation however currently covers only 57% of the learners, instead of the target of 80%.

This allocation is applied mainly to pay staff salaries, leaving little or no funding for promoting quality. Additionally, most of the public universities were not able to pay contractors for ongoing projects resulting in delayed project implementation, pending bills and potential cost escalation.

Prior to the pandemic, the government had committed to increase capitation substantially to public universities to nearly US$1.76 billion by the end of 2023.

This would also see a review of the funding policy to incorporate funding for postgraduate students and for newly established universities, among other emerging issues. Further, the government had planned to prioritise stalled projects in order to unlock idle capital and boost economic performance. This plan however now hangs in the balance.

“Pending bills have an adverse effect and pose a risk to the operations of the university sector. This has been occasioned by financial constraints faced by the universities, especially in meeting their personnel emoluments from the resources available. This calls for increased funding to the sector and strategic intervention to help clear the arrears” said Yatani.

Statutory debts

Data shows that public universities have statutory debts totalling US$190 million owed to the Kenya Revenue Authority. This is in addition to outstanding statutory obligations to pension schemes, and workers’ savings and cooperative societies. The University of Nairobi leads with US$55 million and US$27 million respectively.

A report by the parliamentary budget committee which approved the budget shows there is a need to consider raising funding to the universities after the pandemic abates.

Until then universities are seeking ways to navigate the financial crunch.

“With efficient systems, structures, processes, curriculum and financial systems, we will eradicate internal wastage and achieve optimal resource utilisation, attract quality students to our classrooms and draw the best minds across the globe. Assuredly, the savings made will purposefully offset the deficit until such time that we break even and bring financial sustainability closer to reality,” said Professor Stephen Kiama Gitahi, vice-chancellor of the University of Nairobi.

“Externally, we implore the government as the sponsor of public education in Kenya, to deliberately channel more resources into our universities.”