Universities are headed for tougher times as the state plans to further reduce funding.
Treasury CS Ukur Yatani said the state "will no longer continue funding universities to the tune they desire".
The Cabinet Secretary said in an interview with the Star, "Public universities must be innovative in dealing with their own challenges," meaning they must start raising their own money with commercial enterprises.
The National Treasury, in a cautionary message, said the institutions must think "outside the box" to fund their operations.
CS Yatani said the government cannot continue to shoulder the heaviest burden — 80 per cent — of training students.
He said universities must consider increasing tuition fees — say, from the current Sh40,000 per year to about Sh100,000.
The CS said the increase would be to "match up to the market price of training a student".
“What’s the cost of training a university student? It cannot be less than Sh200,000 factoring in tuition, lectures and library," Yatani said.
“With students paying about Sh40,000, who is absorbing all the other costs? It is the government. That is why it is not sustainable,” he said.
The University Academic Staff Union has backed calls for a fees increment, urging that it should be gradual, not abrupt.
The bigger challenge is that most universities are not changing to meet the current dynamics. They think it is the responsibility of the government to support them
The CS said for the government to continue to support universities, “it means it has to raise taxes to get more money.”
Yatani said with the cost of living rising to new highs, raising taxes is not a step the government may consider, owing to the negative effect.
“There are people who have nothing to eat. Taxing them will subject them to feel the weight more than having a university education. So it is a very delicate balance.
“My suggestion is that even if we were to give them more loans, we need to price universities at near market price.”
“Instead of the Sh40,000, they must go nearer the price. Even if it is not the Sh200,000 — average cost of training — we need to charge even about Sh100,000,” the Treasury boss said.
"I think they should do it slowly, maybe begin with 25 per cent to 50 per cent, so students will gradually absorb and come to terms with the increase," Onesmus Mutio of the union said.
Yatani, in pushing for universities to change their traditional over-reliance on the exchequer, said increasing fees will also likely raise the quality of education.
“They will be having quality books, teachers and a better environment for people to study and gain knowledge.”
“The bigger challenge is that most universities are not changing to meet the current dynamics. They think it is the responsibility of the government to support them,” he said.
The CS said management remains yet another challenge for the institutions.
“A lot has to do with patronage where people are given positions just because they come from a politician’s backyard. That needs to change,” he said.
He spoke following a recent International Monetary Fund assessment that revealed Kenya has limited fiscal space to bail out state-owned enterprises and, by extension, parastatals.
The IMF wants the “proactive efforts to address fiscal risks from state-owned enterprises” to continue, the CS said.
“Financial support to SOEs will require difficult trade-offs and adequate safeguards given Kenya’s limited fiscal space and the need to maintain debt sustainability,” Antoinette Sayeh, IMF acting chairperson, said in a December 2021 report. She is deputy managing director.
Thousands of University of Nairobi freshers failed to report in October 2021 after the Prof Peter Kiama-led institution increased tuition fees.
Of the more than 10,900 students who received letters from the Kenya Universities and Colleges Central Placement Service, more than 4,000 did not report.
UON increased fees for government-sponsored students from Sh26,500 to Sh59,000 annually, disadvantaging many learners.
The fee for a liberal arts master's courses was doubled to Sh600,000, prompting a court petition that was upheld by Judge Antony Mrima.
The justice ruled there was insufficient public participation but disagreed with the claims by KMPDU that the “increment was beyond the reach of many Kenyans."
Public universities are broke, with many failing to meet their obligations – taxes, retirement benefits, insurance, contractor and supplier payments.
Auditor General Nancy Gathungu in audit reports of the institutions revealed they have been forced to rely on to rely on short-term loans to finance their operations.
She has flagged instances of universities defaulting on mandatory statutory remittances despite incessant protests over delayed salaries.
A Universities Fund report reveals the government is currently footing student training to almost 50 per cent — leaving students and varsities to cater to the rest.
The funding gap — which is bound to increase further, and the gradual decline in student capitation — it is argued could worsen times for varsities.
The report further reveals that universities' debts are well over Sh60 billion, warning they are accumulating at an alarming rate.
Private universities increased tuition fees by as much as Sh20,000 per year, citing capitation funding cuts of more than Sh40,000 per student.
Already, varsity managers are protesting the massive funding cuts under the new differentiated unit cost (DUC) model — which is the basis for capitation.
The Education Committee of the National Assembly is considering a petition that they enquire into claims of fee increment at KCA, CUEA, Nazarene, St Paul's and KEMU.
As a way out, Yatani called on the institutions to put their vast land into productive use.
“We can even make a university town where people can benefit through establishing businesses. Universities must really come out of the traditional thinking
“Some have as many as 5,000 acres…some even have 10,000 and the varsity only sits on 50 acres. The rest lie fallow. They are not producing anything, not planting, not generating any income.
"So what's the point of your keeping it? Why not utilise it? Or even sell to the private sector to construct decent hostels.”
“We can even make a university town where people can benefit through establishing businesses. Universities must really come out of the traditional thinking,” Yatani added.
He advised the colleges to liquidate whatever assets they have not put to good use, “for not only expansion but also for improving quality".
“They should have a business mind and know that whatever they do, they must sustain those universities,” Yatani added.
He argued that globally, most of the universities are supported by research grants and said Kenyan colleges should take the cue.direction the Kenyan colleges should take the cue.
“They need to change course,” the Treasury boss said.
(Edited by V. Graham)
