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IN THE RED, RUN ON BANK DRAFTS AND SHOESTRINGS

Public varsities' financial mess: Smart management, industry links and research needed

The elephant in the room is how some private universities have remained afloat, despite their declining number of students — study them

In Summary

• Vice chancellors are complaining as they juggle priorities and try to run their institutions' day-to-day activities on bank drafts and shoestrings.

• Smart management, innovation, research, industry links and wise investment needed if universities are to become self-reliant.  

Education CS George Magoha
Education CS George Magoha
Image: JACK OWUOR

It's gloom and for public universities deep in the red because of a serious funding shortfall — if they don't get with it and try new ways to generate funds to sustain themselves.

Every day, vice chancellors try to juggle priorities and run day-to-day activities.

Both the government and university managers concur on the need for increased funding.

 

But how much, how to get it and from where?

Currently, all public universities are supported by the Exchequer and none liberated itself after the collapses of parallel programmes in 2016.

The problem is both financial and managerial. Universities rely on students’ fees and funding from the government, but they used to get a fair share of the revenue from student enrolment through the Module 2 (parallel) courses.

Mandated to set academic standards and turn out the country's best human resources, universities have failed to lead by example.

Today, university education is characterised by an ever-growing number of courses leading to duplication, unplanned expansions and a blatant lack of academic leadership characterised by tribalism.

Vice chancellors admit the institutions lack the capacity 'to produce an A graduate, despite receiving A students from secondary school'.

Decay has eroded the one-time dream of every student of a quality college education leading to a good job.

 

Ironically, the decline in financing coincides with university expansion.

In the 40 years since the establishment of the University of Nairobi in 1970, the sector has grown to 74 public and private universities. They serve an average of 500,000 students, public universities accounting for 90 per cent of this population. Since 2009, 34 have been accredited.

However, universities are not able to spin these numbers into money, pushing some of them to close campuses.

In the last three years, for example, the government has closed 57 campuses.

Laikipia had six of its campuses in Eldoret, Naivasha, Nakuru, Nyahururu, Embu and Upper Hill, Nairobi, closed.

Moi University campuses in Kericho, Mombasa and Nakuru were also closed.

Jomo Kenyatta University of Agriculture and Technology, Kenya Methodist University, the Catholic University of East Africa and the University of Baraton each had two campuses closed.

JKUAT close Westlands in Nairobi and Kisumu campuses, while Methodist closed its Nakuru and Nyeri campuses.

CUEA closed its  Kisumu and Nairobi CBD campuses. The Ministry of Education puts the blame squarely on university managers for overreliance on government funds for operations.

The elephant in the room how some private universities have remained afloat, despite the decline in their student populations.

Academicians say a substantive number of public university managers are yet to make the most out of the opportunities in front of them as the institutions’ day-to-day operations are run on bank overdrafts, loans and debts.



During the 2017-18 financial year, for example, UoN, Kenyatta University and Multimedia University alone reported negative working capital of Sh5.5 billion.

KU reported the highest debt at Sh3.4 billion, followed by UoN at Sh1.4 billion and Multimedia at Sh700 million as at June 2018.

In contrast, Strathmore University's income in 2017 grew by more than  Sh300 million, backed by a solid asset base of Sh6 billion, according to an audit by Deloitte.

In the report, the university registered an 11 per cent growth in total income in the same year. With a population of 5,732 students, it collected Sh2.2 billion from fees.

Is this financial crisis manmade, or are the institutions and their managers victims of circumstances.

Education CS George Magoha blames vice chancellors for the mess. Allegations include poor academic programmes that miss the market's needs, unplanned expansion, poor engagements with industry and a bloated wage bill.

In seeking solutions, Magoha, a former UoN vice chancellor, suggests a raft of measures.

First, he proposes a staff reduction.

Magoha also proposes merging some institutions, especially those with duplicated roles to free funds for academic projects.

Universities should also establish businesses that will generate funds to finance their operations, he says.

“We will rationalise academic programmes and institutions to ensure the full potential of existing universities and campuses. If possible, universities and campuses can be consolidated for maximum utilisation,” Magoha said when he released the 2019 university admission results on May 6.

Former Commission for University Education CEO David Some backs this suggestion. He says the market for new students is highly competitive, and universities can no longer rely on traditional marketing tactics to hit enrolment goals and generate revenue.

All 31 public universities missed enrolment goals of increased first-year students and tuition revenue since 2016, the Kenya Universities’ and Colleges Central Placement Service says.

“It's high time they started exploring new ways to generate revenue from their resources to become self-sufficient,” Some told the Star on the phone on Friday.

He said universities are underutilised in financial generation.

While some have long-running businesses, industry partnerships and facilities, what they generate does not match the resources they own, Some said.

ROAD TO SELF-RELIANCE

He said for a university to have a successful industry partnership, it must cultivate an open culture that welcomes industry experience.

“These partnerships serve a double purpose of giving students career experience while shoring up the budget," he said.

To build this culture, the professor said, universities should focus on three areas: Acquiring assets, capitalising on core functions such as research, and managing talent and sports.

University and Academic Staff Union secretary general Constantine Wasonga said the key to self-sustainability is research.

Last year, Kenya was ranked number 80 out of 126 countries in the Global Innovation Index.

The government earmarked two per cent of its GDP for research.

Wasonga said if universities invested in quality research, their patents would generate revenue. This isn't happening, either because universities are not monetising their patents or they are not monetising them in the right way.

Patent portfolios of many universities are underutilised assets, as few universities sell or license patents.

Citing UoN, Wasonga said administrators should consider the primary customers for their products or services.

“University of Nairobi is renowned for producing the best doctors in Sub-Saharan Africa. But most of their research has not generated wealth because the university isn't providing adequate resources for research. The doctor ends up looking for outside sources," he said.

The National Research Fund in 2016-17 revealed that less than 20 per cent of funds allocated for research was taken by universities, while only two per cent of total university revenues were allocated to research.

Under NRF funding, Master’s students receive Sh500,000 each to help them in their research, while PhD researchers receive Sh2 million.

MONETISING RESEARCH

Strathmore University is a classic example of monetising research.

University chairman Bernadette Musundi says the research was done by 66 PhD staff who attended research seminars organised by the school.

The school made Sh398 million from research publications by its staff. They published 66 papers, two books and a collection of French books.

This is a 42 per cent growth in research income from 144 million in 2015.

Strathmore BBIT undergraduate student Victor Kadenge says they have 16 research centres in different fields and very well equipped libraries.

Wasonga says consultancy is a major gold mine universities could tap for revenue. However, academicians are free to freelance as consultants, so no funds go to schools.

“Consultancy been instrumental in creating opportunities for the university to increase linkages with industry. By guiding the engagement of academic staff in entrepreneurial ventures, it helped them develop new skills and experiences and increased the university's reputation,” Musundi said.

ASSET INVESTMENT

Older public universities such as UoN, KU, Egerton, Moi University have a vast base of assets. This used to generate revenue by renting or leasing them out.

USIU is understood to have invested in assets to achieve strategic pillars of improving teaching and learning.

By December 2017 assets totalled Sh4.1 billion, invested wisely to generate returns.

“We have an improvised ICT centre with high-speed internet and modern computers,  attracting new students and retaining old ones,” an administrator told the Star.

USIU also has three world-class cafeterias that also cater for foreign students.

But at most public universities, most students live off campus and potential food revenue is lost.