Universities across the country are in financial stress. The Privately Sponsored Students Programme or PSSP, a cash cow for most universities, is not in milk.
Government capitation is on an annual decrease and tuition fees — at about Sh48,000 per student per year — cannot meet costs.
Varsities have backlogs in remitting taxes, pension contributions and other statutory deductions. Varsity chiefs must tap on innovative ways of increasing incomes, to keep their institutions afloat.
One tested strategy of income generation across the world is the internationalisation of student intakes. Kenyan universities must widen their student catchment areas to the other countries of the East African Community — Tanzania, Uganda, Rwanda, Burundi, South Sudan and more recently the DRC — and to other neighbouring countries of Ethiopia, Somalia, Djibouti and Eritrea.
Consider the case of Australia with 39 universities nearly all of which are state-owned, and run like business concerns. In 2019, 27 per cent of on campus students were international, with some universities having up to 42 per cent of international students.
Major source markets were China, India, Indonesia and Vietnam. Revenue from international students rose from $25 billion AUD in 2009 to about $40 billion in 2019, making Australia’s higher education the third largest export after iron ore and coal.
When I won a Commonwealth Scholarship and gained admission to the University of Reading on a full time PhD programme in 1989, I learnt that the university had just won a Queens’ Award for Export.
At the time, I did not understand what that was all about. I learnt later that it attracted the largest number of foreign students of any British university, raking in pretty precious foreign exchange earnings. Little did I know that as a Commonwealth scholar, I was one of the contributors from Kenyan taxpayer’s money which Kenya contributes annually in membership fees to the Commonwealth.
International students pay higher tuition fees. This revenue helps subsidize the cost of education for local students, bring salaries for academic and other staff to international standards, reduce labour activism, do away with the need for collective bargaining agreements, stem student and staff strikes, stabilize and ensure continuity of academic programmes and make graduation predictable and on time.
Kenyan universities should grow their student numbers rapidly; offer courses on and off campus, face-to-face and online, or partly physical and partly online. Certificates, diplomas and degrees may be offered wholly online. This way, a university can grow numbers to over 50,000 students, making it economically viable.
Opening campuses in student sending countries is a way of growing numbers. Unfeasible as it may sound, if Moses can’t come to the mountain, then the mountain must go to Moses. This must be accompanied by aggressive pooled inter-universities student recruitment missions by staff and specialized agencies. This is a cost-cutting measure which enhances income.
Some pundits argue that fees should meet the cost of tuition and living expenses and should therefore be reviewed and adjusted from time to time to be in sync with inflation and the cost of the living index.
One cannot have fees stagnate in the face of hard economic realities. They invoke the Beneficiary Pay Principle, which states, in this case, that those who benefit from the services offered in educating them, must pay for it, matching costs with the quality of services enjoyed.
Some observers argue that education is a basic human right. Article 43 Section (f), of the Constitution states that every citizen has a right to education. Others argue further that education is a great equalizer and that quality education should be compulsory, free, open and accessible to all and provided by the state. The state, not just the individual reaps benefits from an educated, informed and enlightened workforce and citizenry.
For the sake of argument, granted it is the responsibility of the state to provide free and compulsory education, how then must it raise funds to pay for education? The most obvious is what’s going on at the moment — an annual budgetary allocation from taxes.
There are other possibilities.
In 1994, Nigeria introduced an Education Trust Fund. Businesses operating in Nigeria were required to pay two per cent of their annual profits as education tax, to be distributed among all levels of education. It later became the Tertiary Education Trust Fund.
A small percentage of the fuel levy or tourism levy or taxes on alcoholic drinks and tobacco products or on gambling may be directed specifically to funding education. Money recovered from unclaimed wealth and economic crimes may be used to fund education.
Tobin tax is a suggestion made by a Nobel Laureate in Economics (1981), James Tobin, who suggested that speculative flow of money, in short-term currency transactions on the stock markets, seeking high short-term interest rates should be taxed.
The shorter the time between buying and selling, the higher the tax rate. Such traders on money markets are gamblers. This is a plausible idea to fund education.
Another way is a practice common in North America, which is through endowing professors. An endowment is a gift from a rich person or family, often an alumnus, usually in honour of a family member or to support a cause or research, to university by offering to fund or endow a professorship in perpetuity.
In a recent case, a university was endowed or gifted $2 million to pay the salary and allowances, fund travel and research assistance for one professor. In a typical American Ivy League University, such endowed professors may number up to 200 or 300, raking in billions of dollars.
In one university, endowed funds meet the cost of paying full salaries of 25 per cent and in another, 40 per cent of all academic staff, taking the pressure off federal funding. In Kenya there is need for benchmarking and to initiate awareness on this.
Some universities have thousands of acres of land that should be put to commercial agriculturaluse. They can provide certified seeds, fertilizers, artificial insemination, veterinary and extension, research and consultancy services to communities across the country and internationally.
Income generating ventures have been started by some varsities under registered business entities such as the University of Nairobi Enterprises and Services and the Egerton University Investment Company. The latter runs the ARC Hotel, the Ngongogeri Farm and the Lord Egerton Castle. If well managed, these have potential for income generation.
Egerton University owns the Chemeron Dryland Research Training and Ecotourism Centre, under the Division of Research and Extension, in Ilchamus, Baringo County. Here, there are lodging rooms for researchers, dryland livestock such as camels, goats, sheep as well as some commercially viable beekeeping.
A snake park offers potential for income generation for venom harvesting, even for export. Such venom is diluted and used as vaccines for or an antidote against snake poison. This could well turn out to be a lucrative source of income.
Varsities should put up modern students’ hostels, on or near campuses, with well-equipped bathrooms, laundry and kitchenettes shared by only half a dozen students or so. These are best done through PPPs and offer a good return on investments, generating long term profits. Investments in other forms of real estate may rake in handsome dividends.
Strong alumni are pillars of universities. These are former students and staff, all registered and connected to the varsity in regular and continued communication networks. The role of the alumni in helping generate income cannot be gainsaid.
Alumni may donate or raise funds, establish endowment funds, endow professors, deans and chairs of faculties, set up scholarships to support needy students, support research initiatives, help in forging partnerships, form advocacy platforms that lobby for financial support for their Alma Mater and participate in the appointment of the Chancellor, as required by the Universities Act, 2012. Alumni are a lifeline for any university. I wonder how many universities use their alumni in these ways.
University incomes are enhanced when linkages are forged between universities on the one hand and businesses and industry on the other. Industrial, business and research parks form platforms for interactions and business incubation and ideas to be researched on, to the benefit of all parties.
This is the venue for hatching innovation, inventions and creativity. Here, scholars will generate intellectual property that is patented and whose commercialised products generate wealth and incomes for individuals and institutions.
Universities that have such linkages and which generate wealth through business may invest in stocks, treasury bonds and bills, unit trusts and such other financial investment instruments that earn interest and are traded on the stock markets.
Endowment funds may be invested in this way too, with the permission of Councils and Management Boards as well as the Cabinet Secretary. Usually, only interest may be reinvested or used in ways deemed appropriate, but the principal sums are preserved in fixed savings, to protect sovereign or base wealth of institutions.
Ambassador Dr Hukka Wario is the chairman of Council, Egerton University
The views expressed in this opinion article are mine and not that of Egerton University, its Council or Management Board.
