How Kenyan universities can raise revenue

Wednesday May 15 2019

Auditor-General Edward Ouko said the University of Nairobi is technically insolvent. PHOTO | FILE | NATION MEDIA GROUP


An audit report presented in Parliament recently by Auditor-General Edward Ouko revealed that the University of Nairobi — Kenya’s oldest and biggest — is technically insolvent and its continued operation hinges on support from the government, its creditors and bankers.

A similar situation obtains at Kenyatta University, which lost millions of shillings in unsuccessful investments in Rwanda and Tanzania.

The financial turmoil that the two most established universities face is emblematic of the financial ill health of institutions of higher learning in the country. Urgent measures are thus needed to save the sector from collapse.

Reforms instituted by Dr Fred Matiang’i in 2016 eradicated examination cheating, resulting in a significant reduction in the number of students qualifying to join university as all candidates with the mean grade of C+ and above joined the public stream, killing the lucrative “Module II”.

Secondly, the differentiated unit cost system, which replaced the 26-year-old flat capitation model, considerably reduced funding to universities.



Thirdly, with burgeoning demand for degrees, some universities engaged in rapid expansion drives. But in the wake of quality queries and low student numbers, universities had to close campuses.

Universities exist to carry out research that should be beneficial to the society and produce graduates with the requisite skills to drive the economy. It is here where world-changing ideas are generated and future leaders nurtured.

However, when universities operate with limited financial resources, they cannot discharge their mandate effectively. Universities should explore alternative ways of generating revenue internally to bridge the shortfall in state financing.

First, they should leverage on their extensive networks to encourage an active and vibrant alumni base.

Robust and powerful alumni can power research, innovation and expansion in universities through philanthropy. Large and dynamic alumni can also give needy students scholarships.


Secondly, universities should woo international students by creating strong brands built on quality.

The Ivy League universities in the US, such as Harvard, Yale and Princeton universities, and the Oxford University in the UK, attract applications from all over the world due to their towering academic feats.

A significant portion of their income is derived from the international student population.

Thirdly, establish endowment funds. An endowment is a monetary donation or asset to a non-profit organisation, which utilises the resulting investment income for a specified purpose.

King Henry VIII and his kin established the oldest endowment in existence. His grandmother, Countess of Richmond, established endowed chairs in divinity at Oxford and Cambridge universities, where the king started professorships.

Marcus Aurelius, the Roman Emperor and stoic philosopher, established the first ever recorded endowment for the major schools of philosophy in Athens circa 176AD.

Lastly, lecturers and students should draft quality proposals for research that can attract grants from private donors.

Mr Maosa is a banker. [email protected]