Kenyatta University (KU) is seeking a commercial loan of up to Sh450 million from local lenders in the latest signal of the deep financial difficulties facing the country's institutions of higher learning.
The public university indicates in tender documents that lenders have up to February 28 to put in their quotation for the loan repayable in 10 years.
“KU will select an individual financial institution among those invited to submit proposals or those who respond to the invitation for proposals in accordance with the method of selection detailed under this section and consistent with the regulations,” says the tender notice.
Public universities have found themselves in deep financial difficulties blamed on falling student population, mismanagement and low State funding.
In recent months, a number of universities have had to scrap some courses and close satellite campuses to cut costs of operation.
For Kenyatta University, the search for a commercial loan comes hardly seven months after the Auditor-General’s office raised queries on its financial soundness, especially after its Sh420 million Kigali building and the Sh50 million Arusha campuses were ordered closed by respective governments over quality concerns.
Then Auditor-General Edward Ouko said the university faced a financial crisis that forced it to rely on costly short-term loans to fund its operations. The Kigali building, worth more than Sh420 million, was fully equipped with books, computers and other learning materials but now sits idle.
Kenya’s Commission for University Education blacklisted the two campuses saying they were set up abroad in contravention of the Universities Act, given that Kenyan taxpayers publicly fund the university.
The institution experienced a Sh2 billion deficit, reducing the accumulated surplus from Sh8 billion in 2017 to Sh6 billion by June last year.
It also failed to remit pension and taxes amounting to Sh1 billion, more than Sh3 million in audit fees and other statutory deductions worth more than Sh200 million.
Among its planned projects are a student hostel upgrading that is set to take place on a public-private partnership basis.