Universities face financial crisis after Sh1bn budget cut

Wednesday March 18 2020
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The University of Nairobi. Several public universities are facing a financial crisis following the decision by the government to reduce funding to the 31 institutions by Sh1 billion. FILE PHOTO | NATION MEDIA GROUP

By OUMA WANZALA

Several public universities are facing a financial crisis following the decision by the government to reduce funding to the 31 institutions by Sh1 billion.

Some of the universities are unable to pay staff salaries and pension contributions.

Multimedia University, Kenyatta University and Cooperative University of Kenya are among the institutions hardest hit by the funds cut, according to Auditor-General Edward Ouko in a report tabled in the National Assembly.

Early this year, the university managers revealed that more than 16 institutions were unable to pay staff salaries despite collecting millions of shillings from students as fees and receiving funds from the government.

SH181 MILLION DEFICIT

For instance, Cooperative University recorded a deficit of Sh181 million in the financial year ending June 30, last year.

“The current liabilities of Sh231 million exceeded the current assets of Sh163 million, resulting in a negative working capital of Sh67 million,” said Mr Ouko.

He went on: “The university was unable to pay trade payables and payroll liabilities of Sh65 million and Sh55 million respectively to the beneficiaries thereby risking fines and penalties.”

Mr Ouko said the university was technically insolvent.

At Kenyatta University, the Auditor-General said the institution had failed to remit pension and taxes amounting to Sh808.3 million, and Sh161.8 million deductions to the respective beneficiaries there by risking fines and penalties.

LOSS OF INCOME

At the University of Eldoret, students owe the institution Sh600 million in fees. The university is on the spot for allowing 156 students, who owe it Sh10 million, to graduate.

“The university was in breach of its policy hence resulting in loss of income,” said Mr Ouko.

At the same time, Moi University has been taken to task over delay in the completion of a Sh1.7 billion library and hostel on its Bomet Campus.

Mr Ouko said the contractor had been expected to complete the project by November 8. “A physical verification of the project in March revealed that it is behind schedule and is not likely to be completed within the contract period,” he said.