Unmasking the Debt Crises in Universities


Unmasking the Debt Crises in Universities



This was no breaking news. With all elements of alarm and the ingredients of an interesting story, news reports that universities have been ‘holding’ on to statutory payments such as pensions, health insurance deductions, bank loan repayments and other monies, is not new.


For over five years now, universities have been struggling to meet basic daily financial obligations. This column has on several times raised this issue.

Reports of struggles in meeting payroll demands by both public and private universities are now common. The reality is not that universities are illegally ‘withholding’ billions of statutory and other payments, the plain truth is they have no money, and are painfully struggling to pay salaries.


A friend in a private university told me how they are routinely asked to take half-pay every month. Banks are now forced to black list university staff in the dreaded Credit Reference Bureau (CRB).

Banks are turning away those who want loans. In most universities, there are barely extra funds to support anything beyond the basic functions. Sometimes staff have to bear the costs of stationery. Health cover for most universities is gradually disappearing.

Funding research has become a luxury. Unless one is plugged into international networks, the current financial state of universities is hostile to research. Morale is plummeting. The financial disaster in all universities is a reflection of a much bigger problem.


How did we get here?

First, we do not have a higher education policy. For over two decades, university education has expanded ostensibly to meet demands of the market. We now have more than 60 universities, both private and public, across the country.

These universities have grown without proper thought or policy guiding their establishment. We have not had a discussion on university financing. In the case of public universities which rely more on government capitation, the allocations have remained stagnant for years. As a result of a lack of policy, we have established campuses and universities we do not need, and which we can barely afford.

We have more ‘political’ universities supported by the tax-payer than actual universities. We are living way beyond our means. Universities, understaffed and populated mostly by non-PhDs, have gloried in duplicating each other’s programmes, reducing themselves into ‘teaching shops’ and mechanical conveyor belts of degrees.

Secondly, the neo-liberal reforms that commercialised higher education, and which were meant to boost university financing, turned them into debt factories. Poor leadership veered universities into a path of financial ruin.

Too much money

Between 1998-12, universities received too much money when they barely had capacity to manage it. The vast majority of universities got swamped in greed and corruption. There was a near stampede to ‘create rationality around ‘sharing the proceeds’. In the bigger universities, it was common for faculty deans to be paid an average of a million shillings in a month.

This hints at what might have been paid to senior administrators higher up.

As teaching became monetised, the obsession to expand universities horizontally grew. Universities became narcotised, and sought the next ‘high’ in a schizophrenic establishment of satellite universities. They cannibalised each other by establishing campuses in each other’s ‘turf’. As more universities joined the feeding trough, the ‘profit’ margins simply shrunk-out. The final death knell came in the shape of the controversial examination reforms that have all but killed the cash-cow.

As the flow of money swelled, universities operated in a state of financial opacity, where only two or three individuals knew the actual amount of money the university made. VCs saw no reason to be accountable to the immediate university community. In such a context, corruption, maladministration and abuse of office reigned supreme.

Importantly, the windfall allowed universities to abuse their employment policies. Several went on a hiring spree. Within a short while, universities were populated with a mass of idle employees in the non-core functions of the university and an unsustainable wage bill.

So, what should be done to wiggle out of this financial mess? First, we need a higher education policy. There is need to give primacy to higher education as we do primary and secondary. Second, tough and painful decisions must be made regarding the number of universities we need, and the requisite qualified staffing there.

Universities merger

Staff rationalisation is inevitable as well as a complete transformation of the higher education landscape, which should among other things, consider merging of universities. A mere freeze on establishment of satellite campuses is not enough.


Third, there is need for a proper justification for establishment of both new universities and new programmes.  Fourth, the current universities’ debt calls for a bail out. For instance, with over Sh1.5 billion in total outstanding payments, the University of Nairobi will take over 30 years to meaningfully operate unless a financial miracle comes along.

Finally, and possibly more important, the leadership of universities and how it is constituted needs to be re-thought. The politicised appointments of VCs and their deputies creates a congenial atmosphere for accountability gaps and financial malfeasance. It exposes universities to external manipulation and financial abuse.


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