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Machogu, Treasury Launch Plans to Write off Public Universities’ Debts

The Ministry of Education is in talks with the National Treasury and other stakeholders to waive part of the Sh63 billion pending bills that public universities owe.

Cabinet Secretary Ezekiel Machogu said at the weekend they were gathering reports from various universities which they will then present to the relevant government agencies and other stakeholders in a team that has been formed to explore the possibility of the Kenya Revenue Authority (KRA) being allowed to waive the dues owed as statutory deductions which have not remitted such as Pay As You Earn (PAYE), the National Hospital Insurance Fund (NHIF) and pension funds which were not forwarded due to lack of funds.

Should the proposal be adopted, then the universities will be required pay off other debts such as those owed to suppliers.

Machogu said the pending bills totaling to Sh63 billion had accrued in the 32 public universities over the last six years due to inadequate funding due to decline in admissions for parallel degree programmes, through which varsities were raising their own revenues.

Machogu said that due to inadequate funding, only 68 per cent of the total funding required by public universities was disbursed in that period, leading to accumulation of debts.

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“At that time the government was using Differentiated Unit Cost (DOC), where the State would pay 80 per cent of the total cost of a course being undertaken by every student regardless of their social-economic standing and the cost of the course being undertaken,” he said.

Machogu was speaking when he met with the Senate Education Committee, led by Murang’a Senator Joseph Nyutu in Naivasha on Saturday.

According to him, DOC funding model for all university students did not take into account the economic and social background of learners.

However, this has been cured by the new funding model, which categorises learners into vulnerable, very needy, needy and less needy.

The new model, which was recommended and adopted by the Cabinet, is set to harmonise fees per course and address myriad fiscal challenges that have faced universities as well as Technical and Vocational Education Training institutes.

Under the new funding model, the government will cater for 82 per cent of fees through scholarships, while 18 per cent of the costs will be catered for by the Higher Education Loans Board (HELB) through loans that have been funded to the tune of Sh29 billion this financial year.

The 32 public universities (according to 2021 Ministry of Education data) were weighed down by a total debt of Sh62 billion, as at last year due to inadequate funding from the government. Some were categorised as technically insolvent.

Around 563,000 students were enrolled in public universities during the 2022/23 academic year. The number increased from roughly 562,100 enrolled at the beginning of the 2021/22 academic year.

Public universities largely rely on government subsidies to run their operations, but the high number of admissions put a financial strain on the institutions on the back of inadequate funding and delayed disbursement of money by the government.

Under the current financial year (2022/23), the National Treasury allocated about Sh80 billion) for higher education although the universities had requested for about Sh180 billion in their budget plans, which they said they needed in order to function effectively.

At the weekend, Machogu was optimistic that the new funding model will help the education sector get back on its feet, adding that the Ministry was also implementing many of the recommendations of the presidential working committee on education, which were presented to President William Ruto earlier this year and which was later adopted by the Cabinet.

He said his ministry is engaging the National Treasury to unlock delays in disbursement of funds meant for education and explore the possibility of how the government can hasten release of capitation funds to the institutions to ensure smooth continuity of learning activities.

He said the government has also reduced the cost of Technical and Vocational Education Training (TVETs) fees per student to Sh13,000, a move which has seen the enrollment triple from an initial 70,000 students to the current 300,000.

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