Universities fund seeks to end cash crisis
The Universities Fund is seeking to steadily grow its annual allocation to Sh75 billion within the next five years.
In its new 2016-26 Strategic Plan, the Fund says the approved allocation from Government in the 2020/21 Financial Year stood at Sh44 billion, equivalent to about 55 per cent of the required financial resources.
Out of these, only 13 per cent of the money is actually spent on the Fund’s core mandate.
“Over the next five years, it is expected that the Government will continue to be the primary source of funding even as the Fund explores other sources,” the strategic plan states.
The agency seeks to work with the Ministry of Education to enable it undertake its disbursement function to universities by 2026.
It will also be seeking to work with stakeholders to increase and sustain Government allocation as well as determine development, recurrent and personnel needs of universities to give a broad picture of financing through consolidated budgets for the sub-sector.
“We seek to ensure financial stability by having a portion, 0.5 per cent, of funds disbursed to universities allocated to the Fund as an administration fee to support fundraising activities and allocations tied to performance,” the plan adds.
It further notes that the current budget is not sufficient to enable the agency to achieve its mandate.
Fund has also raised concerns over rising costs of operations in universities.
It stated that public universities largely rely on Government appropriations to run their operations.“Many public universities are currently unable to meet their basic operating expesnses, such as personnel costs, utility payments and statutory contributions, including income tax and pensions,” the Fund says in its plan.
Some of the universities, therefore, are technically insolvent and locked in a cycle of debt, leading to increased loans, rising costs and eventual risk of default.
The plan at the same time notes that rising costs have been a direct consequence of the expansion of universities, which has increased the burden of financing higher education.
“Most countries have tried to expand their systems while limiting the adverse impact on unit cost and expenditure to maintain quality.
Enrollment rates in tertiary institutions in Sub-Saharan Africa, for example, grew by more than 20 times between 1970 and 2008, according to UNESCO Institute of Statistics,” Fund says.
The average expenditure per student in real terms has continued to grow while administration costs have been rising due to growth in personnel numbers.
At the same time, the Fund says that it requires data to make decisions on disbursements of funds to universities based on Differentiated Unit Cost.
