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Public varsities’ debt grows 10pc to Sh76bn in a year
Kenya’s public universities are sinking deeper into debt, with unpaid bills and statutory deductions raising fresh fears over their financial sustainability.
Debt owed by public universities rose 10.4 percent during the period ended June 2024 to hit Sh76.1 billion, up from Sh68.9 billion the prior year, extending a trend observed over the past four years.
Fresh disclosures by Auditor General Nancy Gathungu indicate that by the end of the reporting period, the balance of payables constituted Sh10.96 billion in long-term liabilities and Sh68.4 billion in current liabilities.
“Current liabilities reported by public universities have been increasing steadily over the years. This continued growth suggests that institutions are consistently failing to meet their short-term obligations, including trade payables, statutory deductions, and other operational expenses,” wrote Gathungu in the latest report.
The audit, which covered a total of 42 institutions, shows that 17 public universities had unremitted statutory deductions totaling Sh29.6 billion, including unremitted Pay As You Earn (PAYE), pension contributions, withholding tax, and other payroll-related obligations.
13 others had long outstanding payables totalling Sh8.5 billion, consisting largely of amounts due to vendors, part-time lecturers, contractors, and staff claims that had remained unsettled for extended periods, some dating as far back as 2008.
Out of the 17 with unremitted statutory deductions, the auditor said seven lacked disclosures on accrued penalties or evidence of structured plans to settle the liabilities, which she flagged as a contravention of statutory requirements.
The Retirement Benefits Act imposes a penalty of five percent of unremitted contributions, or Sh20,000, whichever is higher, and requires full remittance with interest.
Similarly, employers are bound by law to remit PAYE by the ninth day of the following month, with non-compliance attracting penalties of five percent of the unpaid tax, one percent interest per month, and fines for late filing.
During the review period, six universities recorded operating deficits totaling Sh3.2 billion, indicating that their total expenditure exceeded revenue generated.
The six included Moi University, which posted a Sh1.2 billion deficit, Jomo Kenyatta University of Agriculture and Technology (Sh916.7 million), the Technical University of Kenya (Sh877.97 million), Technical University of Mombasa (Sh141 million), University of Eldoret (Sh57.7 million), and the University of Kabianga (Sh4.7 million).
“This reflects ongoing financial strain and poses a risk to the sustainability of essential services. The shortfalls also) indicate structural weaknesses in revenue generation and expenditure management,” noted the auditor.
This came as analysis of fiscal statements for the entire 42 batch of audited institutions showed that the public universities spent Sh62.2 billion on personnel emoluments, which represented 62 percent of the total revenue of Sh100.7 billion.
