- Much of the losses are attributed to operational problems such as the opening of many outdoor campuses and construction projects, as well as an skyrocketing wage bill.
- Education is a public good, so public universities that serve that public good cannot simply be analyzed on a profit and loss basis like a state-owned company.
- To enter the college funding economy, public investment is required to support equitable access to learning as a fundamental parameter of education policy.
A few days ago it was reported that the World Bank was pushing Kenya to close and merge public universities with scarce resources. The 102 public universities and campuses reportedly posted a deficit of Sh6.2 billion in the year through June and received nearly Sh70 billion from the Treasury to run operations and turn losses for three consecutive years.
Consequently, the World Bank argues, there is a need to address and consolidate the overlapping mandates of these institutions in order to improve the efficiency of public spending on higher education and reduce spending pressures.
This urge to shut down public universities was exposed in an appraisal from the bank calling on the government to meet targeted structural adjustment conditions for a three-year loan facility. Kenya signed the loan agreement to receive budget support and help the economy recover from the effects of the Covid-19 pandemic.
It is obvious that it is about the sustainability of our public universities. The rate at which they have been able to compensate for large losses in a very short period of time is a matter of public finance management.
Much of the losses are attributed to operational problems such as the opening of many outdoor locations and construction projects, as well as an skyrocketing wage bill.
The University of Nairobi (UoN) and Kenyatta University (KU) have a combined financial deficit of Sh4.3 billion, underscoring the cash flow problems that have led them to try to raise tuition fees. For the KU, the institute is dependent on short-term loans to finance business operations.
But the World Bank’s request is quite unrealistic at this point and will be a long-term problem in higher education.
First, the World Bank, which puts public universities in a basket with loss-making state corporations, is like mixing apples and oranges. The two differ in their analysis of their public funding.
Education is a public good, so public universities that serve this public good cannot simply be analyzed for profit or loss like a state-owned company.
Public investment in higher education is vital as it improves the quality of education, which translates into benefits such as higher productivity, lower income inequality, lower poverty and improved overall economic growth.
Therefore, the long-term impact of education, which addresses economic and social inequalities and transforms societies from a small elite system to a mass system, should not be downplayed. Hence, the problem is not that Kenya’s public universities and campuses are increasing from 49 in 2010 to 204 in 2017, before dropping to 102 last year.
To enter the college funding economy, public investment is required to support equitable access to learning as a fundamental parameter of education policy. With public universities already in a tight spot and with huge deficits, asking them to take drastic cost-cutting measures is not the way to go.
What this basically means is that institutions are slashing into the budget by cutting programs that jeopardize and could jeopardize the quality of education. For example, some of these institutions will consider letting go of their well-trained and experienced faculty and professors because they cannot afford them if they are essential to quality education.
Therefore, when reviewing the financial position of these institutions, it is essential that we separate the cost of study and university operating costs. Tuition fees are what worries the government more as they are the factor in equitable access to learning and channel funding taking into account the income per student.
Therefore, the government should maintain or increase the revenue per student and then gradually give the institutions time to reduce their operating costs without causing a financial shock until they reach a cost-effective position. The risk of a financial shock is that universities can no longer meet the demands of the labor market, which affects the quality of education.