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Public universities hit by Sh2bn bills, relying on loans to survive

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Universities are yet to settle Sh2.028 billion bills owed
to suppliers and contractors from the last financial year, raising concerns on their financial health.

The ‘Medium Term Expenditure Framework 2019/20–2021/22 report’ reveals that the pending bills arose due to delayed
release of funds by the exchequer, unforeseen budgetary cuts and late submission of invoices from
suppliers.

The funds released in quarterly basis ought to have been disbursed by the
close of the 2017/18 financial year that came to an end in June this year.
However details from the ministry reveal treasury is yet to release the
funds.

The Treasury report reveals the already
cash strapped universities not only sit on big debts but also bills following a move to
acquire non-income generating assets with no funds readily available to
settle the bills.

Property acquired include motor vehicles, ICT
infrastructure, teaching and learning equipment, furniture, academic
attires, registering of patents, copyrights, and trademarks from
research projects.

Moi University in
August last year for example acquired two new buses at Sh24 million,
Chuka University on the other hand acquired Sh509 million Sasini House in
Nairobi among others.

Read: Public varsities in financial crisis as revenues dwindle

The outstanding bills risk affecting operations in the already struggling institutions. University of Nairobi director of communication John Orindi explains such assets are important to ensure smooth running of an institution.

Orindi says the assets acquisition are due to the increasing number of students in the institutions expanding the resources required.

“Non-financial
assets are acquired with approval of the treasury,” he said adding that this is based on progress and performance thus universities at times
acquire the assets as they await funds to pay those who supplied the
goods and services.

University and Academic Staff Union (UASU) Constantino Wasonga says the delayed
disbursement continue to pose threat that could halt
operations in universities as some rely on loans to run.

The 2016/17
auditor general report paints an uncertain future for the institutions
revealing the institutions’ current assets are less that the liabilities.

“Universities
are seriously underfunded and this is just one area. Lack of liquidity
forces them to take loans to address the pending bills and debts. The
immediate solution is for the government to increase funding to
universities as they device ways to have a stable income generating
sources,” Wasonga told the Star yesterday on phone.

More: State to increase research funds for universities, CS Amina says

Further debts

Auditor General Edward Ouko in the report raised questions on Kenyatta
University’s financial accounts in the 2016/17 financial year.

The
university’s current liabilities of Sh3.2 billion exceeded the current
assets of Sh1.6 billion that resulted in a negative working capital of
Sh1.5 billion.

The university further failed to remit pension and taxes
amounting to Sh808,367,887 and other deductions of Sh161,875,694 to the
respective beneficiaries, thereby risking fines and penalties.

Jomo Kenyatta University of Agriculture and
Technology (JKUAT) was unable to pay creditors and insurance claims
worth Sh51,317,415.

At JKUAT, current
liabilities of Sh3.9 billion exceeded current assets of Sh2.6 billion,
leading to a negative working capital of Sh1.3 billion. The liabilities
include money owed to suppliers, loans, grants and bank overdraft.

On the University of Eldoret, Ouko says the transfer of assets worth
Sh1,124,982,329 from Moi University to the institution could not be
confirmed because no valuation report on the items was forwarded to his
office.

It also emerged that Moi University has long
outstanding debtors who owe it Sh101,971,356, an amount the university
has not managed to recover for three years.

During
the period under review, the auditor’s office discovered that a Sh231
million government loan granted to Karatina Campus that is a constituent
college of Moi University was still reflecting in its financial books.

More: Crises loom as funding for older varsities slashed

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