Academic Giants UoN, KU on the Verge of Collapse over Billions Worth of Debts

The University of Nairobi and Kenyatta University- the country’s academic giants are tottering on the brinks of insolvency after failing to remit billions in employees’ statutory deductions including loans, the Auditor General has said.

Reports by Auditor General Edward Ouko show Multi-Media University is facing the same fate.

The auditor warns that the universities’ continued operation is “a going concern” as they now depend entirely on creditors, banks and the government.

During the 2017-18 financial year, UON, Kenyatta University and Multimedia University alone reported negative working capital of Sh5.5 billion.

Kenyatta University reported the highest debt at Sh3.4 billion, followed by UoN at Sh1.4 billion and  Multimedia at Sh700 million as at June 2018.

But even more disturbing are revelations that universities have spent workers’statutory deductions, which may result in financial penalties for individual employees.

The University of Nairobi, for instance, was unable to remit workers’ deductions of Sh2 billion.

The university failed to remit PAYE of Sh283 million, National Social Security Fund deductions of Sh3.4 million and National Hospital Insurance Fund deductions of Sh10.8 million.

It also failed to submit pension contributions of Sh1.5 billion, sacco deductions of Sh204 million and Helb deductions of Sh828,387.

Ouko also said KU may further worsen its liquidity position, having resorted to financing its operations using short-term bank overdrafts.

The university recorded a deficit of Sh2.1 billion during the year under review. Its current liabilities exceed its Sh847 million current assets, resulting in negative working capital of Sh3.5 billion.

“This indicates that the university was unable to meet its financial obligations when they fall due,” Ouko said.

The University of Nairobi was unable to remit workers’ deductions of Sh2 billion.

The university failed to remit PAYE of Sh283 million, National Social Security Fund deductions of Sh3.4 million and National Hospital Insurance Fund deductions of Sh10.8 million.

It also failed to submit pension contributions of Sh1.5 billion, sacco deductions of Sh204 million and Helb deductions of Sh828,387.

In particular, the university was unable to remit taxes and pension contributions amounting to Sh1.8 billion; audit fees of Sh3.4 million and other deductions of Sh204 million to beneficiaries.

The revelations came as Education Cabinet Secretary George Magoha has proposed that some of the country’s 74 universities be merged to free funds for academic projects.

He has proposed a raft of cost-saving measures, including the reduction of staff, especially in non-essential roles,  to reduce the varsities’ wage bill.

The CS has also proposed the merger of courses and reaching out to industry to fund research. Fees will probably have to be increased.

“Stop dreaming and thinking that the government is going to give you money. It will not,” a stern Magoha told university bosses during a Higher Education conference in Nairobi on Monday.

His warning will dash the hopes of cash-strapped colleges and universities that the government would come to their rescue.

Magoha has vowed that a tough review is inescapable if the country is to achieve globally competitive university education.

Isn’t it convenient to have Kenya’s latest breaking news at your fingertip? That’s right, at kenyanreport.com (which is an intriguing platform to explore all types of Kenya news); you’ll find good informative blogs and articles on various headlines. As a news-savvy person, you’ll not be disappointed with breaking news, entertainment news, politics and political happening, diaspora news, celebrity trend and many more.

Facebook Comments
Please follow and like us:

LEAVE A REPLY

Please enter your comment!
Please enter your name here