Private varsities face cash crunch as funding ban looms

The bid to block private universities from getting government funds has started in earnest with the publication of a proposed law setting the stage for the ban.

The publication of the Universities (Amendment) (No3), Bill of 2023, by Azimio lawmaker Christopher Aseka marks the official start of a journey that will deny the private colleges billions if concluded as planned.

The Bill was under consideration by the budget committee, which has since approved it, hence its publication on the green paper.

“The principal object of the Bill is to amend the Universities Act, 2012, to abolish funding of private universities using public funds and bar the Kenya Universities and Colleges Central Placement Service (KUCCPS) from placement of students to private universities,” the MP said in the Bill’s memo.

“The Bill proposed to amend Section 53(4) (b), 54 (4) (b) and (c) of the principal Act to abolish the issuance of conditional grants to private universities.”

In the proposed law, Aseka, who is a member of the budget committee, seeks to provide that the government only funds public universities.

He argues that the aim is “to safeguard public funds from misuse by private entities, which have not been brought under the regulatory framework of the Public Finance Management Act”.

If approved, the Universities Fund would be required to “in consultation with the Cabinet Secretary, develop a transparent and fair criterion for the allocation of funds to public universities” only.

More than Sh10 billion has gone into the programme since its inception, an average of Sh2 billion a year.

According to data provided by KUCCPS, the body first placed students in private universities during the 2016-17 cycle.

In the 2017-18 financial year, Sh1.56 billion was disbursed towards the programme, while Sh2.7 billion was disbursed in the 2020-21 financial year.

In the period leading to June 2021, private varsities had received grants to the tune of Sh8.7 billion from the government.

Following the Bill's publication, National Assembly members are expected to take it through the first reading in the session beginning this week.

In the existing law, the fund is authorised to expend conditional grants and loans to private universities - a provision the MP wants deleted in the proposed law.

MP Aseka also wants to remove, provisions that have allowed the KUCCPS to place government-sponsored students in private universities.

“Clause 4 proposes to amend Section 56 (1) (a) of the principal Act to bar the KUCCPS from placement of students to private universities,” the Bill reads.

The budget committee had recommended that the state stops funding the 31 private universities in the country.

MPs, during the review of the second supplementary estimates of the last financial year [2022-23]- the first under the President William Ruto administration-recommended that the government should no longer remit money to the institutions.

The National Assembly Budget and Appropriations Committee chaired by Kiharu MP Ndindi Nyoro recommended that KUCCPS be barred from placing government-sponsored students in privately-owned institutions.

The lawmakers said the new policy shift was to take effect in the next cycle of placements, most of which begin from June last year.

“In the next cycle of placements [2023], the State Department for Higher Education and Research, through the KUCCPS should not place new government-sponsored students in private universities,” BAC said in a report that was adopted by MPs.

MPs have held that the government is struggling to fund public universities that are drowning in debts amounting to more than Sh56.1 billion, hence should prioritise all available resources to their cause.

If affected, some of the universities stand to lose as much as Sh500 million in annual receipts from the government.

A disbursement schedule for the year ending 2021 showed that the least amount ranged between Sh500,000 to Sh6 million.