The University of Nairobi (UoN) on Tuesday, July 13 revealed it owes Kenya Revenue Authority (KRA) Ksh7.2 billion, coming amid a deepening cash crisis at the institution.
The Vice-Chancellor, Professor Stephen Kiama, stated that the high pending bill forms part of the reasons the university is carrying out financial, curriculum, and structural reforms to mitigate the crisis.
The university is struggling to honor its payroll taxes, retirement benefits, and insurance premiums for employees’ obligations.
The institution risks losing its assets from the unpaid bills, collection of duty directly from their suppliers, bank accounts holding students’ fees and prosecution of the top officials.
“The UoN has been operating under a huge deficit and today we owe KRA Ksh7.2 billion which has come as a result of us not costing our services,” Kiama noted.
According to the audit report by the former Auditor-General Edward Ouko, the university lost Ksh1.4 billion in the year to June 2018 following their overrunning budget and failure to raise project revenue.
Just like any other university, funding for the University of Nairobi has been hit hard following a sharp fall in the number of module II students in the past three years.
The institution has over the years depended on the billions of shillings brought in by the students enrolling for parallel degree programs.
The University of Nairobi's financial crisis has also been caused by the implementation of the Differentiated Unit Cost (DUC) model that led to the reduction of government capitation in the universities.
The implementation led to a huge payroll gap and the accumulation of debts.
“When DUC was introduced (in 2017), the capitation from the government dropped from Ksh6.2 billion to Ksh4.5 billion, yet the cost of living has been going up,” Kiama explained.
Therefore, the university factored in the DUC costing that has now doubled fees for postgraduate and parallel courses to alleviate the financial crisis.
