Kenyatta University has sunk into a Ksh1.3 billion debt as of June this year, forcing the institution to depend on short-term loans to finance its operations.
Auditor General, Nancy Gathungu, said KU is operating under financial difficulties and is currently relying on loans which she predicts may worsen the liquidity problem.
The situation in KU is worsening on a daily basis with the institution of higher learning struggling to even remit taxes and pensions amounting to Ksh3.67 billion, audit fees of Ksh8.1 million, and other statutory deductions of Ksh342.9 million.
“The university is, therefore, technically insolvent and if no urgent positive measures are taken to improve the financial position, it may not be able to meet its mandate in future,” Gathungu said in a qualified audit opinion.
The Auditor-General added that the deficit KU recorded in the year under review reduced its accumulated surplus from Ksh5.84 billion in the financial year 2019 to Ksh4.5 billion in 2020.
“Further, the current liabilities of Ksh6.38 billion as of June 30, 2020, exceeded the current assets of Ksh1.58 billion resulting in a negative working capital of Ksh4.8 billion,” Gathungu said in a report tabled in Parliament.
The University as it stands right now is unable to meet its financial needs.
The institutions that have found themselves in deep financial constraints have heaped blames on the reducing number of students, mismanagement, and low state funding.
In July, the University of Nairobi implemented a raft of leadership changes to deal with the Ksh7.2 billion debt it owed to the Kenya Revenue Authority (KRA).
Vice Chancellor Stephen Kiama made the appointments aiming to turn around the loss-making institution.
Prof. Kiama appointed Prof. Julius Ogeng'o and Prof. Margaret Hutchinson as associates Vice Chancellors in charge of academic affairs and research, innovation, and enterprise respectively.
The institution was struggling to honour tax obligations, retirement benefits, and insurance premiums for employees’ obligations.