- Many students from needy backgrounds were reportedly placed in higher financial brackets, limiting their access to the critical support they needed for higher education.
- Despite receiving billions in government allocations, many institutions struggled with stalled projects, rising debts, and slow or nonexistent development.
- The relationship between student numbers and the decreasing percentage of DUC funding highlights the challenges that Kenyan universities faced.
Government funding of universities is essential for national development, and Kenya’s recent struggles with higher education financing have brought this issue into sharp focus. In 2017, the Government of Kenya (GoK) adopted the Differentiated Unit Cost (DUC) model, developed by the then Vice-Chancellors of public universities, as the ideal funding solution for higher education.
The DUC model aimed to allocate funds based on the specific cost of delivering various academic programs, ensuring that high-cost disciplines received the resources they needed to thrive.
However, concerns emerged regarding DUC’s effectiveness in addressing funding inequities, enabling universities to meet operational needs, and improving access for low-income students.
In 2022, the Kenya Kwanza government introduced sweeping changes to education, including a New Funding Model (NFM) for universities and TVET institutions.
Also known as the Variable Scholarships and Loans Funding (VSLF) model, the NFM combined government scholarships, loans, and household contributions, with the proportions varying based on students’ financial needs.
While innovative, the VSLF model has faced strong opposition from students, parents, and educational stakeholders, particularly over the Means Testing Instrument (MTI) used to determine students’ financial bands.
Many students from needy backgrounds were reportedly placed in higher financial brackets, limiting their access to the critical support they needed for higher education.
Amid growing discontent, in September 2024, the Ministry of Education appointed a 129-member national committee to review and refine the funding model, aiming to ensure equitable access to higher education.
Unfortunately in October 2024,, hardly had the committee started deliberating on its mandate, than the VSLF was suspended by Kenya’s High Court in response to a petition by the Kenya Human Rights Commission (KHRC), Elimu Bora Working Group, and the Students’ Caucus, citing its unconstitutionality and the confusion it has brought to universities. As uncertainty looms, Vice-Chancellors, students, and parents are left in limbo, awaiting clarity on the future of university funding.
The DUC model, for all its ambitions, left lingering questions about its effectiveness. Did DUC calculations fairly address funding disparities across programs? Was it sustainable and fair for public and private universities? What were the implications for low-enrollment courses critical to national development? Did DUC improve access for low-income students? How did the DUC model affect university infrastructure and quality? What alternatives existed to enhance funding without raising student fees? Was the government faithfully fulfilling its funding obligations under this model?
As a former VC during DUC’s operational years, I have delved into these questions in my analysis, examining university fiscal health and realities that shaped higher education from 2018 to 2023.
In the period under review, Kenyan universities—both public and private—experienced significant financial difficulties that severely impacted their operations.
Despite receiving billions in government allocations, many institutions struggled with stalled projects, rising debts, and slow or nonexistent development. While public perception often placed the blame squarely on Vice-Chancellors (VCs), the reality was far more complex.
The allocation, based on the DUC criterion, came with strings attached. A significant portion of the funds was earmarked for specific directives such as Collective Bargaining Agreement (CBA) allocations, doctors’ allowances, and support for constituent colleges.
For instance, in the 2018/2019 financial year, out of the Ksh38 billion allocated to universities, 86.14% was directed towards the DUC, while 13.86% was earmarked for other commitments. By 2022/2023, the earmarked funds had grown to 21.44% of the Ksh44 billion allocated. This distribution left universities with little room to invest in infrastructure, equipment, or other developmental activities.
The DUC model initially aimed to cover 80% of the unit cost of university education. However, due to insufficient funds, this allocation was steadily decreased, reaching about 48% by 2022.
At the same time, student enrollment in public universities increased dramatically, from 233,218 in the 2018/2019 financial year to 356,188 in 2022/2023.
This growing demand for higher education, coupled with declining government support, placed universities under immense pressure. The relationship between student numbers and the decreasing percentage of DUC funding highlights the challenges that Kenyan universities faced.
The financial difficulties experienced by universities during this period, stemmed from a confluence of factors, both external and internal. Public universities in Kenya rely heavily on government funding.
Unfortunately, this funding did not keep pace with the growing student population or the rising costs of running universities. Budget cuts and delayed disbursements further exacerbated the financial strain, leaving universities struggling to meet their financial obligations.
With insufficient government funding, universities increasingly turned to tuition fees as their primary revenue source. However, many students faced financial challenges, resulting in delayed fee payments and subsequent cash flow problems for universities. Additionally, the government’s push to cap fee increases limited universities’ ability to generate more income, further squeezing their budgets.
The government’s Free Primary and Secondary Education and the 100% transition programs led to a significant increase in university enrollment. This led to overcrowded classrooms, strained resources, and concerns about the quality of education.
A substantial portion of university budgets was devoted to staff salaries and benefits. As the demand for higher pay grew and staff numbers increased, universities found it increasingly difficult to sustain their wage bills, especially given their limited revenue streams.
The general increase in the cost of goods and services made it more expensive to run universities. Inflation eroded the value of the funds received, making financial planning even more challenging.
Many universities accumulated significant debts due to creditors and were even unable to remit statutory deductions courtesy of competing institutional interests. Private universities with government sponsored students found themselves in an unfamiliar territory, where they were allocated a lump-sum to share amongst themselves, in an apportioning done by the Universities Fund (UF).
Delayed government remittances, such as capitation for students and payments for services rendered, created cash flow problems for universities. These delays often led to difficulties in meeting financial obligations on time, further straining university operations.
The COVID-19 pandemic added another layer of complexity to the financial struggles of universities. Disruptions in fee collection, reduced enrollment, and the additional costs associated with health protocols and remote learning infrastructure all took a toll on university finances.
While external factors played a significant role in the financial challenges faced by universities, the VCs at the helm during that period cannot escape without a blame because some issues were internal.
Poor financial planning and management practices contributed to inefficiencies and waste. Challenges in managing income streams, controlling costs, and ensuring financial sustainability enhanced the financial difficulties of universities.
Many universities failed to diversify their income sources, relying heavily on government funding and tuition fees. This lack of diversification made them vulnerable to financial shocks, as there was little focus on alternative revenue-generating activities such as research grants, partnerships, consultancies, or income from university-owned businesses.
Corruption and mismanagement of resources within some universities further drained financial resources. Misappropriation of funds, fraudulent procurement practices, and a lack of transparency in financial dealings all contributed to the financial difficulties faced by these institutions.
Addressing the financial challenges faced by Kenyan universities between 2018 and 2023 required a multifaceted approach. Immediate measures to improve financial management and long-term strategies to diversify income sources were crucial.
Collaboration with the government, private sector, and development partners could have helped alleviate some of the financial burdens. However, the slow turnaround time for such initiatives and government bureaucracy often made these efforts seem impossible.
Any sustainable solution to Kenya’s university funding crisis must prioritise affordability and access without compromising quality. Possible approaches include enhancing public-private partnerships to diversify revenue streams, offering targeted scholarships for students from disadvantaged backgrounds, and revising the Higher Education Loans Board (HELB) model to provide more flexible repayment terms. Additionally, universities could explore income-generating ventures, such as research commercialisation and investment in profitable assets.
In retrospect, the period between 2018 and 2023 was a perfect storm of financial challenges for Kenyan universities. While VCs, management, and councils did their best to navigate these turbulent waters, the structural issues within the funding and management systems made it a daunting task.
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I personally believe the VSLF is robust and viable. Equally, the DUC was working well for the university sub-sector, save for the decline in funding levels by government and remission delays.
My conviction as a former CEO is that, whatever model the GoK adopts is bound to fail if the government does not remit the funds owed to universities in full and on time, for this is what killed the DUC model.
The road ahead remains uncertain, the DUC questions earlier asked herein largely answered, but clarity and commitment to robust, timely funding are vital if Kenya’s universities are to fulfill their role in national development.
