allAfrica.com: Uganda: Public Universities Are Not Supposed to Make Profits (Page 1 of 2)

I was fully aware of fees structures in private universities in Uganda, leave alone those in Tanzania and Kenya--countries I have lived in for long periods and I visit very frequently.

I intentionally avoided comparing fees in a public university with those in a private university.

Price determination in any firm is highly dependent on the basic objectives or philosophy of the firm. That is why there are vast differences amongst prices set by monopolies, oligopolies, firms in competitive markets, and so on.

Comparisons may, therefore, not be useful unless one takes into account the underlying philosophy or ideology.

Any attempt to compare incomparable things is an exercise in futility.

I expect governments in poor countries to offer education (including tertiary education) as an investment, since there is a high, statistically significant correlation between education or skilled labour and development.

A government firm should, therefore, aim at just offering an essential service as the basic ideology. Of course, it should not be a loss-making firm; it should at least break even.

In fact, it is commendable if the firm makes a small surplus, which surplus can be ploughed back to expand the firm. But, definitely, it should not aim at profit maximisation.

I place a public university in this category.

This is why I expect the fixed costs of operating a public university to be borne by subventions. If a government is no longer able to adhere to this philosophy, it should privatize the firms it is unable to cater for with regard to at least fixed costs.

Private firms--maybe, except non-governmental organisations (NGOs)--normally aim at making not a surplus but a profit.

To put it crudely, the firms offer a service or produce a given good in the process of their maximising profits; philanthropy does not come into the picture at all.

If they could generate maximum profits without producing any good or service, they would be fine for costs of production would then be zero or near zero.

Private universities in a way fall in this category. They have no godfather (government) to meet some of their operational costs, yet they need to generate something for their owners.

Breaking even is a very undesirable situation for them. They are in business not for charitable reasons, but to earn something from their investments.

Hence, the price setting mechanism here is not based on variable costs as I argued in the published paper, but on total costs, including at least a 'normal profit'.

The prices set by private firms are, therefore, perfunctorily expected to be higher than those set by non-profit-maximising firms, including universities.

In general, it is, therefore, wrong to compare fees in Makerere University with those in private universities in Uganda.

Fees in one private university can, however, be compared with fees in another private university in the same country or even across borders.

Still on fees, Mr Gilbert Kadilo stated that fees in Makerere have not undergone any revisions since 1996. He implies that, therefore, the fees need revision.

What is the basis? Is the inflation rate now higher than it was in 1996? Are facilities/amenities available to students on a per capita basis more than or superior to what students in 1996 were exposed to?

Or are activities much more enhanced now than ever before (in 1996)? Besides, one still needs to grapple with the issue of the degree of efficiency in revenue collection and resource deployment so as to determine whether or not a given fees structure is optimal or sub-optimal.

Mr Kadilo is conveniently quiet on these salient issues.

As stated in the published paper, I made my thoughts on Makerere University known first and foremost as an alumnus of the university.

To put together the analyses and suggested solutions, I also used my experience as a 'past leader' of the university as well as my professional expertise--which I highly cherish and I am immensely grateful to my peasant parents (belonging to the wretched of the earth) and my country for having enabled me to access the expertise, wealth of knowledge and experience. In this respect, too, I have the moral authority to write on Makerere University and any other institution in beloved Uganda.

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