10 April 2019

Kenya: CUE Reports Sh38.9 Million Loss in 2016, Warns of Financial Crisis

The Commission for University Education (CUE) lost Sh38.9 million in financial year 2016/17, its chief executive said Wednesday and warned of a crisis if adequate steps are not taken.

Chief Executive Officer Mwenda Mtarangwi attributed the loss to a decline in income occasioned by non-remittance of dues by universities, capping of the interest rate by the Central Bank and the slashing of quality fees paid by new students.

Appearing before the Public Investment Committee (PIC), Prof Mtarangwi sought to explain an audit query on the rationale upon which the commission made a deficit of 38.9 million in 2016 against a surplus of 88.5 million the previous year.

"The total income declined due to challenges in collection of quality assurance fees from universities. We instituted these fees to help audit the standards of education but there was a major push and pull and universities didn't want to pay. Most of the institutions complained of cash flow problems."

COSTLY EXERCISES

The commissioner also told the PIC, chaired by Mvita MP Abdulswamad Nassir, that quality control cost the commission Sh30 million.

The activity, according to the CEO, was necessary for them to respond to concerns of quality of education following complaints that universities were churning out half-baked graduates.

The shortfall, according to Auditor-General Edward Ouko, reduced the accumulated surplus in the CUE account from Sh426.5 million to Sh387.6 million in June 2017.

Another major change that cost the commission its income was a ministerial negotiation initiated by Interior Cabinet Secretary Fred Matiang'i in 2016, to slash the amount of quality fees paid by each student upon joining university by 75 percent.

"The negotiations led by Dr Matiang'i went through parliament in 2016 and led to a transition period that saw our income drop from Sh500 million to around Sh100 million," said the CEO.

"Changes in the capping of the interests also affected our resources."

CRISIS WARNING

Mr Mtarangwi said that unless the commission puts in place adequate measures, it will face a financial crisis.

He asked the committee to support the new recommendation being discussed at stakeholder level for the annual student fee to increase from Sh15,000 to Sh48,000.

"The fee structure has remained the same since 1990. It should be adjusted to suit the risen cost of training. [The fee increment] is still a stakeholder deliberations issue," he told PIC.

The commission has since adopted stringent credit control laws with sanctions on institutions which default in payments as per the collection policy.

The CEO suggested that students who can afford the cost of university education pay full amounts as the government supports the others. He said they they should not the treated the same.

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